Rigs Don't Matter -- Laying Down Rigs, Shutting In Wells, And Still It Rises -- And So Do Exports .... Natural Gas -- Part 2 -- May 30, 2020

In response, I suppose, to my post earlier today: rigs don't matter -- US natural gas production continues to increase, a reader sent me a note. But before we get to that note, a reminder of what I wrote earlier:

Natural gas fill rate, link here. Look at these numbers, simply staggering. And this comes despite the industry "shutting down" as fast as it can:

• working gas storage: an increase of 109 BCF from the previous week
• working gas storage: an increase of 42% year-over-year
• working gas storage: an increase of 19% over 5-year-average (and the 5-year average keeps increasing)

Not entirely true, but from my perspective, the three major US shale oil plays are actually giving the US shale natural gas plays a run for their money.

Over the past few weeks, I have caught some of the stories regarding the US natural gas industry but a reader really, really put it into perspective. So, while protesters tear down the US and drive to their destinations in SUVs running on inexpensive, readily accessible, and consistently pure-grade gasoline or diesel fuel, this is what "their" US energy sector is doing. Again, a huge "thanks" to the reader for putting this all together:

• Deals:
• Ukraine just signed purchase agreement for US LNG for annual out put of one (1) standard LNG train (~5 mtpa); the Ukraine is in Russia's backyard;
• Turkey is not repairing the damaged gas pipeline from Iran and, instead, is purchasing US LNG
• likewise, US LNG is cheaper than piped Gazprom pricing (~$7/mmbtu) and so Turkey is also reducing LNG from Russia 
• the Yamal-Poland gas pipe currently not flowing supply as Poland ramps up purchases of US LNG
• both Algeria and Egypt have greatly curtailed exports of natgas due to low pricing.
• Customers such as Cyprus, Croatia, Italy, Hungary are either now switching to US LNG purchases or are planning to
• Qatar is struggling to extend LNG supply contracts to both India and Pakistan as their ~$7/mmbtu prices are higher than current ~$4/$5 spot mostly sourced from USA 
• Singapore is not renewing contracts to receive piped gas from nearby Malaysian and Indonesian suppliers as  US LNG prices are so much lower 
• the reader's favorite: the world's leading LNG exporter - Australia - may start IMPORTING LNG from US into Port Kembla by next year.
• Reader's comments:
• people seem generally oblivious to the ultra-low cost to extract US 'shale' natgas, liquefy it, and transport it in ships that use the "boil off gas" for fuel (essentially cost free fuel).
• just as the Saudi government is pinched for oil-connected revenues, other global players are starting to be squeezed in a BIG way by competition from US LNG.

My comments:

Those are amazing data points; I had no idea of the "immensity."

I had seen a few of these data points over the past few weeks but I only caught a few of them. When all of them are put together, as you note, it's a reminder (for lack of a better word) how incredibly dominant the US energy sector really is.

Some years from now, I suspect, the current demand destruction issue / COVID-19 pandemic will be seen as a speed bump and at best a footnote in America's energy history.

Boil off gas (link here):