Natural gas - where is the bottom

New Era NG Pipes Have Arrived. No comments or questions... I'm merely posting this as an FYI for all our "green" friends.

First Rilsan PA11 High Pressure Natural Gas Pipe Installations In The US
October 25, 2010
http://www.oilandgasonline.com/arti...-High-Pressure-Natural-Gas-0001?VNETCOOKIE=NO

The first natural gas pipes made of Rilsan PA11, a high performance polyamide of renewable non-food-crop origin, were recently installed in the United States on two sites (1.2 and 10.5 miles each) to replace corroded steel pipes. Rilsan PA11 was chosen as it requires very little maintenance, while the installed cost is comparable to that of steel pipes.

Rilsan PA11, the first high-performance polyamide resin allowed by the US authorities in piping systems for high pressure natural gas distribution

In the United States, regulated gas distribution market operates very stringent safety standards. After more than 10 years of laboratory research and testing, Arkema's Rilsan PA11 is the first high-performance polyamide to be authorized for pipelines conveying high pressure natural gas: in December 2008, the US Department of Transportation has allowed Rilsan PA11 to be used for pipes up to 4 inch in diameter at operating pressures up to 14 bars.

A cost effective, performant and environmental efficient solution for gas piping systems
Rilsan PA11 pipes offer all the installation and cost advantages of conventional polyethylene, at the operating pressures of steel. Installation costs are reduced thanks to coiled pipe laying technique and the possibility of using the most common connection systems. Rilsan PA11 features two further key benefits: it eliminates the need for an expensive cathodic protection system, unlike steel, with no risk of leaks from corrosion. Both operating and maintenance costs are then significantly reduced. Rilsan PA11 pipes therefore offer the most technically and economically efficient solution to replace old or damaged steel and cast iron pipes.

Finally, Rilsan PA11's 100% renewable non-food-crop origin combined with the RcycleTM service, Arkema's technical polymer recycling program, should appeal to the market players concerned with eco-design.

With global brands like Rilsan and Pebax, unique products from renewable resources like Rilsan Polyamide 11, Rilsan HT, Pebax Rnew and Platamid Rnew, and leading capacities in Rilsan Polyamide 11 and 12, Arkema's Technical Polymers stand out in the industry by providing customers with global coverage and superior regional service from production facilities and research centers in Europe, Asia, and the USA. Arkema's Technical Polymers business is the acknowledged leader in bio-based high performance polyamides such as world-renowned Rilsan polyamide 11 and Rilsan HT.

SOURCE: Arkema

 

These facilities have been in a planning/buildout process for many years, the sunk costs that had been spent was quite enormous. It only made sense that they finished them. I say that because at some point, the built facilities will be the ones that could wind up alos exporting in the future as a couple have already been approved for that, (bi-directional LNG terminal).

The shale story is lost to many in that the levels of production are really a forced behavior at this time and this behavior will go through a major change in the near future. We will also add to our base demand over the next several years in power generation and other industry.

We have been importing a bare minimum "baseload volume" as US prices are the lowest landing for LNG cargoes, these are largely long term contractual obligations that were inked over the past few years. This baseload importation is roughly 0.6 BCF/day.

 

Wow, some huge moves on the entire curve out today. Maybe seeing a near term bottom on some shifting. Fundamentals near term remain pitiful, however, the forwards could get a lift, once X expires tomorrow, Z may have some upside play in it.

 

Rendell issues forest drilling moratoriump
by robert swift (harrisburg bureau chief)Published: October 26, 2010
http://thetimes-tribune.com/news/rendell-issues-forest-drilling-moratorium-1.1054446

HARRISBURG - About 700,000 acres of state forest land in the Marcellus Shale region is being placed off-limits to any natural gas drilling under an executive order signed today by Gov. Ed Rendell.

Mr. Rendell said a moratorium on new leasing of forest land to drillers is needed to protect Pennsylvania's ability to manage the forests in a sustainable manner and protect the state's forest products and tourism industries. He said an executive order is necessary because the Senate didn't act this session on a House-passed bill to place a three-year moratorium on additional leases.

Mr. Rendell expressed hope the next governor who takes office in January will continue the executive order

The executive order is based on an analysis by the Department of Conservation and Natural Resources that examined 800,000 acres of unleased forest land in the Marcellus Shale formation. This acreage covered by the order includes wild and natural areas, old-growth forests, environmentally sensitive areas including wetlands, habitat for endangered species and scenic vistas; wilderness areas; 88,000 acres in the Poconos and 20,000 acres in the Laurel Highlands where ecotourism is developing.

Another 700,000 acres of state forest land in the Marcellus Shale formation is either leased for oil and gas drilling or the state doesn't own the subsurface mineral rights. The potential exists that companies could drill 1,000 well pads, containing up to 10,000 wells, and build roads and pipelines on this leased land during the next 30 years.

Meanwhile, five Republican senators from Southeast Pennsylvania have urged their Senate leadership to revive talks on a severance tax and include measures to improve environmental and natural gas safety regulations as well. They are Sens. Ted Erickson, R-26, Drexel Hill; Stewart Greenleaf, R-12, Willow Hill; Bob Mensch, R-24, Schwenksville; Chuck McIlhinney, R-10, Doylestown, and Robert Tomlinson, R-6, Bensalem.

All five hold even-numbered seats meaning they face reelection Tuesday. All five have Democratic opponents. They represent suburban districts outside the Marcellus Shale drilling zone, but where constituents are concerned about environmental issues and the safety of pipelines transporting natural gas to seaboard cities.

Contact the writer: rswift@timesshamrock.com

 

US Cuts Estimates Of Untapped Alaska Oil, Gas Reserves

OCTOBER 26, 2010, 3:47 P.M. ET
http://online.wsj.com/article/BT-CO-20101026-716133.html

SAN FRANCISCO (Dow Jones)--The U.S. Geological Survey said Tuesday that Alaska holds less oil and natural gas onshore at the National Petroleum Reserve and in nearby state waters than previously thought.

The agency now estimates that the area, on and near land in Alaska's North Slope owned by the U.S. government, holds 896 million barrels of conventional, undiscovered oil, about 10% of the amount the agency predicted was there in 2002.

The USGS also updated its estimate for natural gas in the area to 53 trillion cubic feet, about 13% less than the agency predicted eight years ago.

"These new findings underscore the challenge of predicting whether oil or gas will be found in frontier areas," USGS Director Marcia McNutt said in a statement.

New geological data from three-dimensional seismic surveys and more than 30 exploration wells that have been drilled in the area show more gas in the area than oil, the USGS said. Many of the new wells show "an abrupt transition from oil to gas just 15 to 20 miles west" of the northeastern boundary of the petroleum reserve, the agency said.

The Interior Department's Bureau of Land Management has held five lease sales in the NPRA from 1999 through 2008. The agency currently administers more than 300 Federal oil and gas leases, according to the agency's Web site.

By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com

 

Natural Gas Rises First Day in Four on Cooler November Weather
October 26, 2010, 3:04 PM EDT
By Moming Zhou
http://www.businessweek.com/news/20...t-day-in-four-on-cooler-november-weather.html

Oct. 26 (Bloomberg) -- Natural gas futures rose for the first time in four days as forecasts showed cooler-than-normal weather in early November, boosting demand for the heating fuel.

Temperatures will be below normal in the U.S. Northeast next week and along the Atlantic Coast from Nov. 5 to Nov. 9, according to Commodity Weather Group LLC in Bethesda, Maryland. Gas has tumbled 40 percent this year as rising production increased an inventory surplus.

“Prices are down to a level where it’s pretty cheap to buy gas,” said Carl Neill, an energy consultant at Risk Management Inc. in Atlanta. “You are starting to get colder weather predictions and it’s going to firm the market.”

Natural gas for November delivery rose 3.7 cents, or 1.1 percent, to settle at $3.354 per million British thermal units on the New York Mercantile Exchange. Yesterday gas fell to the lowest price in more than 13 months.

The November contract expires tomorrow. The more active December futures gained 10 cents to $3.766 per million Btu.

“People are going to be looking for bottoms at these levels,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “We have some weather pronouncements that are a little bit more bullish.”

New York will have a low of 38 degrees Fahrenheit (3 Celsius) on Nov. 7, 6 degrees below average, according to AccuWeather Inc. of State College, Pennsylvania. Boston will have a high of 30 degrees.

La Nina

About 52 percent of U.S. households use gas for heating, according to the Energy Department.

The weather phenomenon known as La Niña will be “the driving factor” this winter, Commodity Weather said in a report yesterday.

“Typical La Niña winters favor a warm East and South along with a cold North and West,” the forecaster said.

The Energy Department may say on Oct. 28 that U.S. gas stockpiles increased by 73 billion cubic feet in the week ended Oct. 22, according to the median of seven analyst estimates compiled by Bloomberg. The five-year average gain for the week is 45 billion.

Gas stockpiles rose 93 billion cubic feet in the week ended Oct. 15 to 3.683 trillion, the department reported last week, a record increase for the month of October.

A surplus to the five-year average widened to 8.4 percent from 7.4 percent in the previous week. A deficit to year-earlier supplies narrowed to 1.3 percent from 3.2 percent.

Stockpile Deficit

“This week’s storage report could well see the inventory deficit eliminated, sending storage on track to set a new record before the winter begins,” Biliana Pehlivanova, an analyst at Barclays Capital in New York, said in a report.

Stockpiles climbed to a record 3.837 trillion cubic feet last November before cooler weather spurred demand for the heating fuel, reducing supplies.

Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, gained 10.09 cents, or 3.2 percent, to $3.2774 per million Btu on the Intercontinental Exchange.

Gas futures volume in electronic trading on the Nymex was 276,410 as of 2:36 p.m., compared with a three-month average of 266,000. Volume was 186,885 yesterday. Open interest was 813,426 contracts, compared with the three-month average of 809,000. The exchange has a one-business-day delay in reporting open interest and full volume data.

--Editors: Bill Banker, Charlotte Porter

 

US gas market is in good shape, FERC analysts tell commission

Oct 27, 2010 - Nick Snow, OGJ Washington Editor
http://www.ogj.com/index/article-di...mics-markets/2010/10/us-gas_market_is_in.html


WASHINGTON, DC, Oct. 27 -- The US natural gas market is in good shape, with production at levels not seen in more than 35 years, moderate prices, and storage about 90% full with about 3 weeks left in the usual injection period, US Federal Energy Regulatory Commission staff analysts told the commission on Oct. 21.

“The abundance of domestic gas has resulted in moderate prices,” said Christopher Ellsworth, chief of the fuels market analysis branch in FERC’s enforcement office. “These prices, low compared to other fuels, contributed to record demand by power generators this summer.”

New supplies and infrastructure suggest that the industry is better prepared than ever to meet winter gas needs, Ellsworth said, adding, “Forecasts for a mild winter compared to last year, coupled with abundant supplies, should help keep prices moderate.” Two transparency orders—Nos. 704 and 720—are beginning to provide more market information, he said.

Record-high demand for power generation this past summer in response to hotter weather and higher industrial demand as the general economy improves have increased prices year-to-year, he told the commission. Prices nevertheless are lower than in recent years and are well below the 2005 price spike resulting from Hurricanes Katrina and Rita and the 2008 increase which occurred just before the financial crisis, Ellsworth said.

“Low gas prices are largely the result of the influx of new, low-cost shale gas, which has revolutionized the natural gas industry,” he report indicated.

Production up 23%
US gas production has increased 23% in the last 5 years to more than 58 bcfd from 48 bcfd in 2005, Ellsworth said. Most of that growth comes from shale gas, which now accounts for 20% of US gas production, he noted.

“Shale gas development has turned the economics for drilling for gas on its head,” he said. “The cost of developing shale gas has declined and well productivity has increased as drillers gain experience with the new technology. In some instances, the time needed to drill a shale gas well has plunged from weeks to just days. This has driven down break-even costs for most gas shales to less than $4/MMbtu and even lower when natural gas liquids such as propane, ethane, and butane are present.”

Ellsworth said that the presence of NGLs increases well profitability considerably although new infrastructure in some instance will be needed to get these products to markets. “There is a possibility that the need to find a ready market for [NGLs] could slow down shale gas development in some areas,” he said. “Possible regulations in response to concerns about the impact of [hydraulic fracturing] fluids on the environment could affect future drilling plans. However, if current trends in technology continue, the cost of developing shale gas is likely to continue to fall, which should moderate long-term gas prices.”

The US is relying less on other source as shale gas production increases, he told the commission. Gulf of Mexico gas production has declined to 7 bcfd from more than 11 bcfd in 2006, which has reduced market apprehension over potential offshore production disruptions from hurricanes and little impact on total gulf production from the deepwater drilling moratorium, Ellsworth said.

He said a geographical shift in gas production is changing how the nation’s pipelines are used, particularly in the Northeast, where Canadian gas imports have dropped by 50% since October 2009 to less than 1 bcfd. “Western Canadian gas is being replaced by cheaper sources, including 1.7 bcfd via the new Rockies Express Pipeline and Northeast production [is being] led by growth in the Marcellus shale” where production has doubled in the last 12 months to around 700 MMcfd, he said. “Together, Marcellus production and Rockies supplies are beginning to compete against traditional Gulf Coast supplies,” he observed.

Western trends
While less Canadian gas has flowed to the US Northeast, it maintained its market share in the West and helped, along with mild weather, to keep gas prices moderate in California and the Pacific Northeast this past summer, according to Ellsworth. “And next spring, the 1.5 bcfd Ruby Pipeline is targeted to become operational, offering more Rockies production to Northern California and the Pacific Northwest as an alternative to Canadian gas,” he said.

LNG imports, meanwhile, through eight US, one Canadian, and one Mexican terminal have dropped to less than 1 bcfd after peaking at a record 5 bcfd in January, he said. Ellsworth cited two reasons for the decline: Shale gas production growth has helped reduce US prices to well below international prices (with prices at the UK’s National Balancing Point averaging $1.30/MMbtu higher than at the Henry Hub, while some Asian prices have been almost $8/MMbtu higher). And while global liquefaction capacity increased 30% last year, global demand is up too (by 21% in Asia and 41% in Europe).

“Today, two US terminals—Everett in Boston and Elba Island in Georgia—are responsible for most of the LNG imports,” the FERC analyst said. “Both terminals’ supplies are supported by long-term contracts. The Canadian terminal—Canaport, near St. John, NB—has steadily sent regasified LNG to New England and will become more important as production from Sable Island in Nova Scotia begins an expected rapid decline in the next year.”

He said LNG can still play a significant role in the Northeast, where prices can be significantly higher than on the Gulf Coast and therefore more attractive to international suppliers. “New England has access to more than 3.2 bcfd of LNG terminal capacity, including two new offshore terminals in Massachusetts Bay and the Canadian Canaport terminal,” he pointed out. LNG supplied 56% of peak New England gas demand this past January and could do so again this winter, Ellsworth said.

At the same time, storage is again robust, he continued. “While overall injections were slow during the summer—due to record gas consumption for power generation—injections began to pick up in September, and stocks for winter should end up close to last year’s record 3.8 tcf,” he said. The US Energy Information also has reported that the nation’s peak working storage capacity grew by 130 tcf between April 2009 and April 2010, Ellsworth said. Inventories of other fuels also are high as winter approaches, with distillate fuel oil stocks at a record 172 million bbl at the beginning of October and heating oil demand expected to be lower due to the economic recession, he said.

New pipelines
Ellsworth also noted that much new pipeline capacity has been added in the Northeast, with 500 MMcfd completed since spring on top of the 5.6 bcfd added in 2008 and 2009. “New pipelines and capacity completed by January should add an additional 725 MMcfd, making a grand total of 1.2 bcfd added in the Northeast since last winter,” he said. “Much of the new pipeline capacity is targeted at improving the access of shale gas to markets.”

Another 325 MMcfd of new pipeline capacity has been added in the West since spring, along with 2.5 bcfd along the Gulf Coast and in the Southeast, he indicated. “We expect another 3.5 bcfd in the West and 5.3 bcfd in the gulf and the Southeast to be added before the end of winter,” Ellsworth said.

He added that a much anticipated western pipeline is TransCanada’s 477 MMcfd Bison system, which will transport gas from the Rockies to the Midwest through an interconnection with the Northern Border Pipeline. Bison should begin service in mid-November, he said.

Prices for gas in the Northeast have narrowed relative to the Henry Hub, he continued. Prices in New York on Oct. 1 were $2.03/MMbtu higher than those at the Henry Hub for January 2011, substantially less than comparable price differences of $4.03 in 2010 and $5.51 in 2009. “The decline in these projected October-to-January differentials reflects market expectations about the change in winter price volatility due to added pipeline, LNG, and storage capacity in the region, as well as new supplies coming from the Marcellus shale formation and the Rocky Mountains via the Rockies Express pipeline expansion,” Ellsworth said. “It also reflects lower gas prices in general.”

Development of new gas supplies and transmission capacity also has pushed basis prices lower nationwide, he continued. Compared with the same period last year, winter basis swaps have declined by 46% in Chicago, 55% in the Pacific Northwest, and 32% in Appalachia, he said.

Contact Nick Snow at nicks@pennwell.com.