August 1, 2018 – Natural Gas Intelligence
Production Overshadowing Lean Storage, Heat in August Natural Gas Bidweek
By Jeremiah Shelor
With only a few months of injections left, steep natural gas storage deficits remain in key regions, but with production setting records and trending higher, prices haven’t responded.
Read the full article here: http://www.naturalgasintel.com/articles/115273-production-overshadowing-lean-storage-heat-in-august-natural-gas-bidweek
In August bidweek trading, prices generally moved lower throughout the Gulf Coast and Texas, tracking closely with Henry Hub. Houston Ship Channel averaged $2.85, down 16 cents m/m, while Tennessee Line 500 gave up 17 cents to $2.75.
West Texas bidweek prices strengthened but still traded well back of Henry as the region manages surging production and takeaway constraints. Waha added 7 cents m/m to $1.83.
In South Texas, Tennessee Zone 0 South dropped 17 cents to $2.66.
Infrastructure additions helped drive an increase in pipeline exports to Mexico in July, according to RBN Energy LLC analyst Sheetal Nasta.
“After idling near the 4.6 Bcf/d level for months, piped gas flows to Mexico raced to a record of more than 5 Bcf/d for the first time earlier in July, and have hung on to that level since,” Nasta said. “This new export volume signifies incremental demand for the U.S. gas market at a time when the domestic storage inventory is already approaching the five-year low.
“At the same time, it would also signify some much-needed relief for Permian Basin producers hoping to avert disastrous takeaway constraints -- that is, if the export growth is happening where it’s needed the most, from West Texas.”
While exports from the Desert Southwest and Waha have contributed to the recent record-level flows across the southern border, “the biggest bump this month has come from South Texas, where more capacity was added recently on the U.S. side,” Nasta said.
Exports out of South Texas had leveled off at around 3.5 Bcf/d since December, “until July, when flows rose to nearly 3.7 Bcf/d, with increases on Kinder Morgan’s Border Pipeline as well as on NET Mexico,” Nasta said. “...Capacity on the Mexico side also got a boost from the new 600 MMcf/d Nueva Era Pipeline.”
