Replies to This Discussion

Permalink Reply by Ragnars Repo on September 13, 2014 at 12:22pm

For Putins plans to work he needs us to become as unstable as possible. Anyone look around lately? We're not as dysfunctional as some, but we don't look like one nation, under god, indivisible, with liberty and justice for all.

Permalink Reply by Trapper on September 14, 2014 at 11:42am

I have said it before and I will say it again. A band of young investigative journalists (TRUE JOURNALISTS) could blow the lid off of all of these hamstringing groups and politicians if they only would take up the cause and dig up and expose the bones.
Let's get real....who profits most by our demise? IMO the veil is pretty thin. Can we say Putin?

Permalink Reply by Joseph-Ohio on September 15, 2014 at 1:39am

Agreed, not really looking like that these days.

Need to start taking care of business here at home and maybe that will change.

Looks to me like the rest of the world's countries are doing it.

Why do we think we need to do it for them ?

Permalink Reply by Jack Straw on September 19, 2014 at 3:35pm

Source: http://www.bloomberg.com/news/2014-09-19/surging-gas-supply-masks-r...

Surging Gas Supply Masks Risk of Winter Price Shock

By Christine Buurma Sep 19, 2014 11:44 AM MT

Gas traders betting that ample supply will limit price gains risk a repeat of last winter’s rally as forecasts for another frigid season raise the specter of supply constraints.

AccuWeather Inc. and Commodity Weather Group LLC predict below-normal temperatures for much of the U.S. this winter. The price difference between gas for delivery in October and January is the narrowest for this time of year since 2000, a sign that the market views stockpiles as adequate to meet peak heating demand.

Goldman Sachs Group Inc. cut its forecast for average gas prices in the fourth quarter of this year and throughout 2015 to $4 per million British thermal units from $4.25, citing a mild summer and rising production. Last winter, a polar vortex left gas supply at an 11-year low and sent futures to a five-year high. Gas inventories will enter the heating season at the lowest level for the time of year since 2008, the U.S. Energy Information Administration predicts.

“Even a normal winter will chew through a lot of the inventory we’ve built up,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said yesterday in a phone interview. “The gas market is still vulnerable to price spikes.”

Falling Prices

Natural gas for next-month delivery on the New York Mercantile Exchange has dropped 41 percent since reaching a five-year high of $6.493 per million Btu on Feb. 24 and fell 7.3 cents today to settle at $3.837. October gas traded 22.6 cents below the January contract. Analysts’ forecasts for first-quarter futures this time last year were about 12 percent below the eventual price.

Gas for next-day delivery at Henry Hub in Erath, Louisiana, the benchmark for Nymex futures, traded at $3.8594 per million Btu today, 4.1 percent below the average of futures for delivery in November through March.

The narrow spot gas to winter spread “suggests complacency in the market about winter supplies,” Michael Hsueh, an analyst at Deutsche Bank AG in London, said in an Aug. 29 phone interview. “The spread and the supply deficit could be a good set-up for higher prices, given a cold winter.”

Hsueh predicts gas will average $5 per million Btu in the first quarter, the highest among the 10 most recent estimates compiled by Bloomberg.

Shale Production

Analysts including Goldman’s Daniel Quigley in London say supply growth from the Marcellus and Utica shale reservoirs in Appalachia will limit price gains. Output from the region has climbed more than 13-fold since 2007 to make up about 18 percent of the U.S. total, EIA data show.

Marcellus production will advance 1.4 percent from September to 16.1 billion cubic feet a day in October, the EIA said Sept. 8. Utica may rise 5.6 percent to 1.5 billion.

“Strong U.S. gas production growth will now drive a bearish trend” in prices, Quigley said in a Sept. 12 note to clients.

Barclays Plc cut its estimate for 2014 gas to $4.30 from $4.55, while Citigroup Inc. lowered its forecast to $4.70 from $4.90.

Analysts discounting the possibility of a winter rally may be in for a surprise if frigid weather descends, according to Greg Armstrong, chairman and chief executive officer of Plains All American Pipeline LP, a Houston-based company that owns gas storage reservoirs in Louisiana, Michigan and Mississippi.

Not ‘Pretty’

“If we have a winter this year like we had last year, I would say it’s not going to be pretty at all, and everybody’s going to be upset,” Armstrong said during an Aug. 7 earnings call. “We’re still just not filling storage up fast enough in the Gulf Coast.”

Gas inventories totaled 2.891 trillion cubic feet as of Sept. 12, 12 percent below the same period last year. Supplies were 13 percent less than the five-year average, the biggest deficit for the week in government reports going back to 2005. Inventories in the so-called producing region, or Gulf Coast, reached 866 billion, down 21 percent from a year ago.

“The market seems comfortable with inventories, which are getting an added cushion from production growth,” Christopher Louney, an analyst at Barclays in New York, said yesterday in a phone interview. “You can’t say that winter price spikes are out of the question, but they would be temporary.”

Frigid Air

Last year’s polar vortex, or rotation of frigid air in the Arctic Circle, dipped southward into the U.S., resulting in the coldest January through April for the eastern U.S. since 1993, according to the National Climatic Data center in Asheville, North Carolina. Gas for next-day delivery in the Northeast, including the Tetco-M3 hub serving New York, surged to a record as a dearth of pipelines prevented Marcellus and Utica gas from reaching demand centers.

“We could see crazy prices like what we saw last winter,” Moses Rahnama, an analyst at Energy Aspects Ltd. in London, said in an Aug. 15 phone interview. “Imports from Canada would have to ramp up to meet demand in the Northeast.”

Below-normal temperatures may prevail across the Midwest and East Coast this winter, Commodity Weather Group said in a Sept. 9 outlook.

AccuWeather predicted colder-than-average weather in parts of the mid-Atlantic, the South and the Great Lakes regions. About 49 percent of U.S. households use gas for heating, with the biggest share in the Midwest, EIA data show.

U.S. gas demand is climbing amid increased consumption from industrial users and rising exports to Mexico. Shipments to Mexico via pipeline from the U.S. totaled 65 billion cubic feet in June, up 13 percent from a year earlier. Consumption may advance 1.8 percent this year to 72.6 billion cubic feet a day, according to the EIA.

“The gas market is susceptible to price shocks if we see another severe winter,” Tim Rezvan, an analyst at New York-based brokerage Sterne Agee, said in an Aug. 22 phone interview. “We are running out of weeks for above-trend gas injections to create a glut of gas in storage.”

To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net; David Marino at dmarino4@bloomberg.net Charlotte Porter

Permalink Reply by Barry D on September 20, 2014 at 2:25am

JS,

Very informative as usual.

I think we are seeing the lull before the storm; the storm of continual price increases for Natural gas. More and more industrial users are converting to natural gas. The chemical and plastics industries are moving manufacturing capacity back to the U.S. Overall, there will be an increasing demand for natural gas. It's all about supply and demand. As the demand grows the price rises.

Yes, rising prices will hit the homeowner in the wallet. But we will also see new jobs and more tax revenue.

Thanks again for an informative post.

Permalink Reply by Nancy LeNau on September 20, 2014 at 2:56pm

   Amazing, Jack Straw !    Thank you, again !

Permalink Reply by Jack Straw on September 25, 2014 at 2:11pm

Source: http://www.reuters.com/article/2014/09/25/us-natgas-henryhub-marcel...

Henry Hub, king of U.S. natural gas trade, losing crown to Marcellus

By Scott DiSavino and Barani Krishnan

A Natural Gas rig operated by Chesapeake is pictured in Bradford County, Pennsylvania just outside the town of Wyalusing on January 13, 2013.

Credit: Reuters/Brett Carlsen

(Reuters) - For nearly a quarter-century, traders around the world have looked to a spot in Louisiana for the best price of U.S. natural gas. Now they're looking east.

The Henry Hub in southern Louisiana, which connects to more than a dozen on- and offshore pipelines from Texas and the Gulf of Mexico, has been surpassed as the most active place for trading physical U.S. natural gas by hubs in shale-rich Pennsylvania.

"How important is the Henry Hub as a price proxy for the Eastern U.S.? My thinking is that, before long, it won’t be very important at all," said Teri Viswanath, director of commodity strategy for natural gas at BNP Paribas in New York.

Only about 240,000 million British thermal units (mmBtu) per day of natural gas have traded in the day-ahead Henry Hub market this year, down 70 percent from an average of more than 825,000 five years ago, according to IntercontinentalExchange data.

The Dominion South hub, a key supply point in the Marcellus shale in southwest Pennsylvania, has averaged nearly 400,000 mmBtu per day so far this year, up sharply from about 290,000 in 2009, the ICE data show.

The switch reflects the boom in shale gas production, as well as a growing recognition that pricing all U.S. gas at a single hub no longer makes sense. The industry is struggling to build new pipelines and infrastructure quickly enough to even out growing price discrepancies in regions like the Northeast.

A decade ago, the Gulf of Mexico pumped about 20 percent of all U.S. natural gas, much of which flowed through the Henry Hub. Now it produces just 4 percent of the nation's total.

Five years ago, the Marcellus produced barely 2 billion cubic feet of gas per day. Now it pumps 16 Bcfd, a fifth of America's gas. It is at the heart of the U.S. shale gas revolution, where the combination of hydraulic fracturing, or fracking, and horizontal drilling technologies have brought massive volumes of gas inexpensively out of once-ignored fields.

The Henry Hub's long-time role as the primary point for pricing contracts for future and prompt gas delivery is beginning to shift.

"Physically, we are buying a lot more supply indexed to the Marcellus pricing points than we did historically," said Kate Trischitta, director of trading at ConEdison Energy, a unit of energy holding company Consolidated Edison Inc.

MORE PIPES COULD NARROW SPREAD

The shale revolution has also pushed prices for gas from the Northeast much lower than gas from the Gulf Coast. Next-day gas at Dominion South went from 21 cents per mmBtu over Henry Hub during the summer of 2009 to 30 cents under in the summer of 2013.

This summer, Dominion South, one of the most-watched price points in the East, was at a discount of $1.50, five times the year-ago discount.

Next-day Dominion South, which hit a 13-year low of $1.72 per mmBtu last week, averaged $2.66 this summer, the lowest since at least 2001, according to Reuters data. Henry Hub spot averaged $4.15.

Some analysts think the spread will narrow as more pipelines are built. Energy companies expect to build pipelines capable of carrying 16 bcf per day out of Northeast fields by 2017, which could double the amount of gas flowing out of the region.

Others question whether prices will converge soon.

"The cost is steep to build new pipelines," Citigroup analyst Anthony Yuen said in a report. "Not all of the pipeline takeaway capacity proposed would be fully subscribed; some may be delayed or canceled."

The Northeast price spreads are likely to "remain challenged" into 2015, Domenic Dell'Osso, CFO at Chesapeake Energy Corp, a major U.S. gas producer, said during the company's August earnings call.

Analysts agree that Henry Hub will remain a benchmark for U.S. gas futures, at least in the U.S. Gulf and West and in international markets.

And with the global acceptance of NYMEX prices, it is likely to keep setting rates for U.S. liquefied natural gas (LNG) when the country starts exporting the fuel in a few years.

"Henry could still be king ... but (gas pricing) is going to be based on location, more than anything else," said Aaron Calder, analyst at Gelber & Associates in Houston.

(In paragraph 10, makes clear Consolidated Edison is a holding company)

(Editing by David Gregorio)

Permalink Reply by Nancy LeNau on September 25, 2014 at 2:41pm

Again... Jack Straw.... Thank you for this Great Information !

Permalink Reply by searcherone on September 26, 2014 at 1:16am

Jack,  thanks always for the informative articles.   I especially appreciate this one on the Henry hub.   I have been thinking about the Clarington hub in Monroe County Ohio which was established just prior to the shale boom and now many of the large pipelines lead to the Clarington hub and onward to processing plants and delivery points.   Recently I am unable to google Clarington and find volume and price listings.

From your perspective can you comment about the significance of the Clarington hub in the scheme of the shale play.   How is the volume increasing, pricing etc and any expected build out of processing near the site     And will it become a significiant hub?   Thanks in advance for your comments.

Permalink Reply by Jack Straw on September 26, 2014 at 4:09pm

I am not sure that I can say anything intelligent regarding the Clarington Hub; but, at least I’ll try to say something intelligible.

The investing community (especially those less sophisticated … and that includes very many) know only one price …. and that is the price of the Natural Gas passing on the hub located on the outskirts of Henry. Louisiana.

That is the only commonly quoted hub, that is the price that makes it to Bloomberg … the problem is that it is not representative of the realities of 2014; it meant something in 2014 …. not much now.

What should be quoted today is a WEIGHTED average of U.S. regional hubs (weighted by how much Natural Gas passes through them). The World needs to catch up with today’s realities.

I dearly wish that the various Hubs and City Gates associated with the Marcellus and Utica were able to realize those Henry Hub prices.

We (citizens of the Marcellus and Utica) live in our World; Henry Hub is a completely different World … someday we will have to meet (perhaps in the middle).

JS

Permalink Reply by Jack Straw on September 26, 2014 at 3:29pm

Source: http://www.ft.com/intl/cms/s/0/c3828aae-4573-11e4-ab86-00144feabdc0...

US shale oil and gas producers are victims of their own success

By John Dizard

Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

An interesting COYRIGHTED article; to read, please follow the above link.

JS

Permalink Reply by Philip Thackray on September 27, 2014 at 1:42am

Jack,

Great article - thanks for posting.

It will be many years until the market becomes favorable to the E&P companies and the Landowners.

I'm in an XTO unit (Marburger B, Forward Township, Butler County, PA) held by two Marcellus wells and I'm in no hurry to see them drill the remaining 5 or so Marcellus wells or go to the Upper Devonian layers or Utica anytime soon.

Prices from July 2014 check stub: propane $0.91/gallon, ethane $0.19/gallon, methane with some ethane left in $3.07/Mcf.

Phil

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