Wednesday, October 21, 2015

Active rigs:

	10/21/2015	10/21/2014	10/21/2013	10/21/2012	10/21/2011
Active Rigs	68	191	182	186	195

RBN Energy: how flow data provides transparency into natural gas production, part 3.

In all sorts of commodity markets, buyers and sellers would give their eye-teeth to have access to accurate daily supply and demand data.  Access to such data would provide insight into the utilization of transportation assets, transportation patterns and ultimately --- the holy grail of commodity markets – price.  What if there was a commodity market where you could know supply and demand on a daily basis?  Well there is.  And it is the natural gas market.  Gas market analysts have access to the luxury of pipeline flow data that (in the right hands) provides reasonably accurate estimates of daily supply (including production) and demand. In today’s blog, we explain how the natural gas industry uses flow data to track gas production trends in real time.

Recap
In Part 1 of this series, we compared the pros and cons of U.S. gas production data from the Energy Information Administration (EIA): the Natural Gas Monthly (NGM), and two forward-looking reports, the Short-Term Energy Outlook (STEO) and the Drilling Productivity Report (DPR). The EIA historical production data is considered the benchmark and for good reason. But the big downside of this data is that it is lagged by two months so the latest NGM, for instance, only provides actual estimates through July 2015. The STEO and DPR data provide projections largely based on history, to extrapolate that data forward. However current market dynamics of rapidly improving productivity and a disconnect between drilling rigs and production render such backward looking projections somewhat moot. Another way to look at gas supply (and demand) in more real-time that we introduced in Part 2 – is pipeline flow data. Using daily, real-time flow data from our friends at Genscape, we showed that production from the Marcellus and Utica basins combined has continued to grow since July. Today we’ll show you how we built the Appalachia production flows using Genscape’s natural gas flow database.
First a brief primer on what flow data is, where it comes from and some of its pitfalls (because no one data source is perfect).

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Taken Longer Than Folks Thought

From Bloomberg/Rigzone:

After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output.

The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates.

While cratering prices and historic cutbacks in drilling have taken their toll on the U.S., OPEC members have also paid a heavy price.

A year of plunging government revenues, growing budget deficits and slumping currencies has left several members grappling with severe economic problems. The fact that the U.S. oil boom kept going for about six months after the group’s November decision also means OPEC has so far succeeded only in bringing the market back to where it started.

“It’s taken a hell of a long time and it will continue to take a long time -- U.S. oil production has been more resilient than people thought,” said Mike Wittner, head of oil markets research at Societe Generale SA in London.

“The bottom line is the re-balancing has begun.”

OPEC abandoned its traditional role of paring production to prevent oversupply last November as a tide of new oil from the U.S. eroded its share of world markets. The group chose instead to keep pumping, allowing the subsequent price slump to squeeze competitors with higher costs. Its representatives will meet in Vienna Wednesday with non-member countries including Russia for technical talks.