Update On East Coast Natural Gas -- RBN Energy -- February 21, 2018

Global warming? What global warming: from Rigzone:

Oil and gas will account for over half of the world’s energy by 2040, according to BP plc’s latest Energy Outlook.

The outlook’s ‘evolving transition’ scenario highlights that demand for oil will grow over much of the period to 2040 before plateauing in later years. All the demand growth is said to come from emerging economies, with the growth in supply driven by US tight oil in the early part of the outlook. OPEC is said to take over from the late 2020s as Middle East producers adopt a strategy of growing market share.

The transport sector will continue to dominate global oil demand, according to BP, accounting for more than half of the overall growth. Most of the growth in energy demand from transport, which flattens off towards the end of the outlook, comes from non-road (largely air, marine, and rail) and trucks, with small increases from cars and motorbikes.

After 2030, the main source of growth in the demand for oil is from non-combusted uses, particularly as a feedstock for petrochemicals.

Natural gas demand is anticipated to grow strongly over the period, according to the scenario, overtaking coal as the second largest source of energy. By 2040, the US is said to account for almost one quarter of global gas production, with global LNG supplies more than doubling.

Impact of oil on US economy: the headline story in today's WSJ -- America's emerging petro economy flips the impact of oil. 

SPR update, via Twitter:

Noble Energy: shares surge 8%? I heard that on the radio this morning. Don't know any more than that. Other sources suggest it's up almost 11%. Most likely due to the Delek-Noble Israel-Egypt natural gas story. Noble Energy, Israel’s Delek to supply gas to Egypt in $15 billion deal.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what your read here or think you may have read here.

Frack sand shortage? Mike Filloon started talking about this years ago, and this particular story posted previously on the blog. Now, over at oilprice.com:

Halliburton said last week that its earnings could be negatively impacted because of bottlenecks related to the supply of frac sand used in shale drilling. The Wall Street Journal reported that Halliburton’s shares were briefly halted on February 15 after Halliburton’s CFO Chris Weber told an audience at the Credit Suisse Energy Summit that the company’s first quarter earnings could take a hit by a whopping 10 cents per share.

The reason, he said, was because of delays by Canadian rail companies that would slow the delivery of frac sand. Halliburton saw its shares drop by more than 2 percent on a day that saw broader gains to the S&P 500.

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Back to the Bakken

Active rigs:

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RBN Energy: East Coast natural gas prices hit all-time highs during "bomb cyclone."

After a three-year hiatus, winter returned to the U.S. natural gas market this year in the form of a “Bomb Cyclone” and more than a week of frigid temperatures.

The cold weather pushed Henry Hub prices above $6/MMBtu and East Coast prices higher than $100/MMBtu on some days.

This winter, the pain wasn’t just confined to New England.

Prices at Williams’ Transcontinental Gas Pipeline (Transco) Zone 5, which includes the Carolinas, Virginia and Maryland, hit all-time highs on January 5. Exports from Dominion’s Cove Point terminal in Maryland are only just getting started so it’s not liquefied natural gas (LNG) exports from the East Coast that are driving prices higher. Instead, it’s gas’s increasing role in winter power generation that has been putting pressure on East Coast gas pipeline deliverability.

Today, we begin a series explaining why prices have been so high on very cold days this winter and why more price spikes may be ahead. This winter, eastern gas prices have set records at some hubs and spiked near record highs at many others. Prices at Algonquin Citygate and Transco Zone 5 ran up to more than $100/MMBtu on January 5, and to $24/MMBtu during the week prior.

These price spikes have been driven by an increasing call on gas for power generation across the eastern U.S. On the coldest days, such as we saw when the Bomb Cyclone hit, the demand for gas as a generation and heating fuel exceeds pipeline capacity to deliver it, which begins a cascade of dominoes that results in skyrocketing prices.

How could such a calamity happen when Marcellus and Utica, two of the greatest gas producing fields in the world, sit right at the doorstep of this market? Although U.S. gas supply overall is more than plentiful, gas pipeline capacity into parts of the East Coast is not. Couple this with rising gas demand for baseload power generation and you have a recipe for price spikes, especially on the Transco system.

Either directly or indirectly, Transco serves almost all of the demand in the Carolinas and much of it from Virginia to New York City in its zones 5 and 6. We call the states in these two zones the Eastern Transco Corridor.