Our focus is to develop and implement strategies that are practical, sustainable and allow organizations to achieve their full potential. Our consultants have long histories of working closely with senior executive teams of firms of all sizes to help their companies not only be successful, but achieve performance that stands out relative to peers.
.
Contact us at insight@energy-cg.com to find out more about us, and how we might be able to help you.
 

E&P News and Information

Upstream Online

Rigzone

Energy365

Alexander's
Oil and Gas News

Schlumberger
Oil and Gas News

World Oil

OIl and Gas Journal

Scandinavian
Oil and Gas Magazine

Hart E&P

International and National
Energy Agencies

International Energy Agency
Oil Market Report

Energy Information Agency- US

Department of Trade and
Industry -UK , Oil

Norwegian Petroleum
Directorate-Norway

National Energy
Board-Canada

Pemex

Ministry of Industry and
Energy-Russia

E&P Project Information

Hydrocarbon Technology

Offshore Technology

US Shale Oil and Shale Gas Drilling Activity: Rig Activity Trends and Maps Deep Utica Dry Gas- Emergence of a "super" productive shale play.
Permian Basin:  The King of the Oil Shales Economic Analysis of US Shale Plays
Energy Dominance: Gulf of Mexico Saudi Arabian Oil and Gas Industry
The Energy Consulting Group's Expertise with the Digital Oil Field 3D Delaware-Permian Basin Well Stack

US Natural Gas Supply/Demand Fundamentals
(Demand, Production, Import, Exports, and Price)
(updated 7/16/18)
Table of Contents


US Natural Gas Supply Summary
US Natural Gas Demand Summary
US Natural Gas Drilling Activity Summary
Natural Gas and Coal Substituion in Power Generation
North American Natural Gas Pricing: Historical, Future and Current (Spot at Select Hubs)
Shale Gas Technology and Productivity Trends


=================================================================================================================================================
The North American Natural Gas Market
Contact Bill at insight@energy-cg.com if you have any questions about the North American gas market.
0
  Add a comment or question.




US Natural Gas Storage Levels Updated thru July 16, 2018
2018 US Natural Gas Storage Level
2018 US Natural Gas Storage Level
For Larger, Higher Resolution View, Click Image
2018 US Natural Gas Storage Rate of Change Comparison
2018 US Natural Gas Storage Rate of Change Comparison
For Larger, Higher Resolution View, Click Image
2017 US Natural Gas Storage Rate of Change Comparison (end of year)
2017 US Natural Gas Storage Rate of Change Comparison (end of year)
For Larger, Higher Resolution View, Click Image
2017 US Natural Gas Storage Levels
2017 US Natural Gas Storage Levels
For Larger, Higher Resolution View, Click Image

US Natural Gas Supply Summary
In this section we provide a brief overview of the US natural gas supply situation.  As illustrated on the following two charts, US nat gas supply which had pulled back in response to the pricing nadir reached in the spring of 2016, has begun to rebound as nat gas prices improved over the summer and fall of 2016.  The relationship between drilling activity and price is clearly shown on this chart.  The first chart in this section illustrates that according to numbers provided by the EIA, production from the main non-conventional gas regions, which had been flat to lower through much of 2016, has now pushed higher.  The main reason for the increase are higher associated gas production in the Permian/STACK/SCOOP regions, and higher volumes from the  Marcellus/Utica plays.  The second chart in the section provides a estimate of how the conventional regions are faring, and it shows that while these regions had experienced a signifcant production falloff through much of 2016, they too are stablizing. 
Reported Production for Main US Non-Conventional Regions
Reported Production for Main US Non-Conventional Regions
For Larger, Higher Resolution View, Click Image

US Natural Gas Production with Marcellus, Utica, and Eagle Ford Breakout
US Natural Gas Production with Marcellus, Utica, and Eagle Ford Breakout

For Larger, Higher Resolution View, Click Image
   

USA Natural Gas Demand, Production (Supply), Imports, Exports, and Price
As reported by the EIA thru end of 2018
USA Natural Gas Demand, Production (Supply), Imports, Exports, and Price
For Larger, Higher Resolution View, Click Image
The chart to the left provides a single page reference for USA natural gas supply/demand fundamentals.  The obvious trends since the advent of large scale shale gas drilling and development in the middle of the previous decade are:
1)  Declining natural gas prices
2)  Increasing demand in response to the lower prices
3)  Falling imports and growing exports.


Go to this page for a discussion of the emergent Utica dry gas play, which might be the next "super" shale play.  Operators  have reported 24 hr IP's in excess of 70 MMCFD with flowing casing pressures (FCP) of 8000-10000 psi.


Longer term, development of the deep Utica, super shale is starting to rev up and could begin pressuring natural gas prices as soon as next spring.  We currently estimate the resource potential of this play to be in excess of 400 TCF  a significant portion of which may be economic at less than $2/mmbtu.  Note: US demand is on the order of about 27 TCF p.a. ,As a reminder, three recent wells in the deep Utica in sw PA tested at 59 MMCFD, 73 MMCFD, and 63 MMCFD.  All three had flowing pressures of 8000 psi or higher.  See the following links for more details:  Scotts Run (73 MMCFD) well; Gaut4IH (63 MMCFD) well; and Claysville Sportsman's Club No. 1(59 MMCFD) well.

US Natural Gas Demand Summary
In this section we provide a brief overview of the US natural gas demand situation. As illustrated in the first slide of this section, domestic demand over the past three years has been well above the levels of prior years.  This is due to a combination of growing use of natural gas in the power sector, as well as users taking advantage of relatively low prices to use more of the commodity for a variety of purposes, including petrochemical feedstock, to space heating, to transportation. Exports are also up substantial;y as both Canadian and Mexican users have imported more of the fuel, and more recently increased volumes have been sent to export markets in the form of LNG.  However, although the demand story is strong and is helping the market heal itself, for the recovery process to end well, we need to have a 2016-2017 winter with seasonal temperatures.  As illustrated in the third slide of this section, the warm temps of last winter submarined US natural gas demand in Jan., Feb., and Mar of 2016, leading to heightened storage levels that depressed price for much of the first half of 2016.  Along those lines, the fourth slide shows that NOAA is projecting temperatures for the upcoming 2016-2017 winter (January, February and March) for much of the northern US to potentially have seasonal to colder than average temperatures.

Add a comment or question.
For Larger, Higher Resolution View, Click Image
US Natural Gas Demand by Major User Segment
US Natural Gas Demand by Major User Segment
For Higher Resolution, Click Image
US Natural Gas Demand and Export Levels: 2001-2018US Natural Gas Demand and Export Levels: 2001-2018
For Larger, Higher Resolution View, Click Image
Year-on-Year Change in Daily Natural Gas Demand
Year-on-Year Change in Daily Natural Gas Demand
For Larger, Higher Resolution View, Click Image
NOAA Temperature Outlook for the 2017-2018 winter (Jan, Feb, March)
Forecast circa November 2017
NOAA Temperature Outlook for the 2017-2018 winter (Jan, Feb, March)
For Larger, Higher Resolution View, Click Image
Short Term Temperature Outlook for the USA for February 2017
Forecast issued by NOAA on January 19, 2017
Short Term Temperature Outlook for the USA for February 2017
For Larger, Higher Resolution View, Click Image
NOAA Temperature Outlook for the Summer 2018 (June, July, and August)
Forecast issued by NOAA on Feburary 15, 2018NOAA Temperature Outlook for the Summer 2018 (June, July, and August)
 For Larger, Higher Resolution View, Click Image
NOAA projections for the summer of 2018 (June, July and August) appear to indicate an elevated chance that temperatures across most of the USA could be above normal.  If this scenario were to happen, it would suggest elevated levels of natural gas demand may occur due to a potential increase in electrical power demand to support air conditioning usage.

US Natural Gas Trade

For Larger, Higher Resolution View, Click Image

US Natural Gas Exports to Mexico
US Natural Gas Exports to Mexico
For Larger, Higher Resolution View, Click Image
USA LNG Export Report Card
Thru December 2017
USA LNG Export Report Card
For Larger, Higher Resolution View, Click Image
 
Est. Landed LNG Prices At Selected Locales Around the World

For Larger, Higher Resolution View, Click Image
 

US Natural Gas Drilling Activity

After a long decline, US natural gas drilling activity is starting to pick-up in response to higher natural gas prices.  At present, this increase is concentrated in the Marcellus/Utica regions (see below), but as natural gas prices continue to rise, our upstream activity model indicates that drilling will start to pick up in other regions as well.

For Larger, Higher Resolution View, Click Image
ECG Assessment of Horizontal Drilling Activity in Several Large Shale Gas Plays in the USA (March 2018)
ECG Assessment of Horizontal Drilling Activity in Several Large Shale Gas Plays in the USA (March 2018)
For Larger, Higher Resolution View, Click Image
Map of USA Onshore Gas Drilling Activity
March 2018
Map of USA Onshore Gas Drilling Activity
For Larger, Higher Resolution View, Click Image
Gas Price Versus Gas Rig Count
(Mar18)

Gas Price Versus Gas Rig Count March 2018
For Larger, Higher Resolution View, Click Image
Map of USA Onshore Drilling Active
March 2018

For Larger, Higher Resolution View, Click Image

Natural Gas and the US Power Sector


Another short to medium term factor in North American natural gas demand is fuel-on-fuel competition in the electric power industry.  The power sector has become increasingly adept at switching between coal and natural gas, depending on relative price levels.  Our research (see below) illustrates that once natural gas prices at Henry Hub move below $3.00/mmbtu, natural gas becomes increasingly competitive with coal for fuel burn.

Fuel-on-fuel competition between coal and natural gas for power generation fuel burn
Fuel-on-fuel competition between coal and natural gas for power generation fuel burn
For Larger, Higher Resolution View, Click Image
As this chart illustrates, once natural gas prices move below $3.00/mmbtu at Henry Hub, the cash cost of power generation, mainly consisting of fuel and variable opex, starts to work in favor of natural gas.  As a result when prices fall to such levels, we see operators increasing the use of natural gas fired power plants to take advantage of the lower costs.  Obviously, the more natural gas prices move below the $3.00 threshold, the greater the incentive to switch over to natural gas fired power generation.

The two charts below of changes in coal or natural gas power generation amounts are presented on the same time scale as the chart to the left.  They clearlyshow the relationship described above.
Year-On-Year Change in USA Terawatt-Hours
For Larger, Higher Resolution View, Click Image
USA Coal and Natural gas Fired Terawatt-Hours
USA Coal and Natural gas Fired Terawatt-Hours
For Larger, Higher Resolution View, Click Image

Cost of Power Comparison By Technology for New Build Power Installations
Levelized CAPEX, OPEX ex Fuel, Sept, 2015, Est. Nat Gas Fuel Cost, Fall 2015

For more discussion of how natural gas is changing the North American power market, go to Power Generation Summay


For Larger, Higher Resolution View, Click Image
 

Regional Price Variation Across the US Natural Gas Market

The spot price, trading hub maps presented below illustrate the price impact of the largest, highest quality of these plays: the Marcellus and Utica in the northeast USA.  As shown by the spot price map of the northeast USA, prompt prices in the Marcellus/Utica area were about half or less that of Henry Hub/NYMEX pricing in January and February 2015.


Select USA Natural Gas Hubs
(These map locations should roughly correspond with the hubs listed to the right)

or Larger, Higher Resolution View, Click Image
 

The daily estimates of pipeline flows to the right was sourced from the useful
Natural Gas Intelligence (NGI) and Genscape website.
 Click here to go to the full page for all the information.










Reported January 2015 Natural Gas Spot Prices at Selected Trading Hubs in the United States:  This demonstrates pricing relative to Henry Hub
Map: Reported January 2015 Natural Gas Spot Prices at Selected Trading Hubs in the United States
For Larger, Higher Resolution View, Click Image
Reported January 2015 Natural Gas Spot Prices At Selected Trading Hubs in the Northeast United States
Map: Reported January 2015 Natural Gas Spot Prices At Selected Trading Hubs in the Northeast United States
For Larger, Higher Resolution View, Click Image
Reported Natural Gas Spot Prices At Selected Trading Hubs Across the United States as of March 2016
Reported Natural Gas Spot Prices At Selected Trading Hubs Across the United States as of March 2016
For Larger, Higher Resolution View, Click Image
Reported Natural Gas Spot Prices At Selected Trading Hubs in the Northeast United States as of March 2016
Reported Natural Gas Spot Prices At Selected Trading Hubs in the Northeast United States as of March 2016
For Larger, Higher Resolution View, Click Image


Shale Gas Technology and Productivity Trends
The rapid pace and magnitude with which shale play technology is improving is illustrated by the two plots below.  The one on the left is an example of an early shale gas well with an initial rate of about 3 MMCFD, and an EUR of about 4.5 BCF.  As the technology evolved since those early days, it is now leading to the emergence of super wells, which are capable of flowing as much as 40 MMCFD, and producing nearly 30 BCF from a single well. This ten fold increase in rate, and 4-6 times increase in EUR, is accomplished with about a 2x increase in well cost.  Currently, only a few such "super" wells exist, but the industry is rushing to determine if such wells are only a local phenomena or whether they might be relatively common. 
Example of Early Shale Gas Well Production Profile

For Larger, Higher Resolution View, Click Image
Example of Emerging Super Shale Gas Well Production Profile

For Larger, Higher Resolution View, Click Image
Rig Productivity Growth Within One Major Shale Gas Play 
For Larger, Higher Resolution View, Click Image
 

As a result of this technological revolution, the North American natural gas supply curve (below), as we calculate it, has been dramatically pushed down, and flattened.  The implications are that large volumes of gas can be developed at lower breakeven costs, meaning the shale revolution is not likely to be a flash in the pan, but rather a long, lived force for good, that has the potential to lower the cost of living for everyone.  There is no better example of this than what is happening in the deep, dry Utica in southwest Pennsylvania.

A North American Natural Gas Cost of Supply Curve
October 2015

For Larger, Higher Resolution View, Click Image
Top 40 Natural Gas Companies in the USA by Daily Output (NGSA)


For Larger, Higher Resolution View, Click Image

 

   

 

 

Go to The Energy Consulting Group home page for more oil and gas related information.

 

 


 

 

==========================================================================================================================================================