High NatGas Storage Report Fails to Move NYMEX Price Lower
It has been a wild ride on the NYMEX natural gas futures roller coaster this week. Record highs and record drops. Natural gas shortages in Europe and Asia are forcing prices to spike in the U.S. Yesterday the U.S. Energy Information Administration (EIA) reported a “very ugly” (as in high) storage report of 118 Bcf (billion cubic feet) of natural gas injected last week, which was 10 Bcf higher than most experts thought it would be–and yet all that extra supply didn’t move the needle on the NYMEX price which closed the day even from the day before, closing at $5.68/MMBtu.
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The Natural Gas Supply Association (NGSA) released its Annual Winter Outlook yesterday. In comments made during a presentation to the press, NGSA Chairman David Attwood said he expects U.S. shale producers to come off the sidelines in response to the highest natural gas prices in nearly a decade. That’s good news. “I firmly believe the market works,” Attwood said in response to a question made by the press during the presentation. “There is no doubt the market is giving strong signals for production to increase. That supply is there and will come and meet the demand,” added Attwood.
Looks like the union bosses, who never suffer as the rank and file do, have been bought off by a band of sleazy Democrats in Congress. A group of Dem Senators, including the bumbling Sen. Bob Casey from Pennsylvania and the shameful Sherrod Brown from Ohio, have introduced a bill laughingly called the “American Energy Worker Opportunity Act” to substitute low-wage government welfare for high-paying jobs in the fossil fuel industry. Metaphorically the bill says “Here’s a Yugo to replace your Chevy Tahoe, now sit down, shut up, and be happy with it–because your sacrifice saves the planet.” Will rank and file union members actually fall for it? Will they trade $40/hour jobs in the oil and gas industry for minimum wage jobs installing solar panels plus food stamps? That’s the deal on offer from the Dems.
Although the U.S. is a big and getting bigger exporter of natural gas, it’s not the biggest exporter of natgas in the world. The distinction of being the biggest exporter of natgas in the world goes to Qatar. Saad al-Kaabi, Qatar’s Energy Minister and CEO of Qatar Petroleum, said yesterday natural gas prices have reached “unhealthy levels” for both producers and consumers. Asia’s spot LNG prices soared by 40% on Wednesday as a cargo for delivery into North Asia in November was priced as much as $56/MMBtu–a record high that beat the previous record from last week of $34.52/MMBtu.
You could see it coming for the past year or more. Free speech is under attack in the United State. The Marxists at Google, Inc. are now full-on, anti-First Amendment. There is no free speech in the Googleverse. Yesterday Google announced a new policy that disallows (turns off) advertisers, publishers, and YouTube creators’ ability to monetize content that denies the existence of climate change. Even if you supply data as proof of your view (see 
MARCELLUS/UTICA REGION: Energy Transfer says Penn. Access refined products pipe is complete; NATIONAL: Wrightstone: No climate crisis, no need for $3.5 trillion; Commonwealth LNG in late-stage talks with customers for US project; US weekly LNG exports grow week over week; US shale discipline a win for shareholders, a loss for motorists; How big a role will hydrogen play in transportation?; INTERNATIONAL: Oil market needs $500B+ injection to ensure supply; Russia says Berlin could ease natural gas crisis by approving Nord Stream 2.
On August 30, the Ohio Department of Natural Resources (ODNR) issued permits to Powhatan Salt Company/Mountaineer NGL Storage for three planned solution mining wells in Monroe County. The three salt caverns will store NGLs (natural gas liquids, mainly ethane) to potentially be used by ethane crackers including the Shell cracker near Pittsburgh and potentially a second ethane cracker proposed by PTT Global Chemical in Belmont County. The salt caverns can also be used to store hydrogen (H2).
Hold on–it’s a wild ride! Natural gas reaches a record high two days ago, only to be followed by an 11% drop the very next day. Comments by Russian dictator Vladimir Putin sent the U.S. NYMEX natural gas price down 11% in one day. Yeah, just a stray comment by old Vlad had massive power over *our* natural gas market. How? Putin publicly stated he’s going to open up the taps and flow more gas to Europe. What a guy–Europe’s savior.
Prices for natural gas along the U.S. Gulf Coast may not, on the surface, have much to do with the Marcellus/Utica–but they do. The price gas is selling for along the Gulf Coast is important because M-U molecules flow to that region to feed petrochemical plants and (more importantly) LNG export facilities. S&P is reporting even though there’s been a big storage build along the Gulf Coast for natural gas, prices remain extremely high in the region. Why? LNG exports…
Sand is big business. Just ask U.S. Silica, the largest proppant/sand provider for the oil and gas industry. Sand, as you may know, is used in fracking new shale wells. LOTs of sand is used. Sand (and alternatives like synthetic beads) is called “proppant” because it’s mixed with water, blasted into cracks in shale rock, and when the water returns to the surface the sand remains behind in the cracks and “props open” the tiny cracks to allow oil and gas to escape. The biggest such sand company in the country, U.S. Silica, announced yesterday that it is exploring separating the company’s non-oil & gas division into a separate company and selling it.
The prospect that the federal government may soon lavish trillions of dollars on the states (the Dems’ way of buying votes with the unfortunate result of causing hyperinflation) has states, especially those with Democrat governors, salivating. Pennsylvania Gov. Tom Wolf is positively giddy at the prospect. Tommy has talked to his good buddy Patty (McDonnell, Secretary of the Dept. of Environmental Protection) about all the gajillions of dollars that will flow to the Keystone State when Biden and the Dems finally (someday) pass their budget-busting bills. McDonnell has some plans for some of that money. He is beginning to recruit companies to help plug old abandoned oil and gas wells across the state.
Even the Joe Biden-controlled U.S. Energy Information Administration (EIA), which remains our favorite government agency although it’s now tainted with Bidenistas, can’t cover up the truth. The truth is this: By 2050 the world’s energy supplies will still mostly come from fossil fuels. The latest annual International Energy Outlook for 2021 issued by the EIA yesterday shows by 2050 so-called renewables (solar, wind, hydro) will provide around 27% of the world’s energy, nuclear another 3%, and the rest–coal, oil, and natural gas–will provide 70% of the world’s energy. Can we once and for all drop this idiotic meme that “renewables” are about to replace fossil fuels “in the next few years”?
Yesterday as Pennsylvania Attorney General Josh Shapiro falsely accused Energy Transfer (ET) of “crimes” while building the Mariner East 2 (ME2) pipeline, another bit of news about ME2 played out in the state’s court system. The PA Supreme Court agreed to hear a case in which several Big Green groups and a long-time anti-fossil fueler are demanding ET pay them back for legal fees in a lawsuit initiated by them against ET, a lawsuit they ultimately lost. Talk about arrogant.
Natural gas futures jumped to the highest settlement price in 12 years–$6.31/MMBtu–as global gas supply shortages stoke concerns about U.S. shortages coming this winter. Spot prices for physically traded gas also jumped yesterday. The NGI Spot Gas National Avg. was up another 32.0 cents to $5.970. Overall production dipped a bit yesterday helping to feed the fears.