Posts from Sheetal Nasta

Tuesday, 09/10/2019

2019 was supposed to be a milestone year for U.S. LNG exports. And to a degree, it has been. Natural gas pipeline deliveries to liquefaction and export terminals have peaked above 6.5 Bcf/d in the past couple of weeks and averaged about 6 Bcf/d for that period, up nearly 2 Bcf/d from where they started this year and more than twice where they stood at this time a year ago. But the growth has come haltingly as under-construction projects have faced a number of setbacks and delays. Moreover, the longer-term, “second-wave” export projects still in the early stages of development and looking to pass “go” are facing challenges of their own, including global oversupply and collapsed margins. Today, we begin a short series providing an update on where U.S. LNG export demand and new projects stand.

Wednesday, 08/14/2019

TC Energy’s Columbia Gas and Columbia Gulf natural gas transmission systems’ recent expansions out of the Northeast — the Mountaineer Xpress and Gulf Xpress projects, both completed in March — are responsible for a large portion of the uptick in Marcellus/Utica production in the last few months and they’ve added an incremental 860 MMcf/d of capacity for Appalachian gas supplies moving south to the Gulf Coast. The two projects join a number of other expansions in recent years that have inextricably tied Marcellus/Utica supply markets to attractive demand markets along the Texas and Louisiana coasts. Where is that latest surge of southbound supply ending up? Today, we look at the downstream impacts of the completed projects, namely on Louisiana gas flows and LNG feedgas deliveries.

Tuesday, 08/06/2019

U.S. Northeast natural gas producers in recent months got a substantial boost in pipeline capacity to receive and move incremental gas production volumes to attractive Gulf Coast markets. TC Energy’s Columbia Gas and Columbia Gulf transmission systems in March completed the Mountaineer Xpress and Gulf Xpress pipeline expansions, respectively, increasing the combined system’s Marcellus/Utica receipt capacity by 2.7 Bcf/d in the producing region, while also bumping up the Marcellus/Utica’s takeaway capacity to the Gulf Coast by nearly 900 MMcf/d. The duo of expansions is among the biggest takeaway capacity additions to be completed out of the Northeast, volume-wise, and among the handful that inextricably connect Marcellus/Utica supply markets to well-sought-after LNG exports markets along the Texas and Louisiana coasts. One of the export terminals these projects are designed to serve is Sempra’s Cameron LNG, where Train 1 began commercial operations in recent weeks. Today, we provide an update on the upstream and downstream implications of the recently installed Northeast-to-Gulf Coast pipeline capacity.

Wednesday, 07/31/2019

The battle between Bakken and Western Canadian natural gas supplies for the Chicago market seems to be advancing toward a final showdown of sorts. Associated gas production from the crude-focused Bakken has been rising sharply, but capacity on the Bakken’s two gas takeaway pipelines — Northern Border and Alliance, also utilized by Western Canadian Sedimentary Basin (WCSB) supplies — has been maxed out for a few years now. The result is that Bakken gas is increasingly encroaching on — and pushing back — imports from the WCSB. Bakken gas flows already overtook Canadian gas receipts on Northern Border a year ago. Since then, the gas-on-gas competition and the resulting pipeline constraints have escalated, and things are likely to get worse. Today, we break down the forces at play in the competition for market access.

Wednesday, 07/24/2019

After sustaining a record pace since March, natural gas storage injections have been slowing dramatically and are projected to fall below the 5-year-average rate over the next few weeks. While weather has factored heavily into the swing in storage activity, increased baseload demand for gas in the power sector has amplified the effects of weather anomalies and electricity demand seasonality on overall gas demand. As a result, gas demand volumes have diverged from historical levels on a temperature-adjusted basis. Today, we examine the changing historical relationships of power burn and storage injections to weather and electricity demand.

Wednesday, 07/17/2019

Natural gas storage activity this spring suggested extremely bearish fundamentals. The market injected gas into storage at a record pace, well above year-ago and 5-year-average levels. The high injection rate was in part a result of demand loss as weather abruptly moderated in April and May. However, a look at injections on a weather-adjusted basis suggests there’s another dynamic at play — namely, that increased baseload demand for gas in the power sector amplified the effects of the mild weather this spring, lowering demand even more than temperatures alone would indicate. Moreover, that same dynamic could have an opposite, equally extreme effect during the hotter months when power generation is the primary driver of gas demand. Today, we look at the latest gas storage and demand trends, and what they can tell us about the balance of injection season.

Wednesday, 07/10/2019

A raft of natural gas pipeline projects completed in the past couple of years has — for the first time — left room to spare on most takeaway routes out of the Northeast and provided Marcellus/Utica producers a reprieve from the all-too-familiar dynamic of capacity constraints and heavily discounted supply prices, even as regional production continues achieving new record highs. There’s on average close to 4 Bcf/d of unused exit capacity currently available — more in the winter when higher in-region demand means more of the production is consumed locally and less than that (but still more than in past years) in the spring, summer and fall seasons, when greater outbound flows are needed to help offset the relatively lower Northeast demand. But we’re expecting Northeast production to grow by another 8 Bcf/d or so over the next five years. And the list of projects designed to add more exit capacity has dwindled to just a few troubled ones that, even if built, wouldn’t be enough to absorb that much incremental supply. When can we expect constraints to re-emerge? Today, we conclude this series with a look at RBN’s natural gas production forecast for the Marcellus/Utica and how that correlates to the region’s pipeline takeaway capacity over the next five years.

Thursday, 07/04/2019

Just two years ago, severe transportation constraints and steep price discounts were part and parcel of the Northeast natural gas market. Midstreamers were racing to add much-needed pipeline capacity out of the region, but not fast enough for producers. It was an inevitability that any pipeline expansions would instantaneously fill up. Gas production records were an almost monthly or weekly occurrence, and just as unrelenting were the takeaway constraints and pressure on the region’s supply prices. Not so today. Northeast gas production in June posted a record high, with the monthly average exceeding 31 Bcf/d for the first time. Yet, June spot prices at Dominion South, Appalachia’s representative supply hub, were the strongest they’ve been in six years relative to national benchmark Henry Hub. Why? The spate of pipeline expansions and additions in the past two years have not only caught up to production but capacity now far outpaces it, and consequently, producers now have something they haven’t had in a long time — optionality. Today, we break down how much spare capacity is available and its effect on regional pricing.

Monday, 06/24/2019

The Northeast gas market has come a long way since 2013, when it first began net exporting gas supply to the rest of the U.S. The past several years were marked by dozens of pipeline expansions to relieve takeaway constraints and to balance oversupply conditions in the region; as a result, takeaway capacity is finally outpacing production growth. How much spare capacity is there now, and how long will it be before production growth hits the capacity wall again? Today, we continue our series on Northeast gas takeaway capacity vs. production, this time examining the utilization of pipes in the Northeast-to-Gulf Coast corridor.

Thursday, 06/13/2019

Natural gas pipeline takeaway capacity additions out of the Northeast over the past year or two, along with suppressed gas production growth in recent months, have relieved years-long and severe constraints for moving Marcellus/Utica gas out of the region and even left some takeaway pipelines less than full. That, in turn, has supported Appalachian supply prices. Basis at the Dominion South hub in the first five months of 2019 averaged just $0.26/MMBtu below Henry Hub, compared with $0.46 below in the same period last year and nearly $1.00 below back in 2015, when constraints were the norm. Today, we continue our series providing an update on pipeline utilization out of the region, and how much spare capacity is left before constraints reemerge.

Sunday, 06/09/2019

Three months ago, the Pacific Northwest natural gas market recorded the highest trade in U.S. spot gas price history. The region at the time was dealing with extreme winter heating demand, a pipeline outage that limited access to gas supply and storage deliverability issues –– all of which were compounding constraints in the power markets. The result was a feeding frenzy that led gas prices to skyrocket to as much as $200/MMBtu at the Sumas, WA, hub on March 1. Fast forward to today — prices there have crumbled, falling to as low as $0.80/MMBtu in trading last week. Winter demand has dissipated, pipeline and storage constraints have eased, and the region is now dealing with an entirely different — even opposite — set of problems. Today, we take a closer look at the factors behind these latest price moves.

Monday, 06/03/2019

The Northeast natural gas market turned a new leaf in 2018, when takeaway pipeline capacity to move supply out of the Marcellus/Utica producing region finally caught up to — and even began outpacing — production growth. More than 4 Bcf/d of takeaway expansions entered service in 2018. Prices at the region’s Dominion South supply hub improved relative to Henry Hub and other downstream markets. And for the first time in years, Appalachian gas producers and marketers caught a glimpse of what an unconstrained, balanced market driven by market economics (as opposed to transportation constraints) could look like. 2019 will be the first full year of operation for many of those takeaway expansions that came online in 2018. Northeast production growth flattened through the first few months of 2019, but has ticked up in the past couple of months, albeit modestly, and the slate of future takeaway expansion projects has shrunk to just a couple stalled projects. Where does that leave capacity utilization out of the region this summer, and how long will it be before production growth hits the capacity wall again? Today, we begin a series providing an update on the Northeast gas market and prospects for balancing takeaway capacity with production growth.

Monday, 05/06/2019

With U.S. natural gas production levels near all-time highs and storage injections running strong, LNG exports will be a critical balancing item for the domestic gas market this year. Yet feedgas demand in recent months has been anything but stable; rather, it’s proving to be susceptible to volatility, driven by a combination of offshore weather conditions, maintenance events, start-up activity and global market conditions, among other factors. At the same time, timelines for the remaining 20 MMtpa (2.6 Bcf/d) of new liquefaction capacity still due online this year are moving targets as coastal weather, construction-related delays and other variables affect target completion dates. Today, we discuss highlights from our new Drill Down Report on the impacts of recent and upcoming LNG export capacity additions.

Tuesday, 04/30/2019

The cascade of LNG export project news continues. In the past week, yet another “second-wave” U.S. LNG export project — NextDecade’s Rio Grande LNG — cleared FERC’s environmental review process. That follows news of three other projects that received their environmental approvals this month; plus two other projects — Tellurian’s Driftwood LNG and Sempra’s Port Arthur LNG — got final FERC authorization to construct their facilities, should they make the financial commitment to proceed; and, finally, plans for a brand new export terminal, Venture Global’s Delta LNG, were unveiled. All in all, there are more than 20 announced projects totaling 235 MMtpa (~35 Bcf/d) that are looking to catch the second wave of U.S. LNG exports in the next decade. The timing of their regulatory approvals and final investment decisions will determine, in part, when this next wave — or shall we say tsunami — of export demand will materialize. Today, we wrap up our second-wave LNG project update series with a look at the progress made by some of the remaining projects that we’re tracking.

Tuesday, 04/23/2019

2019 is slated to be a watershed year for U.S. LNG export projects vying to catch the second wave — the first wave being the slew of liquefaction trains already operational or in the process of being commissioned or constructed. As expected, regulatory and commercial activity has heated up around the two dozen or so longer-term proposals to add liquefaction capacity along the U.S. coastlines over the next decade. Last week, the Federal Energy Regulatory Commission (FERC) approved two of those projects — Tellurian’s Driftwood LNG and Sempra’s Port Arthur LNG — and several others, including Driftwood and NextDecade’s Rio Grande LNG, also have made progress on the commercial front. Many of these projects are targeting a final investment decision (FID) this year. Today, we continue a series highlighting the second-wave projects’ latest developments.