API NatGas Price Explainer: Recent Price Swings Not Extraordinary
MDN has run a number of stories on the recent wild fluctuations in the price of natural gas. As we always explain, there is no one “price” of natgas for everyone–but there is the Henry Hub price, which is used for trading futures contracts (NYMEX). That price is watched like a hawk by everyone who trades natural gas. A casual observer of the market might think, based on media coverage, that the swings in the NYMEX price mean something bad. Negative. “The price I’ll pay this winter will go high, and it will stay high, and the shale “revolution” was always just a mirage and this proves it!” Whew. Take a chill pill. The chief economist for the American Petroleum Institute recently penned what we call a natgas price explainer, looking at the recent spikes in the price, providing context for understanding that the price we pay for gas is still, on average, at historic lows. And no, the sky is not falling.
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Although the Democrats will seize control of the House of Representatives come January, putting Nancy Pelosi in charge, fortunately the Senate will remain under Republican control. However, as happens each two years, a number of committee assignments and chairmanships and ranking member assignments will change. One of those changes is in the Senate Energy and Natural Resources Committee. West Virginia Sen. Joe Manchin (Democrat) may become the ranking (longest serving) Democrat on the committee, and because of tradition, he would then assume the role of Ranking Member of the committee. That prospect doesn’t sit well with the radical children of the Big Green movement–because Manchin is from WV and he loves and supports the coal industry and he loves and supports natural gas. Worse yet, Manchin sometimes (not often, but sometimes) votes with Donald Trump (gag). The petulant children of Big Green groups like “Friends of the Earth” are stomping their feet, demanding that Senate Minority Leader Chuck Schumer deny Manchin the Ranking Member position.
What if the shale revolution had never happened? We’d be another $250 billion in the hole with our trade deficit. That’s the finding of a new report released by IHS Markit titled “Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check.” The report finds the total U.S. merchandise trade deficit in 2017 was $250 billion lower than it otherwise would have been if the petroleum (crude oil, refined products and natural gas liquids – petroleum liquids separated out from natural gas and also known as NGLs) trade deficit had remained at its 2007 level. Thank God for shale! The report also examines the impact of rising U.S. oil, natural gas and chemicals production on the domestic trade merchandise balance and how the U.S. position in energy and chemicals may evolve in coming years. Interesting stuff.
Last week MDN friend and ace reporter Rick Stouffer from Kallanish Energy hosted a one-day event in Pittsburgh called “Kallanish New Horizons: Appalachin Basin.” One of the speakers was Denise Brinley, senior energy advisor for the Pennsylvania Department of Community & Economic Development. She addressed the topic of an NGL (ethane) storage hub. We’ve written a number of posts on what was originally billed as a $10 billion project, to be located somewhere in the Marcellus/Utica region–most likely West Virginia (see 
Continuing on the topic of the NGL storage hub that is today’s lead story (see Appalachian NGL Storage Hub Enters Phase 2 – Built in 2-3 Years?), a number of politicians previously lobbied the U.S. Department of Energy to study the issue of if, and where, a natural gas liquids (NGL) storage hub should be located. Namely, West Virginia’s two U.S. Senators, Shelly Moore Capito and Joe Manchin, were behind the request for a DOE study (see 
Russian native Boris Brevnov, a former Enron executive, and banker Charles Ryan, a Radnor native who was once chief country officer in Moscow for Deutsche Bank, have just landed themselves a sweetheart deal with Philadelphia Gas Works to build a small LNG plant that will export Marcellus gas. The Philadelphia Gas Commission voted to approve a deal yesterday with Liberty Energy Trust. We frankly have mixed emotions about the news. We’re glad to see another LNG export facility, this one in PA (albeit quite small), but unhappy that these particular people are the ones building and operating it. Yes, there’s a lot of history to cover in this story.
This is the kind of news we love to share! Keystone Clearwater Solutions, which was once majority owned by Rex Energy until they sold it to American Water Works in 2015 (see 
Every three years the Pennsylvania Dept. of Environmental Protection is required, by state law, to produce an update to the state’s so-called Climate Action Plan. The fact that they have such a plan boggles the mind–a plan to address global warming (the operative word being “global”) from one state. To be fair, a number of states and even large cities also have such plans. These plans are all arrogant nonsense. No entity, especially not a single state, can do a darned thing to affect the temperature of Mom Earth, but they pretend they can. And they use the existence of such plans as a manipulative political tool to force policy changes that inflict great economic harm on their citizens–all in the name of saving the planet. They’ve brainwashed our children into believing we’ll die if we don’t give up fossil fuel use. The DEP recently released their triennial update, and it’s as crazy as ever.
It’s kind of unusual, but we suppose not totally unheard of, for a township in the heart of the Pennsylvania Marcellus region in the northeast to essentially reject the Marcellus industry and tell the industry it isn’t wanted in their town. That’s the very loud and clear message just sent by Dallas Township (Luzerne County, near Wilkes-Barre) in adopting new zoning regulations that limit businesses related to the Marcellus industry from operating anywhere but in ~10% of the town. And we’re not talking about drilling–there is no Marcellus drilling in Dallas, in fact none in Luzerne County at all. We’re talking about things like “compressor stations, metering stations, processing facilities, hydraulic fracturing water withdrawal and treatment services.” And such restrictions do impact the industry, especially those related to pipeline infrastructure.
In June, Shell said that they plan to build their Falcon ethane pipeline in 2019 (see 
It’s the birth of a brand new pipeline expansion project. Several weeks ago Williams pre-filed with the Federal Energy Regulatory Commission (FERC) to make certain upgrades (all of them in Pennsylvania) to its mighty Transco Pipeline. The upgrades include replacing smaller pipeline with larger pipeline in some areas, adding “looping” in other areas, and upgrading four compressor stations. The changes will flow an extra 582 million cubic feet per day (MMcf/d) of Marcellus gas from northeast and southwest PA to “growing demand centers along the Atlantic Seaboard.” Williams is holding two (of four) open houses next week to discuss the project. Below are details about the project and a copy of Williams’ FERC pre-filing application.
We spotted a notice from Energy Transfer, the company building (via its Sunoco Logistics Partners unit) the Mariner East pipeline projects, that seemed odd to us. It was an open season announcement, a time when companies can “sign on the dotted line” to reserve capacity along any of the three pipelines–Mariner East 1 (ME1), Mariner East 2 (ME2), or Mariner East 2X (ME2X). ME1, a repurposed gasoline pipeline built in the 1930s, has been up and running since 2016. ME2 & 2X are due to go online any day now. ME2 and 2X (built side-by-side) are about two years behind schedule. Normally a pipeline company won’t dig one shovelful of dirt or lay an inch of pipeline until/unless customers have already signed up during an open season. And yes, all three pipelines have had open seasons and have signed-up customers eager to use them. So what’s with this new open season? We think we know.
The liberal PA Gov. Tom Wolf administration continues to tinker with (i.e. destroy) the Marcellus miracle in the Keystone State. In August the Wolf Dept. of Environmental Protection (DEP) finally, after years of work, implemented onerous new regulations to cut down on so-called fugitive methane emissions from *new* drilling and pipelines (see 
Yesterday Kinder Morgan, one of (perhaps THE) country’s largest midstream company, issued guidance (their best guess) for how much money the company will make in 2019. Aimed at investors, of course. Usually these types of things are dry as toast, but we happened to notice the third sentence in the update which says Elba Island, Kinder’s LNG export facility on the coast of Georgia, along with the Gulf Coast Express pipeline project, will both enter service in 2019 and will help lead the company to record revenue–about 10% more revenue next year than was generated this year. Which got us to thinking once again about Elba Island, and the Marcellus molecules that will get exported from it. It also reminded us of a recent email exchange we had with a subscriber who swears that LNG shipments are already departing from the facility.