The cold weather will cause production problems.
This note was sent to one of our members on January 2.
Permian Basin Shut In Wells....
"Just talked to a friend who works in the field in the Permian Basin and his company alone has over 100 HZ wells shut in. Compressors and facilities are frozen and it is going to be a while. Even when the temperature finally gets warm enough to begin the thawing process, the reality is that there will still be ice blocks in lines etc that will take a while. It's going to be a down January for the Permian and Delaware, IMO....let alone the many other fields."
Shut in wells
Shut in wells
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Shut in wells
Henry Hub Cash prices for natural gas skyrocket.
From NGI: "In day-ahead trading, most points outside the Northeast gained $3 or more Tuesday, including big gains throughout Texas and the Gulf Coast. Henry Hub added $3.04 to average $6.62, approaching levels last seen during the 2013/14 winter. In Texas, where AccuWeather was calling for lows in the 20s Tuesday and Wednesday, Katy jumped $3.94 to $8.25. Tetco South Texas added $3.76 to average $7.46. Waha notched a $3.17 increase to average $7.32."
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1) With a cash HH price of $6.62, how much storage is going to be sold right now?
That means any salt storage operator can get $6.62 per mcf when they paid below $3.
Storage is going to drop like a rock.
2) How come HH price is so high? If we have plenty of natgas and no problems...
Why is the HH cash price over $6.6???
3) Supply is going to be lower than thought:
"On the supply side, freeze-offs across Lower 48 continues to choke back volumes." Genscape’s Spring Rock daily pipe production estimate showed "current volumes below 72 Bcf/d, though, as always we urge caution with first-of-month nominations data on production points. On Dec. 31, production was estimated to have fallen to a 43-day low of 74.8 Bcf/d."
If the weather does NOT get warmer, the cash price might rise even higher.
PS The price in the East is also high: In Appalachia, Dominion South jumped $2.30 to $5.34, and Columbia Gas climbed $3.06 to average $6.52.
From NGI: "In day-ahead trading, most points outside the Northeast gained $3 or more Tuesday, including big gains throughout Texas and the Gulf Coast. Henry Hub added $3.04 to average $6.62, approaching levels last seen during the 2013/14 winter. In Texas, where AccuWeather was calling for lows in the 20s Tuesday and Wednesday, Katy jumped $3.94 to $8.25. Tetco South Texas added $3.76 to average $7.46. Waha notched a $3.17 increase to average $7.32."
===============================
1) With a cash HH price of $6.62, how much storage is going to be sold right now?
That means any salt storage operator can get $6.62 per mcf when they paid below $3.
Storage is going to drop like a rock.
2) How come HH price is so high? If we have plenty of natgas and no problems...
Why is the HH cash price over $6.6???
3) Supply is going to be lower than thought:
"On the supply side, freeze-offs across Lower 48 continues to choke back volumes." Genscape’s Spring Rock daily pipe production estimate showed "current volumes below 72 Bcf/d, though, as always we urge caution with first-of-month nominations data on production points. On Dec. 31, production was estimated to have fallen to a 43-day low of 74.8 Bcf/d."
If the weather does NOT get warmer, the cash price might rise even higher.
PS The price in the East is also high: In Appalachia, Dominion South jumped $2.30 to $5.34, and Columbia Gas climbed $3.06 to average $6.52.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group