Natural Gas Weekly: December 2, 2022
Rigs – In the ArkLaTex, November rig counts averaged 84, or ~8 rigs above our latest basin forecast. East Daley assumes a downward trend in rigs as the Henry Hub forward curve declines, based on our forecast for an oversupplied gas market next year. These additional rigs increase our 2023 basin forecast by 55 MMcf/d in the ArkLaTex.
Flows – We anticipate a Northeast production ramp of ~1 Bcf/d through December and January 2023. The early winter has been relatively mild so far in the region, limiting the need for more gas to meet heating demand. Pipeline samples have come up through November following pipeline maintenance early in the month, leaving volumes roughly flat to October. If the trend continues, we may not see that full 1 Bcf/d ramp materialize.
Infra Constraints – West Coast gas prices surged this week as a cold front descended from the northern Rockies. Prices at the SoCal Border and Malin, OR traded over $17/MMBtu Thursday, $10+ above the Henry Hub benchmark. A high-demand OFO is in effect on the Northwest Pipeline, contributing to regional price volatility, while Canadian imports at the Kingsgate are maxed out on the GTN system. Several feet of snow are forecast this weekend in the Sierra mountains in northern California. The loss of El Paso Line 2000 to the SoCal border also is contributing to tight markets on the West Coast.
Storage - EIA reported an 81 Bcf storage injection for the Nov. 25 week, putting inventories at 3,483 Bcf. We forecast storage to end November at 3,491 Bcf. Storge is 86 Bcf short of the 5-year average after the latest EIA report.
East Daley Analytics' Weekly Natural Gas Watch provides a weekly 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 Watch.
Dirty Little Secrets
Dirty Little Secrets is East Daley’s annual market report summarizing trends we expect to shape the U.S. midstream energy sector during the year ahead. The Dirty Little Secrets 2023 Report will be released on December 12, 2022. The webinar will follow on Wednesday, December 14 at 10:30 AM MT.