The Briefing Room
General Category => Science, Technology and Knowledge => Energy => Topic started by: thackney on July 23, 2018, 11:34:28 am
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The One Factor That Could Increase U.S. Natural Gas Prices
https://www.forbes.com/sites/judeclemente/2018/07/22/the-one-factor-that-could-increase-u-s-natural-gas-prices/#6335ebf51968 (https://www.forbes.com/sites/judeclemente/2018/07/22/the-one-factor-that-could-increase-u-s-natural-gas-prices/#6335ebf51968)
Natural gas prices have fallen back to prices not seen since May, hitting the mid-$2.70s per MMBtu. The fall comes in spite of some very hot weather to start July, an increasingly important factor for prices since the electricity that air conditioners use is coming more from natural gas, now our main source of power. Consistently surpassing the 80 Bcf/d all time record mark, U.S. gas production has been bearish, and our demand being pretty consistent at 77-80 Bcf/d.
So, although we are not in a bullish gas market, there's one factor that will become more of a concern as we move toward the winter: storage. Natural gas inventories are simply not where we want them to be, now at 2,249 Bcf and almost 20% below the five-year average. Again, storage is crucial to meeting winter needs because we don't produce enough to meet demand, as gas is utilized heavily in heating. And as we continue to export more gas, storage will become increasingly vital to help meet cold winter needs in China, Europe, etc. If we really want to become the world's biggest LNG supplier, it will bring a seasonality to our shipments that will require us to have the storage capable of meeting fluctuations in demand around the world.
Normally injecting not withdrawing, April was a bad month for gas storage. Of the four weeks in April, we had three withdrawals and only one injection. On the heels of a normal winter that felt overly cold because the two previous winters were historically warm, it was the coldest April we've had in over 20 years and the hottest May in U.S. recorded history. In fact, the first withdrawal of January was easily an all time record, and we tied the previous record two weeks later. In the old days of pre-shale, our large storage deficit would have boomed prices to $6, $7, or $8. But that hasn't happened, and that's another testament to the great power and expectations of shale. The booming optimism that our industry brings is why our gas prices remain so low....
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(http://ir.eia.gov/ngs/ngs.gif)
Weekly Natural Gas Storage Report
http://ir.eia.gov/ngs/ngs.html (http://ir.eia.gov/ngs/ngs.html)
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And that is where coal comes in as it can store vast quantities of fuel right next to the power plant.
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This is a short-term issue.
Build more storage.
As an employee in the slumping nuclear industry (slumping because of low natural gas prices), I don't see this as a game changer.
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This is a short-term issue.
Build more storage.
As an employee in the slumping nuclear industry (slumping because of low natural gas prices), I don't see this as a game changer.
There is not a lack of storage. No one is expressing that concern.
But they are behind normal progress in filling the storage we have after a winter that lasted later in the year than normal.