Ngas storage levels and peak prices, some history

[cmm3rd]

Below are charted the ngas storage levels at the end of refill season (peak) and end of withdrawal season (trough), along with the peak price during those periods, for 2013-2014, 2016-2017, 2017-2018, and 2018-2019 (estimated, using Dan's SWAG for end of refill season level). Many variables affect all of these numbers, and those variables change from year to year, so comparisons not perfect, or arguably even useful. Still, interesting to consider.

Sources: https://www.macrotrends.net/2478/natura ... ical-chart and http://americanoilman.homestead.com/GasStorage.html


Year/wk/pk level (tcf) Year/wk/tr level(tcf) Mo./yr/Peak price

2013 46 3.834 2014 13 0.824 Jan '14 $5.43

2016 46 4.077 2017 13 2.049 Dec '16 $3.87

2017 45 3.790 2018 17 1.281 Dec '17 $3.77

2018 est 3.251 2019 ?? <1.20(?) ??????

If Dan's SWAG is correct, we will end refill in 2018 541 bcf below 2017, so, unless there is significant new takeaway capacity and production that finds its way to storage, the estimate for 2019 trough level (<1.20) may be generous.

If supply remains either stable or increases only modestly, and if demand variables such as weather line up bullishly, and one expects a price spike in Dec. or Jan., what would be the ways to try to profit from it?

[dan_s]

I think the high quality "gassers" will finally get the attention that they deserve if there is a spike in natural gas prices. Keep in mind that any price spike will probably not last long unless we have a colder than normal winter that pushes ending storage way below the 5-year average. A colder than normal winter is forecast, but we always have "Global Warming" to consider.

For those of you not familiar with the natural gas storage system. There is a 'base load" in each storage location, so storage going below 1,000 Bcf is difficult and can cause serious regional problems for utilities. This is what stimulates the big "price wars" that we've seen in the Spot Market. Did you know that spot prices in New York went over $60/mcf last winter in December, 2017? When I was at Hess, we actually sold some gas on the spot market at $100/mcf.

The consensus view is that we have incredible gas supply and our gas prices will remain low forever. If there is a "Paradigm Shift" away from that mindset, it can cause a big rally.

Keep in mind at AR, RRC and GPOR are all profitable today and they are all trading way below break-up value today.

All of the Sweet 16 have some gas production. The others that should draw more attention if gas pries rise are XEC, EOG, NFX and CLR. Permian Basin gas prices will remain depressed because of pipeline capacity issues. The STACK and Haynesville companies are in the best position to reap the benefit of higher Henry Hub gas prices.

Goodrich Petroleum (GDP) will be in great shape if gas goes over $3.50. It is a pure play on the Haynesville.