[GoghGoner]

I am somewhat surprised at the low injection rate.

At the production end, There is a ton of gas coming out of the Permian, SCOOP/STACK, Ap Basin.
Even the Bakken is maxxed out in their gas capture.

And yet, future contract pricing remains very low.

Should be interesting to see how this plays out in the coming months.

Well, front month prices have come up. Storage levels are at their lowest in recent history so injections weren't able to catch up. The consensus forecast is quickly growing supply overwhelming demand for some time but those same past forecasts were obviously wrong in 2018. We are using it up as quickly as it is being brought online.

[Tanada]

This is not a happy chart for me. The weather pattern that caused the bitter winter of 2013-14 appears to have resumed form over the north Pacific and anyone looking at the chart can see that the winter in 2013 started with fill levels about 1200 over where they are now and ended with fill levels of under 1000. Clearly it will be better for everyone but the speculators if this pattern does not repeat! I would hate to be in a situation where the USA is trying to import LNG by February when world market prices are sky high and supply is hard to get. The USA has as I understand it only four LNG ports. It is also my understanding that the most common method for liquefying the LNG for injection into the pipeline network as gas is to burn some of it to produce the heat needed to warm it above boiling point. I don't know of anyone who uses the alternative method of bubbling ground temperature gas through the liquid to passively bring it up to boiling point without external heaters being used. Nobody that I know of uses the passive method either, simply releasing it slowly into the pipeline network and letting the ground around the pipe warm it to boiling point as it trickles up stream. Liquid methane boils at -164C and gets moved on tankers at around -175C so it doesn't take a huge change to return it to gas state of existence. Even just blowing room temperature gas from the network over the top of a tank of liquid will do the trick, just not very fast.

Serious question, has anyone tried injecting LNG into old dry natural gas reservoirs? It occurs to me you could passively heat a large quantity as it moved through the pore spaces to the extraction well. As a liquid it is dense enough you could effectively just pour it down the injection well without heavy pumping so long as the reservoir was dry rock. Moisture would be a show stopper as the LNG would cause freeze plugs to form very quickly.

[GoghGoner]

Another wrinkle if we have a cold winter is that coal inventories are also at multi-year lows. Plants have refused to keep stocks up depending completely on natural gas supply forecasts.

[Tanada]

Another wrinkle if we have a cold winter is that coal inventories are also at multi-year lows. Plants have refused to keep stocks up depending completely on natural gas supply forecasts.

That isn't good per se, but at least we still have working coal mines and railroads to produce and supply power stations domestically. We are a net importer of natural gas already, and our main suppliers is Canada which also uses more in bitter winters for internal use possibly reducing their export capacity right when we need it most.

[yellowcanoe]

Another wrinkle if we have a cold winter is that coal inventories are also at multi-year lows. Plants have refused to keep stocks up depending completely on natural gas supply forecasts.

That isn't good per se, but at least we still have working coal mines and railroads to produce and supply power stations domestically. We are a net importer of natural gas already, and our main suppliers is Canada which also uses more in bitter winters for internal use possibly reducing their export capacity right when we need it most.

The proportionality clause in NAFTA, which was almost certainly carried forward into the new trade agreement, prohibits Canada from arbitrarily reducing exports of fossil fuels to the US without a proportional reduction in domestic consumption.

[Tanada]

Another wrinkle if we have a cold winter is that coal inventories are also at multi-year lows. Plants have refused to keep stocks up depending completely on natural gas supply forecasts.

That isn't good per se, but at least we still have working coal mines and railroads to produce and supply power stations domestically. We are a net importer of natural gas already, and our main suppliers is Canada which also uses more in bitter winters for internal use possibly reducing their export capacity right when we need it most.

The proportionality clause in NAFTA, which was almost certainly carried forward into the new trade agreement, prohibits Canada from arbitrarily reducing exports of fossil fuels to the US without a proportional reduction in domestic consumption.

However nothing requires them to export vital materials needed for the survival of their own citizens and residents. Also in this circumstance if the USA falls short Canada may simply not have the excess capacity to both fill internal needs and increase exports to the neighbors.

[GoghGoner]

March NG futures went limit up this morning. Quite the firework show the past two weeks.

[ROCKMAN]

Goner - Yep, same ole gambler's playground.

[rockdoc123]

If some of the folks at NASA are correct and we are in for a long period of no sunspots much like the Maunder minimum then it will be interesting to see if we get colder winters which, of course, translates into higher seasonal natural gas prices.

[GoghGoner]

Another surge in off-hours trading. The last time NG futures were this high was November 2014.

It wasn't too many months ago I made the same observation about oil -- which goes back to something I have brought up in the past that very few analysts seem to grasp -- commodities are herd animals.

[GoghGoner]

So April's contract stands at $2.85. The market fought against the idea of declining stockpiles for the past year and now still doesn't believe in those fundamentals long-term. Everybody still thinks supply is greater than demand after we just get through this winter.

https://www.marketwatch.com/story/natural-gas-prices-just-booked-the-largest-daily-percentage-gain-in-14-years-up-18-2018-11-14

Natural-gas futures rocketed higher Wednesday, settling at their highest price since February 2014 and logging one of the best days in years, according to Dow Jones Market Data.

“The move higher in natural gas prices is mainly a result of a 15-year low in stockpiles combined with cold weather forecasts for large portion of the U.S. and record exports of natural gas,” said Will Rhind, chief executive officer at GraniteShares.

[ROCKMAN]

Goner - "...and logging one of the best days in years, according to Dow Jones Market Data." Interesting that they describe it as the "best". Obviously it is also the worst depending on who you are. And for every dollar a NG futures buyer makes at that price another futures buyer will loose a dollar. There is only one profit maker in the NET futures market: the broker who collects a commission on the future contract sales regardless of where NG prices actually end up.

[coffeeguyzz]

Pennsylvania just released September production, 524 Bcf ... 17.4 Bcfd.
This is an exit rate of 6 Trillion cubic feet per year.
Combined with Ohio and West Virginia Utica, Marcellus and Upper Devonian formations, the Appalachian Basin will produce over 8 Tcf by 2019, maybe even by 2018.

This is about 1/4 to 1/6 the total gas in place of several of the touted eastern Mediterranean finds these past years.

Two top wells - the McGavin 6 and Howell 8 have hit the 11Bcf mark at 14 months online.
Using $3 HH, each well has already grossed about 35 million bucks.

When the USGS gets around to assessing these plays, it will be shown to be larger than South Pars/North Dome, which is vastly larger than any other reservoir on the planet.

Appalachia Rising!!

[Tanada]

Pennsylvania just released September production, 524 Bcf ... 17.4 Bcfd.
This is an exit rate of 6 Trillion cubic feet per year.
Combined with Ohio and West Virginia Utica, Marcellus and Upper Devonian formations, the Appalachian Basin will produce over 8 Tcf by 2019, maybe even by 2018.

This is about 1/4 to 1/6 the total gas in place of several of the touted eastern Mediterranean finds these past years.

Two top wells - the McGavin 6 and Howell 8 have hit the 11Bcf mark at 14 months online.
Using $3 HH, each well has already grossed about 35 million bucks.

When the USGS gets around to assessing these plays, it will be shown to be larger than South Pars/North Dome, which is vastly larger than any other reservoir on the planet.

Appalachia Rising!!

So are you saying not to worry about storage so much because present production will provide nearly all of our demand? Does that include having a winter full of Arctic blasts when usage is higher than average? Or did I completely miss what you are trying to communicate?

[Tanada]

I had not realized that on a monthly basis January 2018 was actually the highest USA consumption of Natural Gas, I thought 2014 was still holding the record.

EIA data

January 2014 3.2 Billion ft^3 natural gas consumption.
January 2018 3.3 Billion ft^3 natural gas consumption.

I can't speak for everywhere but here in Ohio last winter was average to slightly mild so if this winter is as harsh as predicted we will burning a LOT of Natural Gas and storage is at a relatively speaking low level.

I also find it interesting that base Natural Gas usage has climbed from 1.4 Billion ft^3 in June 2001 to just over 2.0 Billion ft^3 in June 2018. Presumably most of this base use increase has come from additional electric plants burning gas instead of coal as their main fuel supply.

[ROCKMAN]

T - Don't have time to dig up the support but on a national level it's been many decades since max NG production has been able to meet max winter demand. IOW always needed to draw from storage. And on a local basis there has been NG shortages even drawing from storage: pipeline capacity not sufficient to meet short term max demand. One winter bad propane shortage: enough at distribution centers but not enough trucks to make home deliveries.

[GoghGoner]

That's right folks, speculation works both ways.

https://finance.yahoo.com/news/natural-gas-price-explosion-bankrupts-153000380.html

A Tampa, Florida based options trading firm, OptionSellers, went dark this weekend after it informed its clients of a “catastrophic loss event,” resulting from a short squeeze on the natural gas market, ZeroHedge reports, citing parts of the letter.

According to the letter, the short squeeze took place at a rate “truly beyond anything I [president James Cordier] have seen in my career. It overran our risk control systems and left us at the mercy of the market.”

[GoghGoner]

Here is some EIA followup on their forecast and the recent run-up in prices. It has been a month of this higher price level, I am just wondering if the Red Queen hasn't taken over. Just like price forecasts, supply forecasts can be wildly wrong and when the market thinks NG supply forecasts are wrong, we will see the next round of fireworks in this market. I have no idea when that will happen and doubt if it is going to happen over the new few months but it could. Mr. Market would be shocked once again.

In November, natural gas prices rose well beyond market expectations in October. With the release of the Short-Term Energy Outlook each month, EIA publishes market-implied confidence intervals for natural gas prices using the value of futures and options contracts. Based on the value of natural gas futures and options contracts for December 2018 delivery traded during the five-day period ending November 1, the implicit 95% confidence interval encompassed prices between $2.63/MMBtu and $3.95/MMBtu. These intervals suggested a less than 2% chance that natural gas futures for December delivery would rise to more than $4/MMBtu. However, on November 28, the contract for December delivery closed at $4.72/MMBtu.

[Tanada]

Here is some EIA followup on their forecast and the recent run-up in prices. It has been a month of this higher price level, I am just wondering if the Red Queen hasn't taken over. Just like price forecasts, supply forecasts can be wildly wrong and when the market thinks NG supply forecasts are wrong, we will see the next round of fireworks in this market. I have no idea when that will happen and doubt if it is going to happen over the new few months but it could. Mr. Market would be shocked once again.

In November, natural gas prices rose well beyond market expectations in October. With the release of the Short-Term Energy Outlook each month, EIA publishes market-implied confidence intervals for natural gas prices using the value of futures and options contracts. Based on the value of natural gas futures and options contracts for December 2018 delivery traded during the five-day period ending November 1, the implicit 95% confidence interval encompassed prices between $2.63/MMBtu and $3.95/MMBtu. These intervals suggested a less than 2% chance that natural gas futures for December delivery would rise to more than $4/MMBtu. However, on November 28, the contract for December delivery closed at $4.72/MMBtu.

IMO for whatever that is worth to anyone but me I think this is much more a reflection of the cold winter predictions than the Red Queen acting up. The simple fact of the matter is fracking has made natural gas both cheap and abundant above a certain price point. Different folks have different estimates of that price but it seems to have settled around $3/MMBtu over the last few years. I think fundamentally the problem is the market over the summer was anticipating a normal winter and allowed stocks of ready to sell gas to be drawn down further than they should have and when the harsh winter predictions came out in October they realized we had less in stock than we typically consume in a harsh winter.

This is one of those places where blasted regulations can actually be useful by requiring Natural Gas utilities to have a stockpile above certain limits. If the stockpile requirement were in place then wholesalers would have been required to keep stocks above minimums and speculators would make less cash on the shortfall, but the rest of civilization would be way ahead.

[GoghGoner]

In a few years, we were be turning these into import terminals.

U.S. liquefied natural gas export capacity to more than double by the end of 2019

EIA projects that U.S. liquefied natural gas (LNG) export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world behind Australia and Qatar. Currently, U.S. LNG export capacity stands at 3.6 Bcf/d, and it is expected to end the year at 4.9 Bcf/d as two new liquefaction units (called trains) become operational.