Daily Energy Blog

The past 10 years have been challenging, to say the least, for Western Canadian natural gas producers, and the situation may not get better any time soon. Squeezed out of many of their traditional markets in eastern Canada and the U.S. Midwest and Northeast and stymied by delays in the development of West Coast liquefied natural gas (LNG) export projects, producers in Alberta and British Columbia have been suffering from lower prices and searching for new outlets for their gas. Alberta’s oil sands and power generation sectors will help, but the big fish producers need to land is LNG exports. Today, we consider recent developments in a region long on natural gas reserves but short on gas buyers.

The biggest fundamental price indicator in the natural gas market -- Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report – is about to get a major makeover. The EIA is planning to split the US gas inventory data into five regions, from three macro regions currently. The idea has been floating out there for a while, but now it looks imminent, with a good chance it is rolled out before the gas winter season comes around in November. When it does happen, the increased granularity will vastly improve the transparency of natural gas storage inventory data on a weekly basis. But there’s another reason it will be a big deal when it happens:  It will break everybody’s storage scrapes and models. Storage modelers and forecasters will have their work cut out for them. In today’s blog, we break down the upcoming changes.

As natural gas takes on an ever-expanding role in Asian energy markets, the traditional practice of sourcing liquefied natural gas (LNG) through long-term, “point-to-point” supply deals at oil-indexed prices is being challenged on several fronts. For one, U.S. exporters are linking the price of their LNG to Henry Hub gas prices. For another, Asian LNG customers, eager to reduce costs in a suddenly glutted LNG market, are working to renegotiate their oil-linked deals, and turning to the LNG spot market, where prices have been attractively low. Fast-changing market dynamics include planned gas pipelines from Siberia to China that may well make the Asian LNG market more like Europe, where LNG competes head-to-head with piped-in gas and with coal. Today, we continue our look at the changing international market and what it means for U.S. and Canadian gas producers and LNG exports.

Asian consumers of liquefied natural gas (LNG) hope to use the current supply glut—and the start-up of U.S. LNG export facilities--to their long-term advantage. Their very understandable goal is to up-end the old market structure, which for years has had them paying far more for LNG than their Western European counterparts. How will the coming revolution affect U.S. natural gas producers and the next round of U.S. LNG export projects? Today, we continue our review of the fast-changing global market for LNG with a look at a new set of Asian LNG buyers and at the region’s fast-changing supply/demand dynamics.

Producers in the Marcellus and Utica shale plays could be moving a lot more natural gas into New England, if only there was enough pipeline capacity to get it there. An increasingly gas-hungry neighbor to the nation’s most prolific production area, New England has added precious little capacity to transport gas, and the fates of game-changing pipeline projects that have been proposed hang in the balance. The region’s unique gas-delivery challenges, their market impacts and possible solutions are the subject of RBN Energy’s newly released Drill Down report, “Please Come To Boston—New England’s Ongoing Gas-Supply Dilemma”. Today, we provide a preview, and highlight some of the report’s findings.

The latest Energy Information Administration (EIA) Drilling Productivity Report projects natural gas production in the Marcellus and Utica up 170 MMcf/d  in April, and forecasts growth of another 150 MMcf/d in May and June to average about 3.8 Bcf/d higher in Q2 than in the same period last year. While there is talk of deferred well completions and shut-ins, it has yet to translate to a slowdown in production volumes in the Northeast region. Our analysis suggests that barring record-high demand, the region will struggle to balance growing supplies this summer with potentially dramatic consequences for prices Today we conclude our analysis of the Northeast gas supply/demand balance.

A key supply/demand balancing mechanism in the U.S. Northeast natural gas market – displacement of flows – is about to be history, at least in the summer months. With regional supply close to 4 Bcf/d higher year-over-year and now fewer options for offsetting the supply growth, the region faces significant downside risk for prices and even production this summer. The question is, can regional storage, demand and outflow capacity help prevent a widespread summer 2015 supply glut? Today we look at prospects for balancing the surplus in the region, starting with storage and demand.