If you live in the Northeast and heat your home with natural gas, let me offer my condolences now. Those bills will be killer...
Natural gas futures for February traded as high as $5.40 per Mcf (thousand cubic feet) yesterday. In mid-November, this same contract sold for $3.50.
But that's nothing...
Prices have gone as high as $120 per Mcf on the spot market recently. Last week, a nuclear plant in Maryland shut down when snow and ice caused an electrical problem. Power companies had to turn to natural gas, and they got gouged — big time.
Other price spikes of $56.59 and $72.43 were reported.
And the prices could have been worse given that power companies can't just shut down...
Flush to Flat
For the last few years, we've had too much natural gas. So much gas came on the market that prices fell to under $2 per Mcf. And companies that had invested heavily had to keep bringing more gas to market just so they could pay the bills.
Bigger companies started to shut in production and sell off wells at a loss just to raise cash that could get reinvested in oil.
Still, storage facilities were brimming with natural gas — until the polar vortex showed up...
Supplies are already down 20% from where they were a year ago. And the record for use was set just a couple weeks ago, on January 7.
The problem is the cold weather is affecting production. Companies aren't pumping enough to offset demand, so supplies are falling.
Record amounts of natural gas are being pulled out of storage.
This is a sea change for the fuel. We may be entering a new pricing environment for natural gas.
Bull Market for Gas
Last year at this time, there was about 3 Tcf (trillion cubic feet) of natural gas in storage. This year, we have 2.4 Tcf — 600 Bcf less.
Now, last year between February and April, we used 1.35 Tcf. By mid-March, there was 1.7 Tcf in storage. That's in line with 5-year averages.
This year, it's going to be different.
If companies continue to struggle to replenish supplies and demand continues to surge, we could end the winter season with 1.1 Tcf of gas in storage — or less. That hasn't happened since 2003.
You may be surprised to hear this, but we don't use significantly more gas in America than we did 10 years ago. That will change in time as we see more natural gas powering fleet vehicles, trains, and power plants.
But right now, it's looking highly likely that we will go into the summer months with a 10-year low of natural gas supply. And when supply is low, prices tend to go up...
They're for export, where they get $12-15/Mcf against our $8, which has already shot up from January's ~$5-before export began on the 23rd- and last January's $1.18 !
You "landowners" are making your money from the poorest (seniors) consumers' pockets WHILE poisoning us through the air (thousands of vast VOC/BTEX "Evaporation Impoundments") and water (again staggering proof, from even the *Industry Captured* EPA!)and land's future destroyed arability through the massive amounts of PERMANENTLY poisoned (thus LOST) water, pumped down there to EVENTUALLY wind up in the aquifer through natural oblique fissures and literally a million abandoned wells in WV.
Here in Ritchie County there is frac fluid ALREADY bubbing up in people's yards, ponds and creeks. I have seen and smelled it up close and personal. Anything pretending to refute that is an outright LIE. I woulld be glad to take anyone on a ride in Doddridge County WV (to Porto Rico Rd.) that will shut them up permanently about defending fracking. It will also cost them a notch on assured cancer from the cumulative effects of inhaling mixed Benzene vapor.
"the massive amounts of PERMANENTLY poisoned (thus LOST) water, pumped down there to EVENTUALLY wind up in the aquifer through natural oblique fissures and literally a million abandoned wells in WV."
Geology wasn't a strong subject for you in college, was it?
I am speechless!!!
WOW! He's back. This will be fun..
Rodney, Hopefully, you will become better informed by assimilating the information available here. I googled your name and see that you allegedly hold a BSEE and are from a neighboring state. If you had a degree in chemical engineering, as do I, and, if it were from an accredited college, I believe that you would have come to a different conclusion regarding oil and gas production.
I take offense to your trying to demonize myself and my fellow landowners. Eight years ago the price for natural gas was three times what it is today. Why do you think that is? Also, I'd like you to answer some additional questions for me:
1. What percentage of the gross oil and gas revenue do you think landowners in eastern Ohio receive if they own 100 acres?
2. What do you estimate the cost to to lay a pipeline one-mile long?
3. Three multibillion dollar petrochemical facilities have been or are being constructed in Harrison County, Ohio. Do you consider this to be a positive event, and do you think that this might impact the cost of natural gas?
4. Do you think stock market spot prices have any influence on what we pay for energy? If so, do you think these prices are always logical?
5. Could you please explain your rationale for coming to the conclusion that landowners are targeting seniors?
I and many of the landowners that are my best friends own managed woodlands. We take after-tax dollars to grow trees for the future generations, maintain habitat for wildlife, establish a watershed, and provide recreational facilities. I invite you to join me for a walk through my woodlands this spring. If you plan on doing that, let me know as I will bring an additional shovel so you may help plant new tree seedlings.
Water lost is a fallacy.
When natural gas is burned it creates two molecules of water vapor. The natural gas burned from a shale well will produce twice as much water as was used to hydraulically fracture it. The amount of water used to hydraulically fracture a well is recovered within six months of the well being turned into production.
I will not doubt that something is bubbling up in the yards of people you may know. I not only doubt it's frac water I know it isn't that part you made up. Otherwise please provide the analysis of that water from the EPA and WVDEP.
Is "bubbing" a verb?
Polar Vortex Spurs Catch-22 Workaround - Getting New England Gas Pipeline Capacity Built
Philip, Good Article, Thanks.