NYMEX natural gas closed up again today at $2.767. Its now 26 percent higher than it was two weeks ago. Will recovering prices be reflected in higher sales this quarter? Today in “Uptown Top Ranking” we look at 1Q2012 NGI natural gas marketer rankings to see who is riding high in the charts so far this year and what the rankings mean to the market.
First a big thank you to Natural Gas Intelligence (NGI) for sharing with us the results of their quarterly survey of natural gas marketer sales (see table below). This highly regarded survey has provided rankings for the top natural gas marketers for decades. We look at the latest survey and venture into the archives to provide perspective on participant’s performance over the last few years as well as the important distinctions between marketers and production-only companies.
Total Volumes
NGI get the survey data from voluntary contributors as well as by reviewing Securities and Exchange (SEC) reports. Although the survey contains data from all the top natural gas marketing companies it is not and cannot be an exhaustive survey of transactions. We start by comparing the NGI survey volumes to the mandatory Form 552 survey conducted by the Federal Energy Regulatory Commission (FERC) and the monthly Energy Information Administration (EIA) production data. The FERC 552 survey, published annually since 2009 tallies all transactions connected to price indexes. The EIA provides monthly estimates of natural gas marketed production.
In the table below we summarize 2011 data. In row one beneath the “2011 Total Volume” heading is EIA marketed production – the total US gas produced and sold - which was 24 Tcf for all of 2011. In the next row is the total NGI survey volume annualized for 2011, coming in at 49 Tcf. Row three is FERC Form 552 data – the index based sales – that totals 60 Tcf in 2011. In the bottom row we added the total volume of all transactions for the NYMEX Henry Hub futures contract in 2011 (a whopping 747 Tcf) for comparison. In the “Volume to Production Ratio” column we compute how many multiples of the EIA production were reported in the NGI survey (2 times production) and the FERC Form 552 (2.5 times production). This shows that the NGI survey captures a significant part of the FERC Form 552 volume and that natural gas marketers in North America typically buy and sell the same gas two times or more before it gets to end users. The fact that physical sales volumes are dwarfed by the NYMEX contract (31 times production) is a sobering indication of just how liquid the futures market is.
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