Natural Gas Prices

[dan_s]

Go here and watch the daily update video: https://www.weatherbell.com/premium/

The NYMEX natural gas contract for January is currently trading for $2.90/MMBtu

Tomorrow's natural gas storage report for the week ending December 1 will be bearish because the weather was mild over the eastern U.S. last week. The 5-year average draw from storage for the week ending 12/1 is 81 Bcf and tomorrow's report will be nowhere near that. However, natural gas in storage will still be more than 200 Bcf below where it was a year ago on December 1 and storage will still be lower than the 5-year average. Last year, just two cold weeks at the end of December push natural gas over $3.70/MMBtu.

BIG CHANGE IN THE WEATHER PATTERN: The December weather forecast is now extremely bullish for natural gas. If the actual weather is close to the December forecast at the link above, we are going to see big drops in the gas storage level for the next four weeks. My SWAG is that we are going to end December with storage levels near a record low. The last time this happened was December, 2013. In January, 2014 price of gas (driven by the physical market) spiked to over $5.00/MMBtu.

December + January can have a MAJOR impact on the gas price for the entire year because refiling storage is not an option. U.S. storage must be around 4,000 Bcf at the beginning of each winter to make sure demand for residential space heating can be met through the winter heating season. Each year, more and more homes heat with natural gas in the United States. So, utilities need more and more gas in storage each year.

Now go back and focus on the last map that Joe speaks from on the 12/6 update. If that super cold area over SE Canada moves just a hundred miles southeast it will be over the area of North America that burns the most gas for space heating. If that happens, it will get very interesting for the "gassers" in January.

BTW the forecast maps that Joe is speaking from today are NCEP maps, not his own.

[dan_s]

Dominion Energy Cove Point LNG Facility Introduces Feed Gas Tuesday, December 5, 2017

RICHMOND, Va.—Dominion Energy Cove Point on Dec. 5 said it introduced feed gas into its newly constructed natural gas liquefaction facility currently undergoing commissioning in Lusby, Md. All major equipment has been operated and is being commissioned as expected following a comprehensive round of testing and quality assurance activities.

Shell NA LNG is providing the natural gas needed for liquefaction during the commissioning process and will off-take the LNG that is produced.

When commissioning is complete, DECP will produce LNG for ST Cove Point, which is the joint venture of Sumitomo Corp. and Tokyo Gas, and for GGULL, the U.S. affiliate of GAIL (India) LTD under 20-year contracts. DECP’s liquefaction facility has a nameplate capacity of 5.25 mtpa of LNG.

Construction of the liquefaction facility began in October 2014, following more than three years of federal, state and local permit reviews and approvals. With a cost of $4 billion, it is the largest construction project ever thus far for Maryland and for Dominion Energy. Construction has involved more than 10,000 craft workers and a payroll of more than $565 million.