NG MARKET MONITOR | February 06, 2019

February 2019 Commentary and Balances

As the market was getting ready to brace for the impact of cold weather, LCM Commodities held two client research dinners in late January, one in New York, and another in Houston. A survey was distributed to better understand the market’s expectations for end of March inventory and for injection season 2019. Detailed results have been shared with attendees , and Figure 1 below summarizes a few key parameters… … To our surprise, we came to realize that private equity firms and supermajors s.....

NG MARKET MONITOR | January 16, 2019

U.S. Natural Gas Trade and STEO

Mexico: The “NG Market Monitor” published last week highlighted the new Sur De Texas Pipeline driving up Mexican export volumes this summer. With an export capacity of more than 2.6 bcf/d, the new pipe can increase the current throughput by more than 50%… Canada: We are keeping an eye on the application TransCanada will file on January 22nd, asking to add 640 mmcf/d of long-term discounted service on its Canadian Mainline between Empress, AB to North Bay, ON. TransCanada will also file new.....

NG MARKET MONITOR | January 07, 2019

The Case for a Less Bearish Spring and Summer

In an ideal world, we would have seen more new pipelines carrying Appalachian gas out of the basin by the end of 2018, either directly to South Central or by displacing volumes into the Southeastern market. The greenfield Atlantic Coast and Mountain Valley pipelines designed to move Northeast gas into the growing Southeast markets have been heavily opposed by environmental groups that focused on overturning numerous permits. Both projects have been delayed by at least a year. What makes Atla.....

NG MARKET MONITOR | November 16, 2018

A Long Winter on the West Coast

The natural gas price spikes that occurred this summer across Southern California are set to return, as winter demand has begun to ramp up and ongoing infrastructure constraints limit gas deliverability. What’s different this time around is that winter price volatility has the potential to surpass this summer both in frequency and geographic reach due to additional pipeline constraints on Canadian imports at Sumas, WA and low storage inventories in Northern California. This will put markets acro.....

NG MARKET MONITOR | October 19, 2018

Gas Market Follows the NHL - Realignment in the Midwest

With both Rover Pipeline and Nexus Gas Transmission carrying Appalachian gas into the region, it is tempting to conclude that the Midwest will have not encounter any issues sourcing supply this winter. Yet, the inability to move incremental Appalachian gas west of Michigan, low NGPL inventories, and coal retirements in Illinois, Iowa and Wisconsin make pricing hubs like Chicago and Ventura focal points in deliverability discussions (Figure 1). In contrast, infrastructure buildouts into Michiga.....

NG MARKET MONITOR | July 19, 2018

Between the Rockies and a Hard Place

In the past year Rockies pricing points have come under significant pressure, basis prices have fallen to levels not observed since 2010, when supply growth outpaced export capacity. Now, despite ample export capacity, prices have fallen to levels similar to those seen at the end of the last decade as competition from the North and South, caused by WCSB and Permian growth, has eroded Rockies export markets. This has caused gas volumes to once again be pushed eastward and has led producers with.....

NG MARKET MONITOR | June 26, 2018

Atlantic Sunrise Startup Analysis

With the July 1 deadline around the corner, we are receiving an increasing number of questions about Atlantic Sunrise. We interpret the start-up of large projects (including this one) as a process rather than an event. Indeed, parts of the project are already in-service and have been flowing since September 2017. Based on Transco’s FERC filings, this note divides the Atlantic Sunrise project into four segments and discusses each one separately.

MARKET INSIGHT | April 07, 2017

An update on DAPL: Patoka or export?

Since our last note on DAPL , the section under Lake Oahe has been approved, completed and line fill has begun. While disagreement exists over what will happen in North Dakota and how much volume will travel to the US Gulf coast, market participants agree that light sweet exports will need to grow along with DAPL volumes arriving at the Nederland/Beaumont hub.

MARKET INSIGHT | January 13, 2017

Merging Into Traffic - Impact of the SPR Release on Diffs, Spreads and the Arb

Part I of our SPR series detailed the forthcoming mandated as well as discretionary releases from the Strategic Petroleum Reserve. Guided by existing legislation, we derived how sales in 2017 could potentially exceed 60m bbl, compared to the ~18m bbl figure commonly reported. So far, only one of the SPR drawdowns to take place in 2017 has been announced: the DOE will sell up to 8m bbl of sweet crude from the Bryan Mound, Big Hill and West Hackberry storage facili.....

MARKET INSIGHT | December 23, 2016

SPRise - Standing SPR release authorization for 2017 is 23.3-60.4m bbl, not 17.5m bbl

Three pieces of legislation that passed the U.S. Congress and were signed into law over the past twelve months – two of them after the OPEC production cut announcement – give the administration the task to sell 17.5m bbl of oil from the Strategic Petroleum Reserve through September 2017, while also arming it with the option to offer up to another 5.8-42.9m bbl over the same time period. In this Market Insight , we comb through the existing laws that mandate the 17.5m bbl SPR sale during US .....