Tuesday, February 21, 2017

Natural Gas: The Cure For Low Prices

The case study that is MISO coal/gas switching continues to reflect the dynamics of a changing price environment for gas.
The very recent crashing prices are sparking, as it were, a resurgence in gas fired power generation.  

Although there is no gas price so low that it stimulates cold weather, the recent days have seen gas retaking market share, with yesterday's demand adjusted market share at 30%, which is double the February average, and within 6% points of the levels of last November, when gas was around $2.75.  We should see abrupt increases in market share all week, if the December price spike is any indication of the rapidity of the price response.

Sunday, February 19, 2017

Warmest Weather In Decades Suppressing Natural Gas Demand

I suppose the fact that gas is still near $3 despite a -400 HDD anomaly this winter is a testament to the improving fundamentals.

Nevertheless, forecasts for the next two weeks keep getting warmer, and it will feel like late April across much of the CONUS:

Saturday, February 18, 2017

Coal to Gas Switching in MISO, Beginning to Reverse?

Natural Gas usage for power generation in the MISO region continues to be much below 2016.

Back in November, gas was near 40% of the carbon power market in MISO, and well above the prior year as well.  With the price rise in late November, the situation reversed.  That situation was enhanced of course by low aggregate demand due to mild weather.  

With prices falling and now breaking through $3.00, it seems that gas will regain much of that lost market share, though probably not comparable to last year as prices were more like $2.00 then:

Friday, February 17, 2017

Haynesville Shale: Rig Counts Rise +3 to 34, vs 15 Last Year. Gas Production Outlook?

Rig counts have been steadily rising in the Haynesville Shale for a very long time now.  The production response has been muted/sluggish/nonexistent thus far.  

Louisiana has a well production reporting system that has a 4-5 month lag before data is substantially complete, so November '16 is solidifying now, and it shows a slight uptick in daily production, though the plateau in output that prevailed for the prior 15 months hasn't been decisively broken.  

The two parishes that contribute the lion's share of output (70%), Caddo and DeSoto, are shown below as well.  The long lag in reporting makes this data fairly backward looking, but even so.  

Thursday, February 16, 2017

Western Canadian Gas Production Continues to Falter

Despite the year-on-year higher rig counts, receipts on the TC Nova system have been averaging well below last year, and storage draws on the system reflect that as well.  A few more weeks of this and the storage surplus will be eroded.  

A close-up of the same data: