Recent news seems bleak for the future of NG Prices.

September 13, 2019 

A continuing natural gas glut will drive the 2020 average price at the Henry Hub down (in real terms) to a level unseen in decades, according to a new report from analytics/information firm IHS Markit.

The oversupply — reinforced by a new surge in associated gas production from the Permian Basin — will push the average price down below $2 per million British thermal units (Mmbtu) for the year, IHS Markit said.

That’s the lowest average price in real terms since the 1970s. In nominal terms, the last time prices fell below $2 was 1995, Kallanish Energy reports.

Prices fall despite ‘robust’ demand

Prices are expected to fall despite robust domestic demand — which has increased by 14 billion cubic feet per day (Bcf/d) in annual average demand since 2017 — as well as rising levels of exports. The U.S. is expected to export an additional 3 Bcf/d of liquefied natural gas (LNG) in 2020.

It still will not be enough to absorb production that’s grown by more than 14 Bcf/d since January 2018. IHS Markit expects production to average more than 90 Bcf/d in 2019 and 2020.

“It is simply too much too fast,” said Sam Andrus, executive director, IHS Markit, who covers North American gas markets. “Drillers are now able to increase supply faster than domestic or global markets can consume it. Before market forces can correct the imbalance, here comes a fresh surge of supply from somewhere else.”

Production surge from the Permian

That next surge of production is expected to come from the Permian Basin in West Texas/southeast New Mexico. Growth from the region will more than compensate for declines elsewhere — sustaining the oversupply and the downward pressure on prices that it creates, IHS Markit believes.

“Nearly all the growth in U.S. natural gas demand over the next few years will come from LNG exported to other countries. The added supply from the Permian will match, if not exceed, those volumes,” Andrus added.

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ABOUT LNG:[QUOTE] "

They saw it in the Liquified Natural Gas contracts that the world’s fastest growing LNG exporter, the United States, wasn’t signing with the world’s fastest growing importer, China. They recognized it in the recent Chinese deal to take an equity stake in Russia’s Arctic LNG 2 project taken by China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC).

Delegates also heard decoupling in the only four LNG vessels that have sailed from the United States to China this year, according to the US Census Bureau, down from 32 in 2018 and 23 in 2017.

LNG has transformed global gas markets dramatically in recent years, driven largely by significant demand in China and the rest of east and southeast Asia. However, in a market where financing is driven by long-term contracts, often even before construction begins, American suppliers are already gauging the potential costs, until recently unanticipated, of lost Chinese buyers. [END QUOTE]

The US-China trade war has set in motion an unstoppable global economic transformation

ABU DHABI, United Arab Emirates – If one strains hard enough to listen in the humid heat of this oil-rich kingdom, one can hear the rumblings of the most profound event for global energy markets and the world economy, not only for this year but perhaps for this era:

It is the decoupling of the world’s two weightiest economies, that of China and the United States. The process seems as inescapable as its extent and global impact remains incalculable.

This week’s news that President Trump was delaying by two weeks a tariff increase on $250 billion of Chinese goods planned for October 1, the 70th anniversary of the People’s Republic of China, is unlikely to slow this trend, and neither will China’s responding exemption of pork and soybeans from new tariffs.

The most knowing delegates at this year’s World Energy Congress, who met here this week, continued to worry about the US-Chinese trade war. It has slowed growth and placed the biggest drag on oil prices. At the same time, however, they were shifting focus to the more momentous and generational event of decoupling.

They saw it in the Liquified Natural Gas contracts that the world’s fastest growing LNG exporter, the United States, wasn’t signing with the world’s fastest growing importer, China. They recognized it in the recent Chinese deal to take an equity stake in Russia’s Arctic LNG 2 project taken by China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC).

Delegates also heard decoupling in the only four LNG vessels that have sailed from the United States to China this year, according to the US Census Bureau, down from 32 in 2018 and 23 in 2017.

LNG has transformed global gas markets dramatically in recent years, driven largely by significant demand in China and the rest of east and southeast Asia. However, in a market where financing is driven by long-term contracts, often even before construction begins, American suppliers are already gauging the potential costs, until recently unanticipated, of lost Chinese buyers.

The tit-for-tat tariffs and accompanying Trump tweets have been driving markets all year, but what traders haven’t even begun to price in is the longer term, structural impact of this decoupling and its particular danger to individual companies.

One can also see decoupling in the oil deliveries not made to China from the United States this year, even though the US has become the world’s largest oil and gas producer and a net exporter. Whereas US shipments of crude oil to China reached half a million barrels a day in summer 2018, they averaged only a third of that in the spring of 2019.

Though delegates had come here to focus on energy markets, the implications of decoupling have begun to touch almost all economic sectors, from aviation to automobiles, from finance to farmers, and from cell phones to semiconductors.

The tit-for-tat tariffs and accompanying Trump tweets have been driving markets all year, but what traders haven’t even begun to price in is the longer term, structural impact of this decoupling and its particular danger to individual companies.

Wary that US leaders fundamentally want to undermine their country’s rise, Chinese leaders increasingly are dissuading or outright preventing their companies from dealing with American partners. Meanwhile, chastened US companies are rethinking supply chains and relocating Chinese-based manufacturing.

If nothing interrupts this process, it will reverse 40 years of increased trade, financial and economic integration of the two countries. Other nations’ companies won’t follow the American lead but rather look to pick up lost US opportunities among China’s 1.4 billion consumers.

Encouraged by his trade advisor Peter Navarro, President Trump made his own decoupling druthers clear in a late-August tweet: “Our great American companies are herby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

President Trump’s trade policies are resulting in an economic slowdown that could endanger his re-election and thus his revived efforts toward a solution. Yet, it remains unlikely that any major deal can reverse this downward trajectory in bilateral relations in any lasting manner, even as China and the United States open the 13th round of trade talks in October (no specific date set yet).

Beijing remains eager to see the US remove its tariffs. Trump administration negotiators continue to want China to commit to structural changes in how it does its business, ranging from intellectual property protections to state subsidies.

Hunkering down for the long-term

The most profound shift of recent weeks, however, may be Beijing’s move from negotiating the best deal possible to hunkering down for an epochal, systemic contest that Chinese officials fear will long outlive the Trump administration.

Speaking earlier this month to a training session for Communist party cadres, Chinese President Xi Jinping dramatically underscored this change of mood.

The summary of Xi’s speech, published so it would not be missed by the official Xinhua news agency, doesn’t mention the United States but focuses on “all manner of struggles” China will have to undertake to achieve the “Chinese dream” of a “great national rejuvenation” by 2049, the centenary of the People’s Republic of China.

Said Xi, “For those risks or challenges that jeopardize the leadership of the Communist Party and China’s socialist system; for those that endanger China’s sovereignty, security and development interests; for those that undermine China’s core interests and major principles; and for those that deter China’s realization of a great national rejuvenation, we will wage a determined struggle against them as long as they are there. And we must win the struggle.”

The South China Morning Post, in reporting on the speech, said that the Chinese word for “struggle,” douzheng, appeared nearly 60 times in the summary, underscoring the siege mentality that seems to have seeped into Chinese leadership regarding the US.

“It’s a fundamental political statement,” prominent Beijing political commentator Wu Qiang told the newspaper. “China will adopt an antagonist stance, position and approach to handle the deterioration of China-US relations.”

Xi took considerable poetic license, reminiscent of the movie Crouching Tiger, Hidden Dragon in how he instructed Communist cadres to remain watchful of the emerging dangers. He said they should be able “to notice a deer passing by, looking at the grass and leaves, see a tiger jumping out by hearing the wind in the pines, and know the coming of autumn by spotting the changed color of a tree leaf. ”

In the less nuanced world of Trump tweets and global markets, it’s time to buckle up for what is likely to be a long and bumpy ride. It also may be the moment to shift one’s focus from President Trump’s “art of the deal” to what one Chinese expert, Li Mingjiang of Nanyang Technological University, calls President Xi’s unfolding “art of the struggle.”

https://www.cnbc.com/2019/09/14/us-china-trade-wars-unstoppable-glo...

NG prices seem to be rising again over the past several weeks, why?

More than likely a seasonal play. Winter and cold weather pumps the price.

just got my royalty check from EQT  2,05 PER unit price what a glut we are in  

What Production month?

Was that net per unit after deductions?

Here is July Production with white arrows showing high and low for the month

month july and on my stub it says 2.05 per  unit of sale  deducts 28%  

Seems big but I am not an expert. I am in Tioga Co, and EQT has wells here in Duncan Township. Good luck to you, Jeff

yea the deductions are unbelievable also this was a Chesp. lease orig signed in 2011 if my memory is correct And yes I am aware of the decline rate but still 28 % is large as they pay well head but I still have to get there gas to market. I have learned a lot about how they screw the landowner. They told me deductions would be pennies on the dollar  lol  what a joke   

Seems like they have made a business model out of manipulating royalties. We know about CHK already.  Is EQT ripping off farmers and Families.  There should be seperate thread on this site for each driller operator whereas people can list their land relations treatment and royalty relations.  Bottom line is it will show you how each company treats farmers and families.  People will be able to better research each company to see if they want to have a lease relationship based on how well they treat people.

Good idea accept for one main thing. Way to often landowners don't have a choice as to whom they lease with. Many times there is one company to choose from. Seems like EQT is or has been in court more than one time for royalty disputes.

Natural Gas Weekly Update Report – September 19, 2019

 

China introduces new incentives for domestic production of tight and shale gas and coalbed methane

In June 2019, the Chinese government introduced a new subsidy program that, for the first time, offers incentives for domestic production of natural gas from tight formations. The program also extended subsidies for natural gas production from shale formations and from coalbed methane (CBM). The new subsidy program aims to stimulate further growth in domestic natural gas production and to reduce China’s increasing reliance on imports, which have grown from 15% of the total supply in 2010 to 45% in 2018.

 

See full report at:

https://www.eia.gov/naturalgas/weekly/

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