Western Canadian Gas Production Tracking Last Year

Pipeline receipts in Alberta are similar (on a monthly average basis) to 2018 levels. 
Daily storage injections were strong in April, but have declined comparatively since then.

Upcoming EIA Gas Storage Reports

After a fourth consecutive EIA Natural Gas Storage Report showing injections in excess of last year, and The EIA Short Term Energy Outlook now pointing to a 3.8 TCF storage carryout, a glance at the upcoming weekly comparisons is in order.  

Yesterday's report revealed a +189 BCF storage surplus over 2018.  That would grow to over +500 BCF by end of season if the EIA projections prove out.  This translates to an average of about +15BCF per week for the remainder of the season.  

With nuclear outages running at about 1BCFED and falling, and hydro beginning to fade in the PNW, the onset of summer should be constructive for NG.  Next calendar week should begin the first week of near-normal summer weather, with the first empirical glimpse at the coal/gas balance at higher loads.  The shoulder season curves show big gains for gas vs 2018.

Slow Start to Summer Electricity Demand

Some heat is on deck along both seaboards and the deep south, but thus far in June, weather has been anomalously mild and power loads reflect that.

Here are the dailies for several key ISO's, compared with last year:

And NOAA shows the weak climatic beginning to June, after a slightly above normal May.

Texas Oil and Gas Drilling and Permitting Both Rebound in May

The Texas Railroad Commission released statistics for May 2019 today, showing a month-on-month rise in drilling permits and well completions, with permits outpacing completions for the sixth straight month.

Permits rose from 909 to 1,050, and completions were up from 775 to 931.

ERCOT Natural Gas Demand up in May, in Volume and Market Share

Total generation in the ERCOT region in May was down about 5% year-on-year.  But a decline in nuclear output left a bit more market share to fossil fuels (up from 66.5% last May to 67.0% this May).  And gas took more of that from coal.  Last year the split was 2/3 gas, 1/3 coal, and this year gas edged up to 68.7% against coal's 31.3%. 


33.7 vs 32.0

In BCFE terms, gas demand was 4.76 BCFED, out of a total fossil fuel demand of 6.9 BCFED.  That's above the 2019 poly line, and about 21% above last year's line:

MISO Gas-Fired Power Generation Gains Market Share in June

As in PJM region, MISO is showing strong year-on-year gains for gas over coal in the first week of June.  The slope of the line has yet to be tested by high summer loads, but the data points are clustering tightly around a 45-47% line, which represents increases of around 25% more gas when compared to similar load levels in 2018:

Recall that in late April, Gas briefly overtook coal in total generation:

Strong Start to Natural Gas Power Burn in PJM Region in June

Total system load in PJM has been low for June 1-3, but gas is taking almost 2/3 of fossil fuel based power burn, up from about 51% in June '18.  With more heat on deck, the gas/coal balance will soon be tested.

PJM: Gas Outcompetes Coal, But Less So at High Loads

PJM is the largest ISO region in terms of gas fired power demand.  Gas output has continued to rise vs. coal, and in May the YOY comparisons show a gas-vs-coal elasticity curve that is shifted up, but with a lower slope than May 2018.  This suggests that the higher system loads of summer may compress the significant gains in market share for gas.  No real heat has tested the edge case of the equation yet.

Residential Electricity Demand: Steadily Declining Per Capita

The EIA breaks out electricity demand into 3 main sectors (Commercial, Industrial, Residential). 
Only residential has a steadily growing customer count, growing at a slightly lower rate than the US population.  Nevertheless, the customer count is growing faster than power demand growth, indicating a steadily decreasing demand per customer. 

This could be an efficiency story, and urbanization story, or something else.  And the magnitude is small, but still negative.  And it's the most positive demand sector.

Pemex April Production: Oil Declines on Trend, Gas Output Plateaus

Pemex reported oil and gas production for April, showing crude output declining by 15K BOPD from March, and gas down 41MMCFD.

Regionally, oil declines were entirely offshore, with southern onshore output flat, and output rising slightly in the terrestrial north:

Gas output was flat regionally, but nitrogen associated output rose and oil associated NG fell slightly:

MISO Region: Coal Re-takes Market Share from Gas, But Gas Still Outperforming 2018

Very briefly, gas overtook coal in late April, but coal-fired power generation has risen against gas since then.

Never the less, on a total carbon demand basis, gas is averaging about 8 points higher than 2018 in May.  Unfortunately, total load in the system has been well below the prior year, so we have not seen this curve tested at summer heat loads yet:

US Gasoline Demand Stalling

This week's EIA Petroleum Balance Sheet showed more weakness in Motor Gasoline Product Supplied, with the 4 week average down 1.1% from '18, and the YTD number off by 0.4%.

Dampening some of the weekly noise in the data, here are the 52 and 13 week averages, showing a slight YOY deficit since last Autumn:

Drilling Permit Applications in Texas Still Outpacing Well Completions in April

The April Drilling, Completion, and Plugging Report from the Texas Railroad Commission showed permit applications for April at 909 vs 775 wells completed.  Permits have been gradually declining since last summer, with significant monthly variability, but still higher than new well completions.  

Cooling Loads Rising in Early Summer

A minor heat wave this week should begin to indicate how the increase in base load gas fired generation will translate into summer NG demand.  Most forecasts are for power generation demand to exceed 40 BCFD in July and August.  EIA is currently at 41:

Weather has been near average since April 1, but CDD's are forecast to rise to around 130% of seasonal norms this week, and the first real heat of the year:

The NCEP historicals and 7 day forecast:

Overall electrical loads have been very low up to now, though gas market share has been up in most regions.  Spot prices are up slightly, but comparable to 2018:

Hydro Recovers in the Northwest

Runoff in the Pacific Northwest surged in the last ten days, coincident with an increase in power exports to California.

Southern Power Pool: Gas Fired Power Up 15-25% Over 2018

Thus far in May, Southern Power Pool reports the gas/coal mix at about 50%, up from last year's 40-45%:

Gasoline Demand Flat Year on Year

Domestic gasoline demand, as reported in today's EIA Weekly Petroleum Balance Sheet, was well below last week, bringing the YTD average down below 2018 by 0.3%:

California Energy Demand is Tepid Year-to-Date

California (CAISO) electric load has been lagging 2018 thus far in 2019. 

Weather demand was higher than '18 through Feb, and then weakened to an average of 2 degree days below prior year until now. 

Nevertheless, cooling demand is too low to indicate a meaningful change in the relationship between degree days and demand, since cooling matters much more than heating in California:

EIA Revises Down Natural Gas Supply Projections

In the May 2019 Short Term Energy Outlook, the EIA reduced it's dry gas production estimates for the balance of 2019 and all of 2020.  The largest revisions occur in summer and autumn of 2019, where output is seen down about 1 BCFD from the April issue.

Nevertheless, estimates of injection season peak inventories rose slightly for both 2019 and 2020.

ERCOT Air Conditioning: Power Generation per Degree Day in May

Electricity demand growth has been generally robust in Texas for some time now, but the beginning of cooling season is indicating lower power consumption per degree day in May.  Eight days of data are not conclusive, but the load requirements are significantly lower than '18 so they are worth watching.  The trend line indicates loads down 8% or more through the 8th of May:

ERCOT Power: Gas Gains in April, But Carbon Loses

Natural Gas used for power generation in the ERCOT region (most of Texas) gained more market share over coal in April, but carbon based fuels in total (coal+gas) lost market. 

 In April, the gas/coal balance rose to 67.6% gas, 32.4% coal.  This is an April record, up from 65.9% in March, and up 6.2% over the previous April:

Against that, gas and coal were vying for an ever smaller share of the total power pie, with total carbon generation falling to 59.2% of the total load, a new record low.  The main culprits here is wind, which continues to grow faster than total demand, achieving a new record of 9.93 GW of average output in April, which was about 26.7% of the entire power market. 

Gas Gaining Market Share Over Coal in Southern Power Pool

With total loads steady, and wind output falling over the last two weeks, gas has taken up the slack in SPP, pushing fossil fuel market share well above 50% lately.  The current year in red (with a 7 day average line) shows substantial gains on 2018.   SPP isn't an especially large consumer of gas however, so large percentage gains translate into less than an incremental 1 BCFD. 

Western Canada Natural Gas Production in 2019 Tracking 2018

Western Canada's TC Nova Pipeline System reports daily output comparable to last year.  Output briefly fell below trend in February, but quickly recovered.  Scheduled maintenance, combined with seasonal drops in rig counts, drove down output in late April and early May, again mirroring 2018.

Gas Rig Counts Continue a 4 Month Downtrend

Today's 3 gas rig decline to 183 reflects a 2 rig drop in the Haynesville and a loss of one in the Marcellus.  Counts remain high but clearly on a decline.

In the Marcellus however, at 61 rigs the fleet remains larger than at any time in 2018 or before.

Finally in the Permian, the gas rig count remains at zero of course, while oil rigs are at 459.  This tells the story of associated gas....

EIA Natural Gas Inventory Rises 123 BCF

Another large injection (+123 BCF) was reported this week, which reduced the deficit to the 5 year average to -316 BCF.  Large early season injections are expected to transition mid-summer to a tighter balance, as exports ramp up.  Even so, these spring injections have been larger than expected, and prices reflect that, with the summer strip falling into the $2.60's.  

The last four weeks have a total 5-year average injection of 143 BCF, and this year it has totaled 332!

The daily weather anomaly, in Heating Degree Days, is certainly below average, with all but 7 days in the period warmer than normal.

Yet, the period totaled 314 HDD's this year, against a 20 year normal of about 364.  That would normally translate into something like 100 BCF in reduced gas demand.  Thus, unusual weather explains about half of the excess injections.  

Unleaded Fuel Consumption: Down on the Week and on the Year

Today's EIA release was a bit disappointing from the demand side.  Unleaded fuel supplied is now down 100KBOPD year to date:

Pemex: MARCH Oil and Gas Production Show Steady Gas Output, Further Oil Declines

Pemex daily oil production fell by 7K in March to 1.069 MMBOPD, on trend to cross 1.5 MMBOPD by year end.  Gas was down minimally, to 4.857 BCFD, continuing a 6 quarter streak of almost level output. 

Light and Extra-light oil output is down the most over a 3 year period, in percentage terms. From a regional perspective, marine, and southern onshore, have been declining the most.

Gas output details reveal onshore decline trends, with marine output recovering erratically over the last year:

Coal Power Decline in Southern Power Pool

Coal-fired power in SPP (Southern Power Pool) declined sharply in March-April.  Here is the Year-on-Year comparison for both coal and gas fired power.  While gas is taking a much larger market share of fossil fuel generation now, the net effect has not yet resulted in more gas use because total load is down, wind generation is up, and nuclear is also up.