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Northeast Basis

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  • Northeast Basis

    Figure this would be a good topic to discuss going forward and to have a historical to look back on. I will update the following points at least once a week.

    Settlement prices Friday 12-13-2013

  • #2
    Thanks PAPA,

    I don't think some people understand all the legs of this Four Legged Stool called the price of natural gas.

    Production, Net Normalized Demand (Demand supplied by imports and created by exports off of normal weather), Weather Abnormalities and Basis make this market what it is. Of course demand changes such as power demand from switching are in there too.


    • #3

      This is incredible how the entire market has changed.


      • #4
        Those forward prices are depressing to look at, especially DOM-south. The curves are saying that Northeast won't need any gas at all from Producing after February.

        ...I think we might have to start calling the Northeast the Producing region.


        • #5
          Originally posted by passgas View Post
          Those forward prices are depressing to look at, especially DOM-south. The curves are saying that Northeast won't need any gas at all from Producing after February.

          ...I think we might have to start calling the Northeast the Producing region.
          Bingo. I think this is the most interesting story in the natural gas market over the next 2 years. With the production growth there and then the gulf coast LNG projects coming online and mexican exports growing, does the NE become the "producing region" and export gas to what is now the producing region? How would that change how we think about basis markets and the forward curves in the NE?


          • #6
            Tennessee Gas Pipeline Company, L.L.C. (TGP), a subsidiary of Kinder Morgan Energy Partners, L.P. (NYSE: KMP), has completed a successful open season for incremental, north to south natural gas transportation capacity on the TGP system ....

            Kinder Morgan East Region Natural Gas Pipeline President Kimberly S. Watson. “The capacity subscribed in this open season also supports continued growth in Gulf Coast consumption markets and provides more supply for Gulf Coast end-uses, including processing, fractionation and liquefaction.”



            • #7
              Settlement 12-24-13 Some points had significant weakening...


              • #8
                As a supplement to basis pricing, I thought a three-point in time look at rig counts by basin could add to the conversation.


                Gas rigs counts:
                Directional (YoY Change in BOLD)

                Ardmore Woodford:
                0----0----0 0
                5----1----0 -4
                0----0----0 0

                Arkoma Woodford:
                0----0----0 0
                4----2----5 +1
                0----0----0 0

                0----0----0 0
                27----20----18 -9
                2----0----0 -2

                Cana Woodford:
                0----0----0 0
                14----12----14 0
                1----0----0 -1

                DJ Niobrara:
                4----0----0 -4
                14----14----19 +5
                0----0----0 0

                Eagle Ford:
                0----1----0 0
                65----24----26 -39
                2----1----0 -2

                0----0----0 0
                13----12----9 -4
                0----0----0 0

                Granite Wash:
                0----1----0 0
                14----22----6 -8
                1----0----0 -1

                1----0----0 -1
                35----35----40 +5
                2----2----0 -2

                1----10----7 +6
                79----66----74 -5
                13----1----4 -9

                0----0----0 0
                1----1----8 +7
                0----0----0 0

                60----57----62 +2
                24----14----27 +3
                31----31----25 -6

                0----0----0 0
                8----7----8 0
                4----2----1 -3

                0----1----2 +2
                6----15----19 +13
                0----1----0 0


                • #9
                  What's going on with zone 4 all the other basis are gapping up and it's down to 2.06


                  • #10
                    Transco Z6 $93.00
                    AGT City gate $ 42.00
                    Tetco M3 $ 57.00
                    Chicago $7.50


                    • #11
                      From Cabot's presentation:

                      Over 13.3 Bcf/d of pipeline capacity expansions in Appalachia between now and 2017
                      with even more projects currently in the planning phases

                      Cumulative Pipeline Capacity Additions
                      Q42013: 3.1
                      2015: 5.8
                      2016: 8.8
                      2017: 10.9
                      2018: 13.1


                      • #12
                        EIA 914- although net supply ticked up 650MM/day, Offshore has continued its' decline and sits at a measly 3.32 B/day now. Louisiana has also continued its' unabated decline with another 220MM/day monthly loss, down to 5.86. Texas continues to stay rather flat. Big gainers offsetting were Wyoming (+420MM/day), and 'Other states', which has been mainly NE Marcellus/Utica with a gain of +660MM/day.

                        Theme continues for me; continued production losses in the PR coupled with demand projects in the region coming online, creating a tightening market for the region, which includes Henry Hub (NYMEX), being offset by NE regional loosening with steady production gains, creating the impetus for basis widening. This is not a bearish set-up for NYMEX as it has been the past several years, this is a notable shift; the labor of balancing S/D for refill will be borne upon NE cash markets and CAPP coal competitiveness, not Louisiana molecules.


                        • #13
                          EIA: New England and New York have largest natural gas price increases in 2013



                          • #14
                            Update on todays settles.


                            • #15
                              Look at those summer strips (at the bottom of the sheet)....