natural gas

Thursday, 01/21/2021

In the past few years, the Netherland’s Title Transfer Facility (TTF) overtook the UK’s National Balancing Point (NBP) to become the premier gas trading hub in Europe. TTF has gained favor over NBP largely due to its location closer to more markets, supply pipelines, plentiful storage, and also the Netherlands’ Gate LNG import terminal, which has become paramount given Europe’s growing need for imported gas. As imports have grown, so has TTF in terms of its volume and its liquidity — a trend that is expected to continue as the European gas market evolves. TTF now shares the stage with Henry Hub and the Japan Korea Marker (JKM) as one of the key global benchmarks for LNG and natural gas. Though traders use TTF as a price index for LNG, much like its cross-Atlantic peer, Henry Hub, TTF is also heavily influenced by regional pipeline gas and storage levels. Today, we’ll look at the history of Europe’s premier natural gas index and the fundamentals affecting it. 

Wednesday, 01/20/2021

There are no absolute certainties in the energy industry, but one thing a lot of people are betting on is increasing demand for LNG in Asia. A long list of countries there — China, Japan, and South Korea among them — have been shifting from nuclear and coal-fired power generation to natural gas, and as they do, their demand for LNG will be mind-blowing. The U.S. has emerged as a major supplier, but shipping LNG from the Gulf Coast to Asia involves either transiting the busy and costly Panama Canal or taking much longer routes through the Suez Canal or around the Cape of Good Hope. All of that has helped spur interest in developing LNG export terminals in western Mexico that would pipe in and liquefy Permian gas, then ship it straight across the Pacific Ocean. Today, we discuss plans for a large-scale liquefaction/export project aimed squarely at Asian buyers.

Sunday, 01/17/2021

If you are looking for a way to focus on 2021 without reflecting on the last 12 months, we might have a deal for you. That’s because Permian natural gas and oil production is starting off this year at levels very close to where they finished 2019. That’s right: as far as the Permian is concerned, you can almost skip entirely over 2020 and pick up right where we left off the prior year. Well, for the most part. Oil prices are lower, rig counts have been reduced, and industry consolidation has removed some of the familiar Permian names from the stock ticker. In general, the atmosphere out in West Texas has calmed down dramatically from the headiest days of Permian growth and it’s safe to say it’s easier to grab lunch in Midland these days. Does that mean things in the basin aren’t still interesting out there? If you ask us, the answer is a resounding “No!” For starters, growth is back in the basin, even if it is at a slower pace than in 2019, and natural gas prices are stronger, with negative-price trades a thing of the past thanks to new pipelines. Even crude prices are better than some might think, with Permian barrels pricing over Cushing for many months now. The Permian in 2021 is certainly a half-empty or half-full type of market. We go for the latter in today’s blog, in which we outline our view of production growth in West Texas this year.

Sunday, 01/10/2021

Much the way that COVID-19 accelerated the trends toward working from anywhere, shopping online, and exercising at home, the pandemic and its far-reaching energy-market effects fast-forwarded the challenges that many North American midstream companies had been expecting to face more gradually through the 2020s. The good news — if you can call it that — is that a lot of economic pain was front-loaded into the past 10 months. The bad news is that a sizable subset of midstreamers is saddled with too much capacity in shale basins where drilling activity and production are down sharply. For them, there’s still more pain ahead, even bankruptcy in a few cases. In today’s blog, we discuss highlights from the newly released 2021 edition of East Daley Capital’s Dirty Little Secrets report about what’s ahead for the midstream sector and 27 leading companies within it.

Thursday, 01/07/2021

If you are looking for a way to focus on 2021 without reflecting on the last 12 months, we might have a deal for you. That’s because Permian natural gas and oil production is starting off this year at levels very close to where they finished 2019. That’s right: as far as the Permian is concerned, you can almost skip entirely over 2020 and pick up right where we left off the prior year. Well, for the most part. Oil prices are lower, rig counts have been reduced, and industry consolidation has removed some of the familiar Permian names from the stock ticker. In general, the atmosphere out in West Texas has calmed down dramatically from the headiest days of Permian growth and it’s safe to say it’s easier to grab lunch in Midland these days. Does that mean things in the basin aren’t still interesting out there? If you ask us, the answer is a resounding “No!” For starters, growth is back in the basin, even if it is at a slower pace than in 2019, and natural gas prices are stronger, with negative-price trades a thing of the past thanks to new pipelines. Even crude prices are better than some might think, with Permian barrels pricing over Cushing for many months now. The Permian in 2021 is certainly a half-empty or half-full type of market. We go for the latter in today’s blog, in which we outline our view of production growth in West Texas this year.

Tuesday, 01/05/2021

Canada’s natural gas market has been a source of tremendous interest to us at RBN. Last year, demand for gas in Alberta’s oil sands sector plummeted, inventories experienced record highs, yet prices remained remarkably healthy. But how can we know all that? From a data perspective, Canada’s natural gas landscape can be confusing and frustrating. Different units of measure and currencies, limited or no data coverage for important fundamental components, and numerous statistical agencies that organize and report the data in different ways just create further complications. But this data still needs to be tracked given the impact that Canadian gas production, demand, and storage levels can have on the U.S. market — and vice versa. Having all that vital Canadian gas data in one convenient package, along with some great analysis, sure would make life easier. Today, we discuss recent developments on the Canadian gas data front and why Canadian NATGAS Billboard would be a worthy addition to your analytic needs. Warning! Today’s blog is a blatant advertorial for an RBN product.

Sunday, 01/03/2021

Welcome to 2021! We finally have that train wreck of a year 2020 behind us, and it’s time to look forward.  At RBN, we have a long-standing tradition of doing just that in our annual Top 10 Energy Prognostications, where we lay out our expectations for the most important developments for the coming year. But how is that possible amid the chaotic market conditions still ahead? So much has changed, so many market factors have been disrupted, and so few guideposts remain unscathed, there is just no way to predict what is going to happen next, right? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2021 has in store.

Thursday, 12/31/2020

Whew. We made it! 2020 is finally in the rear-view mirror. And with the New Year, it’s time for the annual Top 10 Energy Prognostications blog, our long-standing RBN tradition where we lay out the most important developments we see for the year ahead. Unlike many forecasters, we also look back to see how we did with our predictions the previous year. That’s right! We actually check our work. Usually we roll our look back and prognostications for the upcoming year into a single blog. But after the mayhem of 2020, and considering how that upheaval has changed the landscape for 2021, this time around we are splitting our prognostications into two pieces. Monday’s blog will look into the RBN crystal ball one more time to see what 2021 has in store for energy markets. But today we look back. Back to what we posted on January 2, 2020.

Wednesday, 12/30/2020

Well, here we are. The last day of 2020. We are tempted to say “unprecedented” to describe the year. But the word is so overused — there’s been an unprecedented use of the word “unprecedented” — let’s just say it will be good riddance to have this one behind us. After all, we’ve seen a collapse in transportation fuel demand, an oil price war between major producers, negative $37/bbl crude prices, massive LNG cargo cancellations — the list goes on — all in the context of a global pandemic and much of the world committed to weaning itself off fossil fuels over the next few decades. How do you make sense of all that? How do you anticipate when it’s going to be “all right” again? Well, one thing we can do is to heed the events and trends that captured the market’s attention during all this chaos. In other words, to put a spotlight on the things that the market considers top priority — crowd-sourced market intelligence, if you will. Well, at RBN we have one way to do that. We scrupulously monitor the website hit rate of the RBN blogs that are fired off to over 30,000 people each day and, at the end of each year, we look back to see which topics generated the most interest from you, our readers. That hit rate reveals a lot about major market trends. So, once again, we look into the rear-view mirror to check out the Top 10 blogs of the year based on the number of rbnenergy.com website hits.

Tuesday, 12/29/2020

Talk about whiplash! Not that long ago, the global LNG market was reeling from the effects of the pandemic: stunted demand, severe oversupply, brimming storage, and record low prices, all of which led to a squeeze on offtaker margins and mass cancellations of U.S. cargoes. Within a matter of months, however, the market has done a 180. Global supply has tightened significantly as cargoes can’t get delivered fast enough, and international LNG prices are near two-year highs. U.S. LNG exports and domestic feedgas demand are at record highs in December, for the second straight month. That’s not to say U.S. LNG producers and the domestic gas market are out of the woods. Cancellations are rearing their heads again — not because the demand isn’t there, but because of logistical constraints and a severe vessel shortage, which are injecting more uncertainty into the market. Today, we provide an update on domestic LNG exports and the immediate factors driving them.

Monday, 12/28/2020

Canadian natural gas storage levels finished the most recent injection season at a record high. With what has been a fairly mild start to the heating season so far in North America, you might be tempted to think that Canadian storage levels would have been slow to draw down. On the contrary: so far, gas is being withdrawn from storage more quickly than might be expected from the winter weather alone, partly because of structural developments that have been emerging in the Canadian market. And these changes will help to draw storage levels down closer to historical averages by the end of the current heating season in March 2021. Today, we consider these structural changes and what the current heating season might have in store for the Canadian gas market.

Thursday, 12/24/2020

To succeed over the long term in the music business, professional sports, or the midstream sector, you need to learn from your successes and failures, and — most important — continue adapting and evolving. For many North American midstreamers, a key to success has been a thoughtful combination of expansion and diversification, plus an affinity for financial discipline, especially when the broader energy industry is going through tough, uncertain times. A prime example of that strategy is Canadian midstreamer Pembina Pipeline Corp., which after C$14 billion in acquisitions over the last four years is instituting a more cautious approach to new investment that’s largely based on self-funding and a new, more rigorous return criteria for new projects. Today, we preview our new Spotlight report, which focuses on the risks and rewards of Pembina’s new strategy.

Monday, 12/21/2020

No one could’ve seen the energy market disruptions of 2020 coming, and most of us are ready to write off what has been one of the most challenging years the industry has seen in a long time. Yet the events of the past year will most certainly define what unfolds in the New Year and beyond. To make sense of what 2020 will mean for the post-COVID era, we retooled and refreshed our models and forecasts to tackle the hard questions facing U.S. crude oil, natural gas, and NGL markets. As it turns out, beyond the immediate chaos of the pandemic, there is a new order taking shape, and that’s what we laid out in the RBN Fall Virtual School of Energy, sharing our results and the Excel spreadsheets behind the models to get you ready for what’s coming. Some of what we expected has come to fruition, and we still think that there is a pretty good chance that the rest will unfold in the months and years ahead. If you weren’t able to join us for the live broadcast, we invite you to sit by the fire, put your feet up and dig in over the holidays. The entire 14+ hours of streaming content, plus slide decks and spreadsheets, are available online. Today’s advertorial blog provides highlights from our key findings and the overall conference curriculum.

Monday, 12/14/2020

Natural gas economic shut-ins! Shutting off a producing well on purpose, because the market won’t take the produced volume at a reasonable price. There was a time, back before gas commodity decontrol, when shut-ins were standard operating procedure, but that practice went the way of the dodo bird 40 years ago. Until earlier this year that is, when amid crushingly low prices, Appalachian producers said: enough is enough — and shut off the spigot themselves. In the months that followed, various producers have continued to see-saw their production in response to weather-related demand and regional market prices. The behavior signals that Appalachia’s shale gas producers are increasingly employing a light-switch approach in dealing with short-term weakness in demand and prices. Today, we take a closer look at the price-driven curtailments in the Northeast and potential implications for the market.

Wednesday, 12/09/2020

Closing midstream deals has been a bit of a challenge in 2020, to say the least. In fact, this has been a year when many projects have been sidelined or cancelled outright, with most decisions on even the best prospects getting pushed to next year. But it hasn’t been all bad news. In a few cases, assets with advantages have made it across the finish line, even in the land of liquefied natural gas (LNG) export projects. Despite this summer’s collapse in U.S. LNG exports, driven by a compression of the spreads in global gas prices, Sempra Energy recently announced that it is going ahead with Phase 1 at its Costa Azul liquefaction project in Mexico’s Baja California. How did they pull this off in such a tumultuous year? Well, Costa Azul isn’t your everyday LNG export project. Today, we detail the most recent U.S. LNG export project to receive a final investment decision (FID) to proceed.