Natural Gas

Overview (Wednesday, January 9, 2007 to Thursday, January 16, 2008)

Released: January 17, 2008

Next release: January 24, 2008

 

• Since Wednesday, January 9, natural gas spot prices increased at virtually all markets in the Lower 48 States.  Prices at the Henry Hub rose 35 cents per million Btu (MMBtu), or about 4 percent, to $8.23 per MMBtu. 
• At the New York Mercantile Exchange (NYMEX), the futures contract for February delivery at the Henry Hub settled yesterday (January 16) at $8.133 per MMBtu, climbing 3 cents or less than 1 percent since Wednesday, January 9. 
• Natural gas in storage was 2,691 billion cubic feet (Bcf) as of January 11, which is 7 percent above the 5-year average (2003-2007). 
• The spot price for West Texas Intermediate (WTI) crude oil decreased $4.84 per barrel on the week to $90.80 per barrel or $15.66 per MMBtu.

 

 

Prices:

Natural gas spot prices increased on the week (Wednesday-Wednesday) at all market locations, as colder temperatures increased heating demand for natural gas.  Price increases at most market locations ranged between $0.12 and $1.65 per MMBtu, since Wednesday, January 9.  On a regional basis, prices increased between 4 and 11 percent on average. Plentiful supplies of natural gas in storage and declining crude oil prices likely mitigated the extent of the price increases at many market locations.

 

The largest price increases in the Lower 48 States occurred in the Northeast region where the average price climbed 88 cents per MMBtu or about 10 percent since last Wednesday, January 9, as severe wintry weather gripped the region.  Prices in the region ranged between $8.38 and $10.36 per MMBtu on Wednesday, January 16.  On Tuesday, January 15, prices peaked at the Algonquin citygate, which serves the New England natural gas markets, and at the New York citygate, at $10.96 per MMBtu and $11.32 per MMBtu, respectively.  These increases, while significant, fell far short of matching the price spikes that occurred on January 2, when prices at the Algonquin and New York citygates reached $22.04 and $37.39 per MMBtu, respectively.

 

 

 

 

 

At the NYMEX, while the price of the contract for February 2008 delivery gained 3 cents per MMBtu since last Wednesday, January 9, futures prices for natural gas delivery through February 2009 decreased, with each contract price falling no more than 4 cents per MMBtu,.  Prices for the 12-month futures strip (February 2008 through January 2009) averaged $8.347 per MMBtu as of Wednesday, January 16, declining about 2 cents per MMBtu, or less than 1 percent, since last Wednesday. Overall, the 12-month futures strip traded at a premium of less than 13 cents per MMBtu relative to the Henry Hub spot price.

 

Recent Natural Gas Market Data

 

 

Storage:

Working gas in storage was 2,691 Bcf as of Friday, January 11, which is 7 percent above the 5-year average inventory level for the report week, according to EIA’s Weekly Natural Gas Storage Report (see Storage Figure).  At 2,691 Bcf, working gas stocks were 258 Bcf below the 2,949 Bcf in storage at this time last year but exceeded the 5-year average by 168 Bcf. 

 

Net withdrawals from working gas storage were relatively modest compared with historical levels. The net withdrawal from working gas storage of 59 Bcf is 43 percent less than the 5-year average of 105 Bcf and 29 percent less than last year’s net withdrawal of 83 Bcf for the same report week.  These differences likely reflected the heating demand for natural gas as heating degree-days in the Lower 48 States were well-below normal levels during the report week (see Temperature Maps and Data).  Although aggregate heating degree-days this week were at roughly the same level reported last year at this time, stocks entering the comparable week last year still exceeded 3,000 Bcf, which is a record for the period and almost 300 Bcf more than this year’s level.  Overall, gas-weighted heating degree-days were 32 percent below the normal level for the Lower 48 States.  All Census Divisions in the Lower 48 States posted warmer-than-normal temperatures, except for the Pacific Census Division where temperatures were 6 percent colder than normal.  In the Middle Atlantic, New England, East North Central, and West North Central Census Divisions, which are intensive gas-consuming areas, heating degree-days ranged between 28 and 43 percent below normal for the report week.

 

 

 

   

 

Other Market Trends:

EIA Submits New Survey for OMB Review and Requests Comments: The Energy Information Administration (EIA) published a Federal Register (FR) notice on January 15, in which it is requesting comments on the “Natural Gas Processing Plant Survey,” Form EIA-757. EIA also has submitted the survey to the Office of Management and Budget for review and a 3-year approval. The purposes of the survey are to collect information and to produce reports about the operational status of processing plants in the United States, to improve public understanding of their production capacities and operating levels, and to monitor constraints resulting from natural gas supply emergencies. Form EIA-757 consists of two parts. Schedule A, “Baseline Report,” will be used to collect baseline information as frequently as every 3 years. The information will be used for periodic reports and to develop the survey frame for Schedule B, “Emergency Status Report,” which will collect information about operating levels, damage, and recovery of operations in the event of a supply emergency. EIA requests that comments be submitted by February 14.

 

Natural Gas Transportation Update:

• Rockies Express Pipeline LLC’s (REX) West gas transportation system began interim service on January 12 with capacity of about 1.4 billion cubic feet (Bcf) per day. The 500-mile section runs between the Cheyenne Hub in Weld County, Colorado, to the ANR Pipeline delivery point in Brown County, Kansas, and includes delivery points with pipeline systems owned by Kinder Morgan Interstate Gas Transmission, Northern Natural Gas Company, and Natural Gas Pipeline Company of America. The remaining 213 miles of the REX-West, which are expected to come online in early February, will continue to Audrain County, Missouri, and will increase the capacity to 1.5 Bcf per day.

 

• Florida Gas Transmission Company (FGT) announced that it will be performing maintenance on the Port Barre Compressor Station Number 75 in St. Landry Parish, Louisiana, on January 22 and 23. During the outage, volumes will be limited to 700,000 MMBtu per day through the compressor station. Under normal operating conditions, FGT accepts up to 1 million MMBtu per day through the compressor station.

 

• Mississippi River Transmission Corporation (MRT) implemented a system protection warning (SPW) for gas day Monday, January 14. The pipeline cited cold weather conditions and low East Line supply nominations as the cause for the SPW. While the SPW was in effect, MRT did not schedule any Main Line interruptible transportation volumes north of Glendale, Arkansas, and firm transportation volumes were limited to their primary direction of flow.

 

• Gulf South Pipeline Company began unscheduled maintenance on Marksville Compressor Station Unit Number 2 in Louisiana on January 14, which is expected to last until January 21. Capacity through Marksville will be reduced by 150,000 decatherms (Dth) during the maintenance. The pipeline also announced that it is performing unscheduled maintenance on Carthage Junction Compressor Station in east Texas between January 14 and 17, during which capacity through the station could be reduced by 75,000 Dth.

 

• Southern Natural Gas Company issued a Type 3 operational flow order (OFO) for the Savannah Line and Cypress Delivery Group in Georgia. The OFO, which carries a $15 per Dth penalty for excess deliveries of 102 percent of daily entitlement, went into effect on January 14 and will remain in place until further notice. Both Savannah Line and the Cypress Delivery Group deliver natural gas from the Elba Island LNG terminal in Georgia. The Savannah Line connects to, among others, Atlanta Gas Light, while the Cypress Delivery Group transports natural gas onto the FGT system at three different Jacksonville, Florida, interconnects.

 

 

 Short-Term Energy Outlook