natural gas supply and demand: a delicate balancing act
TRANSCRIPT
Natural Gas Supply
and Demand
A Delicate Balancing
Act
Jack Weixel
VP Analysis
• Full service, energy fundamental data service provider.
• 30 employees consisting of both
upstream, midstream and downstream experts with offices in Houston, Denver, El Paso and Gaithersburg, MD.
• Started over 18 years ago as Lippman Consulting (later renamed LCI Energy Insight).
• Purchased by OPIS in December 2012 and renamed PointLogic Energy in January 2015.
• Over 350 years of combined industry experience.
• Detailed basin, regional and macro
reports spanning multiple delivery platforms.
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What more can we possibly talk about?
• Lower 48 Balance – how did we get here?
• Demand – Expectations and Review of Panel Forecasts
• Supply – Stagnations, Accelerations and Panel Forecast
• Lower 48 Balance – where do we go from here?
3.2
0.0
0.5
3.7 4.1
-0.4
0.1 1.0
4.8
Dry
Pro
d
LNG
Can
Impo
rts
Supp
ly
Pow
er
Indu
stria
l
Res
/Com
Mex
Ex
Dem
and
2015 Summer td vs. 2014 Summer td
Supply Demand
Source: PointLogic Energy Supply & Demand Report
Season to date: 1.2 Bcf/d Short Versus Summer 14 to date Was 3.1 Bcf/d Long on May 22nd Was 1.1 Bcf/d Long on June 12th
0.6 0.8
1.0 1.1
0.9
0.7
1.1
0.8
1.1 1.1
1.2 1.1
0.8 1.0
0.9
1.0
Week on Week Mexican Exports Delta Summer 15 Versus Summer 14 (Bcf/d)
Power and Mexico Pushing the Envelope
5.4 4.5 4.4
2.7
4.0 4.5
0.3
5.7
6.7 7.4
3.3
6.2
8.0
6.9
4.9
3.4 3.3 3.1
Week on Week Power Burn Delta Summer 15 Versus Summer 14 (Bcf/d)
Power up 4.1 Bcf/d Summer TD, Mexico up 1.0 Bcf/d – Total Demand up 4.8 Bcf/d
Versus Summer 2012 TD, Total Demand Up 3.3 Bcf/d
Demand to date for Summer 2015
50.052.555.057.560.062.565.067.570.072.575.077.580.082.5
Total Demand - Summers in Bcf/d
3-Year Range 3-Year Average 2015 Extrap. Forecast
No reason for demand to dip going into late shoulder season as Mexico persists and price is suitable for power generators.
3.3
-0.1
0.3
3.5 3.4
0.0 0.0 1.1
4.5
Dry
Pro
d
LNG
Can
Impo
rts
Supp
ly
Pow
er
Indu
stria
l
Res
/Com
Mex
Ex
Dem
and
2015 Summer Forecast vs. 2014 Summer
Supply Demand
Source: PointLogic Energy Supply & Demand Report
Summer 15 Season Base Forecast: 1.0 Bcf/d Short Versus Summer 14 Equates to 214 Bcf less gas available to inject into storage 7.1 Bcf per week lower injection over 30 weeks of summer
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Storage Inventory (Bcf)
5 Year Range 2015 2015 Demand Forecast
Demand Impact on Storage
Upper Bound: 4.2 Tcf 2014 Injection Rate
Lower Bound: 3.0 Tcf 5 Yr. Minimum
3.98 Tcf
Expectations for Winter 2015/2016 Demand
Source: EIA and PointLogic Energy
0.0
1.2
-2.0
1.0
0.2 0.3
Po
wer
Ind
ustr
ial
Res
/Co
mm
Mex
Ex
LNG
To
tal D
eman
d
Delta to Winter 14/15 (Bcf/d)
0.6 Bcf/d Capacity at Sabine Train 1 starting in
Dec/Jan. Actual commercial deliveries to
start in April 16.
=
What do these two temperature outlooks have in common?
Expectations for Winter 2015/2016 Demand
Source: EIA and PointLogic Energy
1.6
0.5
-2.0
1.0
0.2
1.2
Po
wer
Ind
ustr
ial
Res
/Co
mm
Mex
Ex
LNG
To
tal D
eman
d
PointLogic Estimates -- Delta to Winter 14/15 (Bcf/d)
0.6 Bcf/d Capacity at Sabine Train 1 starting in
Dec/Jan. Actual commercial deliveries to
start in April 16.
=
Up 1.5 Bcf/d vs. EIA STEO
Pace of Industrial Gains
Slower than Anticipated
Weather is a Marginal Player
Winter 15/16
Expectations for Winter 2015/2016 Demand
Panel Forecasts for Demand
85.0
85.5
86.0
86.5
87.0
87.5
88.0
EIA Winter14/15 Actual
PointLogic BTU Analytics Bentek -Weather
Normalized
SNL Energy*
Total Domestic Demand Plus Mexico and LNG Exports (Bcf/d)
*Derived value with permission, not an official SNL Forecast
What’s Going On Production?
63.064.566.067.569.070.572.073.575.076.578.0
Lower 48 Dry Production (Bcf/d)
2015 2014
But, production grew 4.5 Bcf/d from Jan to Aug 2014
Production stagnation waning – Aug up 1.6 Bcf/d compared to Jan
Production Forecast Winter 2016
73.8 74.6
62.0
64.0
66.0
68.0
70.0
72.0
74.0
76.0Dry Production Forecast through Winter 2016 (Bcf/d)
Actual Forecast Prod
Panel Forecasts for Production
71.50
72.00
72.50
73.00
73.50
74.00
74.50
75.00
EIA Winter14/15 Actual
PointLogic BTU Analytics BentekEnergy
SNL Energy
Dry Production (Bcf/d)
1.8
0.0 0.0
1.8 1.6
0.5
-2.0
1.0 0.2
1.2
Dry
Pro
d
LNG
Can
Impo
rts
Supp
ly
Pow
er
Indu
stria
l
Res
/Com
Mex
Ex
LNG
Ex
Dem
and
Supply Demand
Winter 15/16 Forecast Market could be 0.6 Bcf/d Long versus Winter 2014/15. This equates to 89 Bcf less gas withdrawn over course of season.
Winter 2015/16 vs. Winter 2014/15
Source: PointLogic Energy Supply & Demand Report
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Storage Inventory (Bcf)
5 Year Range 2015 2015 Demand Forecast 2016 Forecast 2016 Weather Norm
Supply and Demand Impact on Storage
Upper Bound: 2.5 Tcf 5 Yr. Maximum
Lower Bound: 0.8 Tcf 5 Yr. Minimum
1.94 Tcf or
1.89 Tcf Weather
Norm or
1.85 Tcf Minimum
Storage Inventory Impact on Price…
Oct-15 2.693
Feb-16 3.025
Apr-16 2.854
Jun-16 2.882
Oct-16 2.949
1.50
1.75
2.00
2.25
2.50
2.75
3.00
3.25
3.50
November Can Still Dip Lower as Lower 48 Storage Approaches Historical Fill Record.
Upward Pressure Going into Jan and Feb as Power and Mexican Export Demand Persist, and LNG Exports Arrive on Scene.
Downward Pressure into Summer 16 as demand struggles to keep up.
Key Takeaways
Despite Market Going Short Over the Course of Summer, Rapid Fill to Storage Expected.
Winter Demand Expected to Increase Season on Season.
Winter Production Flat to Decreasing Season on Season.
Impact on Storage Inventories is Negligible – Within Range Expected.
Systemic Increase in Demand Led By Mexican Exports Could Lead to “Pop” in Prices this Winter.
Contact Us Today!
Jack Weixel Vice President, Analysis 202.607.6354 [email protected] Customer Support Phone: 855.650.4500 ext. 1 [email protected] Sales Phone: 855.650.4500 ext. 2 [email protected]
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