[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]

$this->bbcode_second_pass_quote('GoghGoner', 'A')nother 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.

[yellowcanoe]

$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('GoghGoner', 'A')nother 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]

$this->bbcode_second_pass_quote('yellowcanoe', '')$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('GoghGoner', 'A')nother 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.

[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

$this->bbcode_second_pass_quote('', 'N')atural-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]

$this->bbcode_second_pass_quote('coffeeguyzz', 'P')ennsylvania 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]

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

$this->bbcode_second_pass_quote('', '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.

$this->bbcode_second_pass_quote('', 'I')n 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]

$this->bbcode_second_pass_quote('GoghGoner', 'H')ere 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.

$this->bbcode_second_pass_quote('', 'I')n 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.

[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

$this->bbcode_second_pass_quote('', 'E')IA 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.

[coffeeguyzz]

As Pennsylvania just released October's production numbers - 543 Bcf (17 and a half Bcfd) - you folks who follow this hydrocarbon world may want to be aware of a few items.

The Appalachian Basin (PA, OH, WV) is now producing at a rate of 10 Trillion cubic feet per year ... and ever increasing.
To put 10 Tcf in perspective, glance at the description of several 'monster' finds these past few years and compare.

The resource base in the AB will be 100 years, give or take.
Recent, high production wells are producing above 5 Bcf first year with a few double that.
As the speed, precision, and lateral length continue to improve, economics will greatly favor this region.

Now, main point of this post is to steer any interested readers towards the emerging world of LNG.

Rapid innovations involving modularization and floaters are upending natgas handling, transportation and - ultimately - useage

LNG projects such as Driftwood, Delfin, and Main Pass Energy Hub have the potential to revolutionize the LNG world as the costs plummet while build times shrink to construct these plants.

The fact that a near Elba Island capacity plant - at 2.1 mtpa - is to be built way up in the woods in northeast Pennsylvania for under $900 million and 18 months timeframe - should send shockwaves throughout the hydrocarbon world. (New Fortress Energy is the operator).

Just as natgas has displaced coal for electricity generation, the day is not far off when oil will be supplanted by natgas for transportation. Emerging MOF technology assures this.

You folks who closely watch 'oil happennings' are apt to be caught off guard by this new paradigm.

[rockdoc123]

thanks for that update. If the appropriate infrastructure can all get built one should expect a global market for LNG. Years ago the company I was at did a study that worked out if LNG became traded freely across the globe there would be a single value attached versus the large range we see now. Currently you have prices as low as less than $2/Mcf in parts of North America to as high as $14/Mcf seasonally in parts of Latin America. The value our study came up with was $6/Mcf. On a BOE basis that would be $36/Boe a price that would be OK for consumers and producers.