Natural Gas Weekly: December 22, 2022
Flows – An Arctic blast crossing the US is bringing extreme cold and heavy snow that is likely to disrupt operations in several oil and gas basins. In the Bakken, residue gas samples are down 20% (-0.4 Bcf/d) over the latest 7 days vs the prior 7-day period, likely due to wellhead freeze-offs. The impact is consistent with declines of 0.3 - 0.5 Bcf/d during past winter storms in the region. We have 100% sample coverage in the Williston Basin, so our estimates of freeze-offs are reliable. Supply disruptions are likely to spread to the Anadarko and Permian basins as temperatures drop this week, leading to significant storage withdrawals.
Rigs – ArkLaTex rigs have bounced back after dipping in November. There are currently 87 rigs operating in the basin in the latest week. Rig counts in December have averaged 88, above our monthly forecast of 84 rigs. Updating December rigs to 88 in our ArkLaTex model increases 2023 exit-to-exit growth by 20 MMcf/d.
Infrastructure Constraints – Energy Transfer (ET) announced the in-service of Gulf Run Pipeline on Dec. 15. Enable Gas Transmission has subscribed to all Zone 1 capacity running between Carthage and Perryville in December. Zone 2, which run south to Starks, LA has yet to show any flows. We assume deliveries will start after January 2023 bidweek nominations next week. We model high utilization on Gulf Run once the market moves into the shoulder season and winter demand dissipates.
Storage - EIA reported an 87 Bcf storage withdrawal for the Dec. 16 week, putting inventories at 3,325 Bcf. We forecast storage to end December at 2,767 Bcf. Storage is 22 Bcf above the 5-year average after the latest EIA report.
East Daley Analytics' Natural Gas Weekly provides an update to our monthly Supply and Demand forecast. The update covers rigs, flows, production, prices, and capacity constraints that materially change our view on supply and demand. This update highlights what investors and traders need to keep their eye on in the natural gas markets to ensure they are on the right side of the market. Subscribe to the Natural Gas Weekly.
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