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.

Marcellus Rig Count Hovers Near Highs, at 62 This Week

Many are predicting an end to the steady production growth from PA, but with rig counts near all time highs, and longer laterals every year, this does not seem likely. 

The April 15th EIA Drilling Report on the Appalachia Region shows the continuation of a trend that has reshaped the north american gas market:

Natural Gas Storage Continues Recovery

Natural Gas Inventory rose +92 BCF last week, continuing its aggressive recovery.  It's a shocking contrast to last year's 34 BCF DRAW.  This build brings the deficit to the 5 year average down to -369B, after bottoming out at -565B about eight weeks ago.  

The consensus is for a strong early injection season, then quickly weakening as exports (primarily LNG) ramp up in the latter half of the year.  

Alaska North Slope Crude Oil Production: Steadily Declining at 4%+

With maintenance season approaching, crude output on the north slope continues a steady long term decline.

The trailing 12 month average is down more than 20K over the last year, breaking through 500K BPOD this week:

Daily output fluctuates a lot, especially in Summer, but the trend is visible:

Miles and Mileage: Driving Grew Faster than Fuel Economy Improved

With yesterday's release of traffic data for January, here's a look at the long term traffic and fuel economy trends in the US.  In 15 years, with the GFC conspicuous mid-decade, miles driven has increased 8-9%, to about 3.23 trillion miles per year.  Over the same period, fuel economy (a crude measure using unleaded fuel demand vs miles driven) has improved minimally (about 6-7%) to about 22.5 MPG.

New cars aren't poised to lift the average so very much:

"(Reuters) - The fuel economy of new U.S. cars and trucks hit a record 24.7 miles per gallon in the 2016 model year..."

With miles driven growing faster than fuel economy improves, total fuel consumption goes up axiomatically.  But common sense suggests that a combination of slower population growth, fuel economy improvements (and mandates), and slower GDP growth, plus the wild card of ride sharing, should influence this trend.  

This graph is low resolution to begin with, and I've done some smoothing, but everything is built on EIA and DOT data, in Miles per Gallon of Unleaded, and Trillion Miles Traveled per Year.

Nuclear Power Rebounds in April

The Spring refueling season for nuclear reactors is peaking now, and units are beginning to return to service.  The net effect is about 3.5 BCFED currently offline, which is about 0.75 BCFED less than '18.  This refueling season peaked a little lower, and a little earlier, so we should see a steady return to service of the remaining offline reactors.

Outages were heavy in the Autumn, and so year-on-year comparisons favored increased natural gas utilization, but the situation has now reversed sharply and suddenly. 

Midwest Power Generation Finally Shifts in Favor of Natural Gas Over Coal

MISO region fuel mix has never seen a day with gas fired generation exceeding coal until this month.  Over the last three years, coal output has exceeded gas by more than 5 BCFED at times.  Here is the daily amount by which coal generation exceeded gas since 2016:

The 7 day average GW output from coal and gas this year:

And the gas/coal relationship from a market share perspective, over the past 4 Aprils, shows a substantial increase for gas over prior years:

Final Verdict on Winter: Slightly Colder Than Average

The cumulative Heating Degree Day Anomaly stands at +67 for the Oct 1 - April 25 period (including the current 7-day forecast).  That totals about 4,518 HDDs, so it's a mere 1.5% more than normal. 

After a mild October, a sharp cold snap quickly raised the anomaly to about +130 by early December, sending gas prices up sharply but briefly.  Henry Hub Spot hit a November high of $4.69, then fell to $3.10 in late December.

Western US Hydroelectric Power: Expect Less from 2019 Runoff

Most west coast hydro comes from the Pacific Northwest, in the Bonneville Power Administration.  Thusfar in '19, output has been far far below 2018, averaging 7.7 GW vs. 11.0 GW in '18.  That's about 2/3 of a BCFD in gas equivalent.

Snowpack suggests these reduced flows will continue.  As of 4/18, Washington snowpack was 82% of average, while last year on this date it was 128%.

There is less hydro potential in California, but snowpack is much healthier.  It sits at 199% of normal, vs. 73% last year.

See the snowpack table from the NRCS here.

ERCOT Power Generation: Microcosm of Natural Gas Demand

Texas is the most dynamic power generation market in the US.  It has growing demand, and a changing generation mix, with renewables leading the field.  Here's a low resolution look at the monthly data back to 2012, showing that gas is displacing coal, but that fossil fuel (coal+gas) generation is losing market share.