SPECIAL REPORT | March 19, 2015

A Bullish Spring - A Different Perspective on Balances

Next week is expected to record the first injection since the week ending November 7, 2014 and we would like to switch our attention to the upcoming spring. Two weeks ago we discussed a sub-1.4 tcf end-March scenario due to colder weather forecasts, but since then, weather forecasts for the month of March have been slashed down by about 60 HDDs. Halfway through the month, most recent weather forecasts put our end-March inventory estimate at 1,480 bcf, which leads to an end-October inventory of.....

SPECIAL REPORT | December 15, 2014

Outlook for condensate exports - Is the bark worth the bite?

The initial enthusiasm about U.S. export licenses issued mid-year has been tempered by fierce competition from producers in the Middle East. Cargoes may be leaving the U.S. as condensate, but they fall into the “crude oil” category in Japan, forcing U.S. exports to compete against Middle Eastern condensate and light crude oil. With existing suppliers determined to defend and/or grow their market share in Asia, U.S. cargoes are facing an uphill battle. So far, the precipitous drop in oil prices h.....

DATA INSIGHT | August 29, 2014

Behind the Meter: Quantifying daily power burns behind a utility meter

As useful as informational postings published by natural gas pipelines are, they only provide limited visibility and fall short on two fronts. First, since intrastate pipelines are no longer required to report scheduled volumes on their systems, supply and demand dynamics in Texas, Oklahoma and Louisiana are opaque. Second, in regions where a large portion of electric generation capacity is controlled by utilities, pipeline flows only allow us to see total gas volumes delivered to a utility’s se.....

SPECIAL REPORT | May 05, 2014

March made April look bad - Outlining a bearish summer scenario for natural gas

The withdrawal season ended with natural gas inventories at their lowest levels in over a decade and storage builds so far are not keeping up with previous expectations. Infrastructure delays and problems — including an explosion in the largest processing plant in the Rockies — are expected to limit year-on-year supply growth during the injection season. Demand is surging thanks to the U.S. industrial renaissance and growing market share of natural gas in the power sector. Most indicators — incl.....

MARKET INSIGHT | April 16, 2014

Splitter naphtha as an indirect LPG competitor

Heating demand for propane contributes to seasonality; incremental US naphtha supplies could support ethylene margins in Asia Pacific. In addition to record liquefied petroleum gas ( LPG ) exports, if recently-announced condensate splitters go ahead as planned, the US will also have excess light naphtha to export. Both of these products compete as feedstock for petrochemical production. But because of propane’s greater seasonality and its use for on-purpose propylene (propane dehydrogenation .....

SPECIAL REPORT | April 07, 2014

Can crude-by-rail survive? It is no longer just about tank cars

Oil producers and rail carriers are facing great obstacles in their crude-by-rail businesses. A lot of attention has been paid to tank car design recently, but the challenges revolve around the product as much as its container. Bakken crude in its current form makes it a more dangerous product to transport than it is labeled to be. The Lac-Mégantic accident was a wakeup call for the industry and oil producers are taking measures to make Bakken crude safer to transport. In.....

MARKET INSIGHT | March 03, 2014

Assessing the energy implications of the Ukraine-Russia conflict

The Ukrainian uprising and brewing war between Ukraine and Russia is extensively chronicled. Less attention, however, is being paid to potential energy-related consequences of the Ukraine and Russia rift. The two countries have deep historical and economic ties, and Russian oil and natural gas supplies transit Ukraine to the European market. In this Market Insight, we explore how the escalating conflict between the two countries could impact energy markets, especially if the current flashpoints,.....

MARKET INSIGHT | February 07, 2014

Up, Up and Away - NG cash prices trading at a premium is a sign of deliverability issues

As long as 200+ bcf/week February withdrawals are on the table, we expect cash to post a high premium to NYMEX . We perceive deliverability constraints in depleted fields as the driving force behind yesterday’s surprisingly small draw and do not expect the issue to disappear in the next two weeks. Call on storage in January 2014 fell just short of 1,000 bcf (1.0 tcf!) and that draw was preceded by a -718 bcf pull in December 2013. Mechanical failures aside, there are two main reasons why an ope.....

MARKET INSIGHT | January 23, 2014

“Water, water every where, nor any drop to drink”

Enamored with exports, the midcontinent has been left out in the cold. Resolving the supply issue will have global implications. The metaphorical sailor stuck at sea from Coleridge’s poem is the rural American household that heats with propane. With prices at all-time highs and stocks at unprecedented lows, the midcontinent propane market is far from business-as-usual. Although there are region-specific reasons for the shortage – such as an exceptionally large and wet corn crop that pushed reg.....

DATA INSIGHT | January 14, 2014

It's not over yet - End-March 2014 storage inventory might surprise us to the downside

Front month natural gas prices rallied over $0.35/mmbtu since last Thursday. Although the year-on-year storage deficit was as low as -80 bcf early in the season, it ended the year at -545 bcf. A cold January 2014 is expected to match or break the all-time high storage draw of -853 bcf for the month, a feat that will have been repeated for the second time in as many months. Although the deficit will be cut down in February and (primarily) in March, our unadjusted reference case balances point to .....