So far this winter, front-month CME/NYMEX natural gas futures have fallen, risen and fallen again but, until their most recent dip, generally remained within the same $2.30-to-$3.30/MMBtu range where they have been lingering since mid-2023. With production sustaining near-record levels, LNG export volumes down from the winter highs, and temperatures back to normal, the supply of gas remains plentiful — a bearish scenario. In today’s RBN blog, we look at why there’s been a lid on natural gas prices — and the odds that the situation might change before the rapidly-approaching end of the winter season.
LNG exports have been the main driver of increased demand for U.S.-produced natural gas over the past decade, and the next tranche of planned facility builds has been hotly anticipated by producers. However, while producers once hoped that the upward march of demand would resume in 2024, they must now wait until 2025 before seeing substantial increases. Golden Pass LNG in southeastern Texas, the Qatar Energy/ExxonMobil project that had been expected to start up in late 2024, now won’t be coming online until early 2025 and the market will likely need to wait until at least November of this year before Venture Global’s Plaquemines LNG in southeastern Louisiana begins taking feedgas.
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Despite the lag in incremental LNG demand, gas production inched steadily higher throughout last year, rising from an average of 100.8 Bcf/d in January 2023 to 105.9 Bcf/d in December. This rise occurred across many producing regions. Permian Basin production led the charge, surging from an average of 16.2 Bcf/d in January to 18.2 Bcf/d in December — a jump of more than 12%, accounting for about two-fifths of the overall increase in the Lower 48. Although crude prices have receded from the highs of 2022, WTI futures remained above $70/bbl for most of the past year, which has been enough to keep production in the crude oil-focused Permian healthy. New gas pipeline capacity helped out: historically, Permian gas production has often been constrained by limited takeaway capacity to markets (see Some Beach, Part 2), so the recent capacity additions on Kinder Morgan’s Permian Highway Pipeline (PHP) and WhiteWater Midstream’s Whistler Pipeline abetted the increase. Similarly, we expect Permian production to have a banner year in 2024 as the 2.5 Bcf/d multi-owner Matterhorn Pipeline enters service, enabling even more gas to be transported to market.
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About the song
“Heat of the Moment” was written by John Wetton and Geoff Downes. It appears as the first song on side one of Asia’s debut album, Asia. Asia songwriter and lead vocalist/bassist John Wetton said, “The lyrics are an apology for my dreadful behavior toward a particular woman.” Released as the first single from the album in April 1982, it went to #1 on the Billboard Mainstream Rock and #4 on the Billboard Hot 100 Singles charts. Personnel on the record were: John Wetton (lead vocals, bass), Geoff Downes (keyboards, backing vocals), Steve Howe (guitar, backing vocals), and Carl Palmer (drums percussion).
The album, Asia, is the debut LP of the English supergroup Asia. Recorded between June and November 1981 at Marcus Recording and The Town House in London, the LP was produced by Mike Stone, whose previous work with Journey was admired by the band. The album’s cover artwork was done by Roger Dean, well-known for his cover artwork for Yes (Howe and Downes were previously in Yes). Released in March 1982, the album went #1 on the Billboard 200 Albums chart and has been certified 4x platinum by the Recording Industry Association of America. Three singles were released from the LP.
Asia is an English supergroup formed in London in 1981. The band is made up of four former members of successful prog-rock groups from the 1970s. Lead vocalist/bassist John Wetton had been in King Crimson, Uriah Heep, and (the band) U.K.; guitarist Steve Howe had been in Yes and Tomorrow; keyboardist Geoff Downes had been in Yes and The Buggles; and drummer Carl Palmer had been in Emerson, Lake & Palmer. They have released 13 studio albums, 35 live albums, 13 compilation albums, two EPs, and 23 singles. Seventeen musicians have passed through the ranks of Asia since its formation. Founding member John Wetton died in January 2017 at the age of 67. The current group, comprised of Geoff Downes (Keyboards, backing vocals), Harry Whitley (lead vocals, bass), John Mitchell (guitar, backing vocals), and Virgil Donati (drums), continues to tour.
"About the Song" -- written by Mickey McMahan , RBN Director of Musicology
