Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on June 27, 2014 at 2:03

NYMEX Natural Gas Monthly Settlement Price for July - $4.40.  Monthly average year to date - $4.745.

https://www.hessenergy.com/reports/nymexsettlementreport.aspx

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Permalink Reply by Joe King on June 27, 2014 at 6:03

I am in the sabine county area, do you know anything about Anchor drilling,, got a call today?

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Permalink Reply by Skip Peel - Mineral Consultant on June 27, 2014 at 6:52

Joe, I suggest that you post your question in the Sabine County Group.  When you do that all the members of the group get an email notifying them of the new reply or discussion.  Use this link:

http://www.gohaynesvilleshale.com/group/sabinecounty

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Permalink Reply by olddog573 on June 27, 2014 at 4:59

What do you mean by this?  

Enjoy the remainder of the last classical injection season.

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Permalink Reply by Skip Peel - Mineral Consultant on June 27, 2014 at 5:11

olddog, the monthly settlement price is the most meaningful NG price as it is the base for the bulk of actual gas sold.  Futures are paper contracts for the purpose of trading and spot prices represent a smaller fraction of the gas sold each month.  As I understand it if a customer runs out of gas bought on their monthly contract then they must buy additional supply based on spot prices.  If they don't run out they never pay the spot price.  Since the bulk of GHS members are most interested in the price of gas that appears on their monthly royalty statement, the settlement price is the best base price to follow.  And a comparison of monthly average by year gives a good indication of how prices are trending.

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Permalink Reply by dbob on June 29, 2014 at 16:47

Olddog - and anyone else still following - 

http://www.ferc.gov/industries/gas/indus-act/lng/lng-approved.pdf

Right now, we have 2 approved export terminals - one under construction and one not yet under construction.  The Sabine Pass LNG project should be nearing operational status at about 1 BCF/day toward the end of the 2015 injection season.  an additional 1 BCF is likely to come online in late 2016, with even more coming online in 2017.  

When the 2015 season starts, we should know how many other approved projects are out there, the construction status on many, and the market will have to price that in.  

For the 2 current approved projects, the daily capacity is 4 BCF/day, when fully built.  That is roughly 1200 BCF/year, which is a large fraction of the storage capacity.  

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Permalink Reply by olddog573 on June 30, 2014 at 0:35

Thanks for clarifying Dbob. I'm looking forward to 2015 for the reasons you mention. I'm hoping these will kick off ALTERNATE drilling in my area of the Shale. I'm also hoping this time around CHK will log their wells and see what's in the other zones. Hope that doesn't sound greedy.

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Permalink Reply by dbob on June 30, 2014 at 2:01

Olddog,

Doesn't sound greedy

Mike R -

With continued drilling in the Marcellus and Utica, as well as moves to stop Bakken flaring, I think we will still be oversupplied next injection season.  I think its 2016, a projects come online, that Haynesville gas drilling actually picks up meaningfully.  And remember, cross unit laterals, as well as improved fracture design, and faster drilling times mean that we can produce more gas with the same number of rigs than even 2-3 years ago.  

Start of construction on the second export terminal and/or approval of a third east coast/Gulf Coast terminal with firm commitment to build will put some type of floor on the 2015 pricing IMHO, 

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Permalink Reply by Doob on June 30, 2014 at 3:40

The injection rates are higher than we have seen, but not significantly so. Over the past several years the injection rate has experienced a decrease starting around 1st week of July caused by the increased usage for air conditioning. This spring has been very cool in the US, which increased the late winter draw-down, but has also increased the injection rate this spring. I have projected the current high injection rate and it is on trend to fill storage to normal levels by the end of the injection season (green). The red projection projects at the rate of  the 2nd half injection rate from last year. It result in a shortfall of about 600 BCF. The black projection extends the peak rate (1st half injection rate) from 2013, which results in about 200-300 BCF shortfall.

We will have to wait and see, but if the summer heats up to levels we have seen over the past several years, injection will struggle to achieve storage fill-up by the end of the injection season.

Attachments:

• EIA strorage projections.jpg, 187 KB

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