Canadian Gas

CME/NYMEX Henry Hub natural gas futures prices for August delivery continue to trail $1.50/MMBtu behind year-ago levels and natural gas production volumes show little sign of softening. Gas demand is rallying to record-setting levels and the balance is tightening. But there is still a long way to go before the storage inventory surplus is reined in. Today we revisit supply/demand balance and its impact on storage this summer.

The U.S. Northeast natural gas market thus far has been able to offset local production growth primarily by pushing out supply from other regions.  But recent trends in pipeline flows suggest that for the first time, net flows into the Northeast will fall to zero this summer, marking the end of displacement. Meanwhile, regional natural gas production could be as much as 4 Bcf/d higher this summer than last. The result could put this summer’s prices in a precarious position further challenging producers suffering in an oversupplied market. . Today’s blog looks at recent trends in Northeast flows and implications for prices this summer.

The Jordan Cove LNG project in coastal Oregon is the first “greenfield” US LNG export project—and the first on the West Coast--to win the Department of Energy’s approval to export to non-Free Trade Agreement (FTA) nations. That approval is critical for an LNG exporter focused on Asian markets, because the only FTA countries in that region are South Korea and Singapore. But can Jordan Cove compete with Sabine Pass and other Gulf Coast projects with existing LNG tankage and therefore lower capital costs? Today we consider the economics behind the project.