April 7, 2018 – Natural Gas Intelligence
April Cold Helps Boost NatGas Futures, But Production Seen Outpacing Demand
By Jeremiah Shelor
Forecasts for yet more April cold helped natural gas futures tick higher Friday as surging production was seen limiting upside heading into the shoulder season. In the spot market, prices in the Mid-Atlantic rose ahead of a cold front expected to sweep through over the weekend as points in the West retreated; the NGI National Spot Gas Average slipped 4 cents to $2.88/MMBtu…
Read the full article here: http://www.naturalgasintel.com/articles/113960-april-cold-helps-boost-natgas-futures-but-production-seen-outpacing-demand
…Further upstream, Rockies prices dropped almost across the board. Cheyenne Hub fell 15 cents to $2.08, while Opal gave up 18 cents to $2.00.
“Efforts to increase natural gas production in the Rockies are running into a brick wall -- make that several brick walls,” RBN Energy LLC analyst Housley Carr said in a recent note. “To the east, burgeoning gas production in the Marcellus/Utica shale region is surging into Midwest markets, pushing back on Rockies gas supplies. To the south, Permian gas production is ramping up toward 8 Bcf/d, most of it associated gas from crude-focused wells--volumes that will be produced even if gas prices plummet.
“To the west, Rockies gas faces an onslaught of renewables in power generation markets, where wind and solar are increasingly replacing gas-fired and coal generation, especially during nonpeak periods when the sun is shining and the wind is blowing,” Carr said. “To the north, Western Canadian producers facing a where-do-we-send-our-gas problem of their own” will be looking to take advantage of recently increased pipeline capacity.
Considering competition from hydro and wind/solar generation, competition from Western Canada and import and storage restrictions for Southern California Gas Co., among other factors, “you have a 2018 recipe for lower Western gas demand, more volatile gas prices and generally wider basis compared to Henry Hub,” according to Carr. “None of this bodes well for the Rockies, and the mid- to longer term it is only going to get worse.”
