Marcellus Stagecoach Sees Record Volumes, Con Ed Wants to Sell

In 2016 Crestwood Equity Partners formed a joint venture with New York City’s largest utility company, Consolidated Edison Inc., to operate a critical link of pipelines and storage facilities in the heart of the Utica/Marcellus, called Stagecoach Gas Services (see Con Ed & Crestwood Seal the Deal on Marcellus Pipeline/Storage JV). Crestwood, which owns and operates midstream businesses in multiple shale plays across the United States, released its fourth-quarter and full-year 2020 update yesterday. The big news (for us) is that Crestwood partner Con Ed is looking to sell its 50% share of the Stagecoach jv.
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Biggest Withdrawal from Underground NatGas Storage in 2 Years

Types of underground natgas storage (click for larger version)

While the weather is, without a doubt, the biggest influence on the price of natural gas, there is another key influence that traders watch closely: storage numbers. Natural gas is stored mainly in large underground caverns during in the “summer” months (called “injection season,” April through October). Natgas is later withdrawn for use during the “winter” months (“heating” or “withdrawal” season, November through March). The U.S. Energy Information Administration (EIA) reports withdrawals for the week ending Feb. 12 were the twelfth largest on record since 2010, and the biggest one-week withdrawal in the past two years.
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Prediction: The U.S. is Heading for NatGas Storage Crisis Next Winter

While the recent spike over the past week in natural gas prices was a fluke, an anomaly due to a rare snow and freezing cold event in the nation’s southwest and Midcontinent regions, the long-term price of natural gas has not moved all that much. The NYMEX futures prices for natgas month by month for the foreseeable future has stayed under or just above the $3/MMBtu mark. Yet we continue to see predictions of alarm that we’re heading for a natgas shortage and with it, a rise in gas prices.
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FERC OKs WV Storage Field to Increase Tariff, Keep More Gas

Here’s an interesting aspect of the natural gas business you may not have heard about before (we hadn’t). As you may know, not all gas produced gets used immediately. Some gas gets stored, typically in underground caverns, and later extracted for use when needed. Buyers (like utility companies) contract with storage fields to park the gas they’ve purchased until they need it. What you may not know is that not 100% of the molecules that go in come back out again.
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Ohio NGL Storage Permit Expires, Builder Says Project Still Alive

Mountaineer NGL Storage is planning to build an NGL (primarily ethane) storage operation in Monroe County, OH, located just across the river (and border) from West Virginia. Last summer David Hooker, president of Mountaineer and president of the parent company Energy Storage Ventures (located in Denver, Colo.) announced the project had received all necessary permits to begin construction, and that construction “could” begin by the end of March this year (see Mountaineer NGL Storage Says Construction Begins in OH 1Q20). One teeny tiny problem. One of the necessary permits needed for the project expired last week. What’s going on?
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EIA Says NatGas in Storage Will Hit Record High Later This Year

Last week MDN told you that our favorite government agency, the U.S. Energy Information Administration, predicts natural gas production from the country’s seven largest shale plays will decrease in March (see EIA: Shale NatGas Production Declines First Time in 39 Months). The trend has reversed and is now heading in the downward direction. Yet this week the same EIA published a post to say natural gas inventories (i.e. storage) will reach a record high later this year. Less production but more storage? How does that work??
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WV Legislature Advances Bill Granting Tax Credit for NGL Storage

Two weeks ago MDN told you about two bills important to the oil and gas industry in West Virginia that are quickly advancing through the state’s current 60-day legislative session (see WV House Advances 2 O&G Bills: Orphan Wells & Faster Permits). You may now add a third bill to the list–one previously not on our radar. House Bill (HB) 4421, called the “Natural Gas Liquids Economic Development Act,” is aimed at providing a tax credit to those who would store or transport natural gas liquids (NGLs).
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NatGas in Storage Really High, Which Means Prices Really Low

Natural gas is one of those commodities that economists consider as close to a “pure” commodity as one can get. Meaning the classic supply and demand curve rules. When you get more supply than you have in demand, the price goes down–along a predictable curve. In the natural gas world, supply signals come from a couple of different numbers. One is overall production. Another is storage–how much natural gas is sitting, unused, in underground storage, put there during summer “injection season” so it can be used during the winter “withdrawal season.” The bad news (for prices) is that with relatively mild temperatures this winter, we are at near-record high storage levels, according to the U.S. Energy Information Administration (EIA).
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Fed Court Rules Columbia has Right to Use OH Gas Storage Field

Medina, Ohio

In a phenomenally complex court case decided last July by the U.S. Court of Appeals for the Sixth Circuit, Columbia Gas (TC Energy) won the right to continue storing natural gas in an underground storage field near Medina, Ohio. The landowners, who claim Columbia owes them (more) money for using the land under their property, appealed the decision to the U.S. Supreme Court. The Supremes turned it down yesterday, meaning the Sixth Circuit ruling stands.
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Did Federal Budget Passed This Wk Torpedo M-U NGL Storage Hub?

Appalachia Development Group is leading an effort to build a ~$10 billion (or $2.5B, or $3.4B, depending on your source) NGL storage hub in Appalachia–most likely in West Virginia (see WV’s US Senators Lead the Charge to Build $10B NGL Storage Hub). The project, called the Appalachia Storage and Trading Hub, needs a federal loan guarantee of $1.9 billion, which has been in the works for the past several years (see Appalachian NGL Storage Hub Gets Serious with DOE Loan Guarantee). The loan guarantee is now in doubt following a budget bill passed by Congress earlier this week.
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PA DEP Targeting NatGas Storage Operators Using Act 13 Law

In October MDN reported that Equitrans (formerly EQT Midstream) had settled an outstanding issue with the Pennsylvania Dept. of Environmental Protection (DEP) over the company’s failure to produce a “verified statement” that proves they have turned over every rock and branch looking for old conventional wells that are not mapped in a natural gas storage field in Greene County, PA (see PA DEP Fines Equitrans $650K for SWPA Gas Storage Field Violation). According to law firm Buchanan Ingersoll & Rooney, gas storage is “no longer under the radar” in PA.
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PA One of Two Finalists for “Massive” Ethane Storage Hub

The Appalachia Development Group (ADG) is leading an effort to build a ~$3.3 billion NGL storage hub in Appalachia. From the start, the thinking has been the storage hub would be located somewhere in West Virginia (see WV’s US Senators Lead the Charge to Build $10B NGL Storage Hub). But what’s this? ADG Chairman and CEO Steven Hedrick, speaking at a conference last week, confirmed potential sites for the project have been narrowed down to two. And one of those sites, according to “sources” (not Hedrick), is located in southwestern Pennsylvania.
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NatGas in Storage Triples from April 1 to October 31

On April 1 of this year the U.S. exited natural gas consumption season (“winter”) with a relatively low value of 1,155 billion cubic feet (Bcf) in storage. Fast forward to October 31 and the end of the injection season, when gas is stored away for the winter months, and that number had soared more than 3X to 3,724 Bcf. Underground storage of natgas as of October 31 was 37 Bcf higher than the previous five-year end-of-October average. The U.S. Energy Information Administration, our favorite government agency, calls this year’s injection season ramp-up pace a “near-record.”
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PA DEP Fines Equitrans $650K for SWPA Gas Storage Field Violation

Equitrans (nee EQT Midstream) owns a natural gas storage field in Greene County, PA, in the southwest corner of the state, called Swarts Field. Natural gas storage fields are an important, but often overlooked, part of the natgas ecosystem. Last December the state Dept. of Environmental Protection (DEP) threatened to shut down Swarts Field because of coal mining in the area, saying Equitrans had not properly mapped old/abandonded conventional gas wells in the area (see PA DEP Threatens to Close Equitrans Gas Storage Field in SWPA). The good news is the DEP threat is now over. The bad news is that Equitrans has to pay a $650,000 fine.
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NatGas in Storage Goes Above 5-Yr Average Pressuring Prices Lower

click for larger version

Storage isn’t as sexy as “fracking” when talking about the natural gas industry. But storage, the amount of gas stored during summer months for use during winter months, is a closely watched number. Last year storage numbers ran below the 5-year average (see EIA: Underground Natural Gas Storage Declined in 2018). If there’s less of a commodity (like natgas) available, given the same or increasing demand, prices will go up. Prices didn’t really go up all that much over the last year because, as we’ve pointed out, the ability of drillers to quickly open the spigots any time they want and let it flow is now a new kind of “storage” (see Utilities Now Depend More on Pipelines, Less on NatGas Storage).
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