Natural Gas

Tuesday, 06/30/2015

Natural gas exports to Mexico are on a tear, and there’s every reason to believe the market will continue to grow. In essence, parts of the Eagle Ford and Permian Basin are becoming the go-to fuel source for new power plants and industrial facilities south of the border, as evidenced by a Howard Energy Partners plan to build new, connecting pipelines to deliver large volumes of gas directly from South Texas to emerging demand centers in and around Monterrey, Mexico. Howard’s also been addressing some of Texas’s gas gathering and processing needs. Today, we consider the latest plan to add gas pipeline capacity across the Rio Grande.

Sunday, 06/28/2015

One of the most significant events to occur in the U.S. natural gas market this year will be the full-scale reversal of flows in Zone 3 of the Rockies Express Pipeline (REX), and it is right around the corner. The Zone 3 East-to-West Project (E2W) will bring on an incremental 1.2 Bcf/d of westbound capacity, opening the floodgates for Marcellus and Utica producers. As REX touches nearly every part of the US gas market, the expansion will reconfigure continental gas flows and price relationships across multiple regions as it comes online.

Based on conversations last week with our good friends at Tallgrass Energy, the operator of REX, today we bring you the up-to-the-minute scoop on the E2W expansion and other forthcoming changes on the pipeline.

Wednesday, 06/24/2015

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.

Monday, 06/22/2015

Asia for years has been seen as the primary market for U.S.- sourced liquefied natural gas (LNG), and that’s still true today as the first round of U.S. export facilities inch toward completion and operation. But an ongoing upheaval in the international LNG market—and the “destination flexibility” built into most U.S. LNG sales and purchase agreements--suggest that Europe may receive significant volumes of U.S. LNG as well. It’s also possible that U.S. exporters may become “swing suppliers” like LNG trading giant Qatargas, ready to direct LNG-laden vessels across either the Atlantic or the Pacific, depending on where the price is higher. Today, we continue our look at the fast-changing LNG market and what it means to U.S. natural gas producers and LNG exporters.

Sunday, 06/21/2015

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.

Wednesday, 06/17/2015

The six liquefaction “trains” under development at Cheniere Energy’s Sabine Pass liquefied natural gas (LNG) terminal will demand nearly 4 Bcf/d of natural gas on average, the first 650 MMcf/d of that starting within a few months. And the five trains now planned at Cheniere’s Corpus Christi site—yes, now five, not three—will require another 3.2 Bcf/d. Taken together, that’s about 10% of current daily gas production in the U.S.; in other words, a monumental logistical task. Today, we start a series looking at the challenges of securing and moving huge volumes of gas to LNG export terminals, the emerging epicenters of U.S. gas demand.

Tuesday, 06/09/2015

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.

Wednesday, 06/03/2015

RBN analysis of 31 exploration and production (E&P) companies shows sharp differences between two groups of gas-weighted firms. The US diversified group is struggling to increase production, and slashing capital spending in light of weak profitability. Meanwhile, the Appalachian group is flying high as the most profitable classification in our analysis – largely as a result of slashing costs in response to weak natural gas prices. Today we wrap up our three-part analysis of U.S. E&P company’s 2015 outlook.

Wednesday, 05/27/2015

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.

Wednesday, 05/20/2015

Last year at this time (May 2014) the natural gas market was concerned with how depleted US natural gas storage might be by the start of the 2014-15 gas winter season. A short year later, the concern now is how full storage could get before next winter. CME/NYMEX Henry Hub natural gas futures prices for June delivery closed at 2.915/MMBtu yesterday – presumably reflecting a decidedly bearish 2015 supply/demand balance with forecasts predicting summer-ending inventory at upwards of 4.1 Tcf, which would be the highest on record. Today we provide an update on gas fundamentals.

Monday, 05/18/2015

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.

Thursday, 05/14/2015

At a time when market prices have been weakened by a surplus of new natural gas production waiting for demand to develop, Mexico has been stepping up to the plate by increasing imports.  Gas demand for Mexican power generation, industrial use, and commercial and residential space heating continues to increase at a torrid pace south of the Rio Grande, much to the relief of gas producers in the Eagle Ford, the Permian Basin and other U.S. plays within reach of the international border. Today we provide an update on Mexico’s growing dependence on U.S.-sourced gas, and the implications for producers and midstream companies.

Tuesday, 05/12/2015

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.

Wednesday, 05/06/2015

Japan takes up less real estate than California, and South Korea is smaller than Kentucky, but the two Asian nations are giants in the international liquefied natural gas (LNG) market. Their outsized appetite for LNG, combined with their interests in diversifying their sources of gas supply, could provide a major boost to U.S. and Canadian natural gas producers—only, though, if the price is right. Today, we continue our look at the fast-changing international market for LNG, rising Asia demand, and what these changes mean for gas producers and LNG exporters.

Monday, 05/04/2015

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.