Largest Cross-Border Natural Gas Pipeline (By Volume) To Be Operational Early This Summer -- April 19, 2019

Re-posting because it's making America great again. 

From SeekingAlpha:

TransCanada and IEnova's (Sempra Energy) Sur de Texas-Tuxpan pipeline to add U.S. natural gas export capacity to Mexico should come online by the end of June.

The Texas-to-Mexico pipeline had been expected to come online by mid-February but technical and other problems have delayed the project by more than a year.

Sur de Texas will connect with Enbridge's 2.6B cf/day Valley Crossing pipeline; once the entire pipeline system comes online, it will comprise the largest cross-border gas pipeline by volume.

April 12, 2019, T+100, Part 2

FWIW.

I will never again be "snookered" again about the risk of a natural gas shortage in the US.

Natural Gas, April 11, 2019, T+99, Part 2 -- Making America Great

Updates

April 12, 2019: with regard to the note below, a reader noted --

"Unfortunately: NGCC power plants are less efficient than other forms of natural gas-fired capacity." Did you mean non combined cycle are less efficient - like single stage peak load generators....the other 1/2?

Original Post

Natural gas milestone, 2018: US natural gas-fired combined-cycle capacity overtook coal-fired capacity in 2018.

NGCC.

• 2019, US:
• NGCC capacity: 264 GW
• coal plant capacity: 243 GW
• NGCC capacity: accounts for about half of all natural gas-fired capacity in the US

Unfortunately: NGCC power plants are less efficient than other forms of natural gas-fired capacity.

Last four years:

• coal: shed 40 GW of capacity
• NGCC: added about 30 GW 

Examples:

• Duke Energy: $1.5 billion, 1.64 GW Citrus Combined Cycle Station in Florida
• Dominion Energy: $1.3 billion, 1.6 GW Greensville station in Virginia

$1.5 billion / 1.6 GW =  $1 million / MW
New natural gas capacity for 2019: should add 6 GW of electricity -- mostly in PA, FL, and LA

It's very interesting: California is not mentioned in the article. In fact, the entire west coast is AWOL.

*******************************

Skills For The 21st Century

Canadian CBR, Slawson, The Dockets, And All That Jazz, Page 5 -- September 3, 2018

Locator: 10010B.

 

Updates

Later, 8:05 p.m. CDT: the same reader (see below) provided an update to show the "weekly estimate" vs the "monthly official" data: https://static.seekingalpha.com/uploads/2018/8/31/5006891-15357440372477696_origin.png.  Based on comments from the reader, I was the only one that missed that memo. LOL. I learn something new every day.

Later 7:51 p.m. CDT: a reader wrote:

The Reuters story is not dated.  It is referring to the monthly data, which has high accuracy but is a couple months old.  The weekly bpd is not even really data, but is "current".  But it is just a model (comes from the STEO model).  Weekly estimates can be off by hundreds of thousands of bpd (under or over). 

The reader is very, very correct. The Reuters story is not "dated" -- as in an "old" story. I was mistaken. I learned something new. For those who are confused:

• the official EIA data that comes out monthly lags two months, just like the NDIC data -- lags by two months; 
• on the other hand, the weekly data is an estimate 

Later, 2:18 p.m. CDT: wow, talk about a dated story. The Reuters story is dated August 31, 2018, and perhaps the EIA released the "official" data, but regular readers know the current record is well above 10.674 million bopd set in June. At this EIA link, US crude oil production hit 11.0 million bopd in the 2nd week of July, and has fluctuated since then between 10.9 million bopd and 11.0 million bopd. The next milestone: 12 million bopd. 

Original Post

US crude oil production hits record -- EIA. Record hit due to Texas production - Reuters.  Data points:

• crude oil, US data:
• June, data: US production rose 2%, month-over-month
• June, data: US production, rose 231,000 bopd
• June, data: 10.674 million bopd 
• the agency also revised the May estimate to 10.4 million bopd (up 1,000 bopd from original estimate -- wow, talk about "false precision" -- 1,000 bopd)
• Texas:
• output climbed 165,000 bopd; or 3.9% to 4.4 million bopd
• Gulf of Mexico:
• climbed 10.3%, or 154,000 bopd to 1.7 million bopd 
• US natural gas in the lower 48, June: an all-time high of 90.8 billion cubic feet, 
• May: a prior record; 89.9 bcfd
• Pennsylvania: second biggest gas producing state: 16.5 bcfd in June
• The US has been the world's biggest producer of natural gas since 2009, ahead of Russia.

I did not realize that -- it's been almost ten years since the US took the lead in natural gas production, back in 2009. The US fracking revolution began in 2000; the Bakken boom began in 2007.

***************************************

Peak Oil? What Peak Oil?

Guyana Update

Guyana update, for those concerned about off-shore drilling. From Rigzone:

Following Exxon Mobil Corp.’s latest Hammerhead-1 discovery, the company’s ninth discovery offshore Guyana, it’s believed the country will create the greatest value of any offshore basin since the downturn.

.... the Hammerhead discovery as a “another play-opener” that adds to more than four billion barrels of oil equivalent of reserves through an exploration program that has a current success rate of 82 percent.

... almost 18 prospects left to pursue in the Stabroek block, the project is bound to get bigger. 

[To make this successful,] Guyana must first develop institutional and regulatory framework in order to effectively manage the emerging sector.

Guyana has hit the jackpot. If this small South American nation with a population of about 750,000 can properly manage the billions of dollars of revenue about to come its way, it may become the richest corner of the continent.

Canadian CBR, Slawson, The Dockets, And All That Jazz, Page 4 -- September 3, 2018

Profits? How good was the last quarter. Russian oil giants more than doubled their combined profits in the first half, trouncing estimates thanks to a weaker ruble and rebounding prices. And with output curbs easing, the influx of cash is set to continue. Bloomberg.

******************************

Huge, Huge Story For Appalachia

Making America Great Again

Making America great again. As you read this story, remember, Hillary's goal was to put millions of miners out of work. Trump's goal was to put Americans back to work. Let's swing over to Appalachia. Appalachia Development Group awards contract for $3.4 billion ethane storage hub. Wow, it never quit. Link here.

First, some background (see link below):

The goal of the Research Team was to complete a geologic study of all potential options for subsurface storage of NGLs along and adjacent to the Ohio River from southwest Pennsylvania to eastern Kentucky, with a similar study along the Kanawha River in West Virginia.

This involved the mapping and identification of areas where the Salina F Salt is at least 100 feet (ft) thick and suitable for solution mining; mapping and identification of areas of the Greenbrier Limestone that are at least 40 ft thick and suitable for hard-rock mining; and mapping the thickness and extent of sandstone reservoirs in depleted gas fields and gas storage fields that could be converted to NGL storage.

The Research Team defined an Area of Interest (AOI) on both sides of the Ohio River that extends from southwestern Pennsylvania in the north as far as the Kanawha River Valley in southern West Virginia, and conducted a regional stratigraphic study of all potential storage candidate formations and reservoirs in this area. Each of the individual stratigraphic units or intervals was defined in the subsurface based on well-log patterns that marked the top and bottom of each. These log tops were then correlated throughout the AOI, enabling the construction of regional stratigraphic cross sections as well as thickness and structure maps. Individual sandstone reservoirs were identified within this regional stratigraphic framework, as appropriate.

Now, data points from the linked Rigzone article:

• multibillion-dollar regional storage complex for NGLs
• sourced from the Marcellus, Utica, and Rogersville shale plays
• ADG and Parsons: joint venture: the buildout of the Appalachia Storage and Trading Hub (ASTH)
• first phase: pre-front end engineering design (FEED)
• subsequent phases: would include constructing the $3.4 billion project and its long-term operation
• the ethane storage hub will act as a catalyst for more than $36 billion in follow-on petrochemicals investments and the creation of more than 100,000 long-term jobs
• DOE: a $1.9 billion loan guarantee (I doubt Hillary's DOE would have done this -- the guarantees would have gone to her renewable energy cronies and Russian uranium friends)
• with the $1.9 billion loan guarantee, the group now seeks $1.4 billion in private investment (so while couch potatoes are watching hundred-thousand-dollar deals with Mark Cuban, the real investors are looking at US energy)
• this link takes you to the study: 2017 Appalachian Oil and Natural Gas Research Consortium study

Speaking of which, whatever happened to the proposed Badlands NGLs project? The last presentation was May, 2016.

On another note, a great time to re-read the New York Times reporting on natural gas shale revolution which they called a scam/hoax.

Shale Revolution -- Natural Gas -- September 1, 2018

From the EIA:

***************************************

The Country That Can't Close A Deal ....

.... but he sure is photogenic. Eh, what just happened?

*****************************************

But Will Amazon Ship For Free?

Natural Gas Inventories "Dangerously Low" -- Contributor Over At Oilprice -- August 25, 2018

Updates

September 4, 2018: so much for CO2 and global warming. The Brits are going to use a lot of coal this winter. Natural gas getting too expensive; coal is cheap. Link at Platts (beware: lots of jargon):

Bullish NBP spot and winter contract gas prices have focused the power market's attention on the UK's coal-fired power plants, which have recently become more economical to run in the summer as well as in the winter.

The gap between prompt NBP gas and the coal switching channel indicates that, if and when needed, thermal generation is going to be predominantly coal-fired this winter, with higher gas prices opening the way for increased coal-fired generation, despite a strong hike in carbon prices.

Data show 35% efficient coal-fired plants are competing with 45% gas-fired plants.

The UK month-ahead coal-switching price for 45% efficiency was 68.43 pence/therm on Monday, slightly lower than the NBP day-ahead contract assessment of 69.70 p/th.

However, UK month-ahead CSP for 50% efficiency was 78.19 p/th. Platts CSPI is the theoretical threshold at which gas is more competitive than coal in power generation.

When the gas price is higher than the CSPI, CCGTs are more expensive to run than coal-fired plants.

"Despite the gains in carbon over recent months, coal generation has been supported this week by particular strength in the gas market," according to S&P Global Platts Analytics.

"We forecast gas to lose ground this winter too, with the Q1-19 Clean Dark Spread above the Clean Spark Spread. As a result we expect coal generation to be stable year-on-year this winter, despite the closure of 2GW of capacity, while gas generation is forecast to fall more than 3 GW vs Winter-17."

August 26, 2018: Europe's natural gas prices surge to record for summer season.

Europe’s natural gas market is the most bullish it has been in years, as higher-than-expected summer demand and a tighter market drive natural gas price futures to levels last seen during this past winter’s supply crunch and to the highest for a summer season.

Natural gas prices are expected to stay strong and may still have room to rally, ahead of the next winter heating season in Europe that begins in October. 

Contrary to the typical summer lull in Europe’s gas prices, this year the front-month gas price in the UK—Europe’s biggest gas market—for example, is nearing the winter price from December 2017 when a deadly explosion in Austria’s gas hub at Baumgarten squeezed supplies throughout Europe. Immediately after the explosion, the price of gas for immediate delivery in the UK reached its highest level since 2013.

August 26, 2018: natural gas production in the US --

Gulf of Mexico Fact Sheet, EIA: Gulf of Mexico federal offshore oil production accouts for 17% of total US crude oil production and federal offshore natural gas production in the Gulf accounts for 5% of total US dry production. Comment: I believe the EIA data is for the entire US, including Alaska. RBN Energy often limits their NG production discussions to the "lower-48."

US natural gas production: EIA update, December 4, 2017.

From the EIA:

Drilling wells in the Appalachia region has become very productive.

The average monthly natural gas production per rig for new wells in the Appalachia region increased by 10.8 million cubic feet per day since January 2012.

EIA attributes this increase to efficiency improvements in horizontal drilling and hydraulic fracturing in the region, which include faster drilling, longer laterals, advancements in technology, and better targeting of wells.

For example, in West Virginia, the average lateral length per well has increased from about 2,500 feet in 2007 to more than 7,000 feet in 2016. Some operators have recorded lateral lengths as long as 15,000 feet in the Marcellus and 19,000 feet in the Utica. Along with longer horizontal drilling, the days it takes for completion have decreased from about 30 days in 2011 to 7 days in 2015.

Comment: For comparison, lateral lengths in the oily Bakken are around 9,000 to 10,000 feet, and take about 10 days to reach TD, but the range can be quite wide, some still taking as long as 30 days (of course, that is not continuous drilling).

Note: in the EIA graph above, the Appalachia region was producing about 20 billion cf/d as of 2017. The chart below suggests about 25 billion cf/d during 2017. But notice the current rate of production in the Marcellus, nearing 30 billion cf/d in September, 2018. Maybe that's why folks are not concerned about that widening gap in the "natural gas fill rate" as noted in the original post.

Current Appalachia production, ycharts:

Original Post

The following was previously posted, just a few days ago.

NG fill rate, link here. I still think this is going to be the most interesting metric to follow this winter. If it's a cold winter, and if storage rates fall outside the historic minimum going into November, and if the US shale natural gas operators can meet natural gas demand this winter, it means tracking natural gas fill rate is almost meaningless:

Update: I think this is one of the most fascinating stories currently being followed.

If this is a cold winter, it will be interesting to see if the natural gas sector can respond. It it is a cold winter and the natural gas sector responds "without missing a beat," it will suggest to me that the tracking of this metric is absolutely unnecessary.

Having said that, look at this article today from "Ag Metal Miner" over at oilprice.com:

Futures markets are suggesting the currently benign level of natural gas price volatility may not remain through the winter months.

According to the Financial Times, market volatility this year has been the lowest on record despite inventory levels falling 19.5 percent below average and by the time winter starts are set to be at their lowest in more than a decade.

The Financial Times puts this down to investors being lulled into complacency by a seemingly unstoppable wave of new supply from the shale market rising inexorably to meet rising demand.

The government last week forecast 81.1 billion cubic feet per day in dry gas production for 2018 — a record high — and up by 7.5 billion cu ft/d from 2017.

But is the market safe to assume shale gas will supply regardless of demand?

Natural gas producers are systematically hedging their sales throughout next year, often a sign they plan to continue an aggressive policy of drilling and expansion.

That activity has contributed to a dipping of forward prices, as there are more sellers in the futures market than buyers.

But inventory levels are low — some would suggest dangerously low — after a high summer demand due to hot weather increasing demand for air conditioning. Natural gas “power burn” surged to a record 37.7 billion cubic feet per day during July, the Financial Times reports.

So, we'll see.

The FT story is behind a paywall. I could not get to it "thru" oilprice.com but I was able to google and get to it "thru" a Yahoo link.

From the FT article:

When US natural gas futures passed a milestone this month, they did so quietly: volatility fell to the lowest levels since the market’s debut nearly 30 years ago. 

The event seemed improbable. Volatility usually fades when commodity stocks are ample. Yet US gas stocks are 19.5 per cent below average. 

When the winter starts they are set to be at their lowest in more than a decade. This situation is the latest example of how the world’s largest gas market has been transformed by shale drilling. While demand for gas is galloping, it has been met by waves of supply that show no sign of abating. Conditions that put traders on edge a decade ago get shrugs.

And that's way I think it will be fascinating to watch this play out this winter. Especially if it's a cold winter.

Wow, I love to blog.

US Natural Gas Production Hits All-Time Record In April -- EIA -- Argus Media -- June 30, 2018 -- So The Magic Number Is 90 BCFPD

From ArgusMedia:

US natural gas output hit a record high in April above 89 Bcf/d (2.5bn m³/d) as production rose in Texas, Louisiana and Oklahoma.

Gross gas production from the lower-48 states rose in April to 89.1 Bcf/d, up by 0.3pc, or 252mn cf/d from March, the US Energy Information Administration (EIA) said today in its monthly production report. April output has surged by 12pc from a year earlier as new infrastructure allowed more northeast gas to reach market and as producers continued to shore up fresh oil supplies from places like the Permian basin. 

Rising gas production and expectations for future supply growth has put downward pressure on prices this year.

Natural gas futures so far this summer have failed to sustain a rally above $3/mmBtu, despite low inventories and hot weather, a sign of confidence in continued growth.

A Graphic Worth 10,000 Words -- March 30, 2018

It would be interesting to have a similar graph with two natural gas exporters superimposed / compared: the US and Qater. Or the US and Russia. Or the US and anyone else.

US Natural Gas Production, A Random Update -- March 3, 2018

Updates

NOTE: from million tonnes LNG per year (MTPA) to Bcf/d = multiply the former by 0.131584156

March 4, 2018: China became second largest importer of LNG (after Japan) in 2017; Japan 11 Bcf/d; China, 5 Bcf/d; but Japan's and Korean imports have remained steady for years; China's is growing significantly; see EIA data;

March 4, 2018: the world needs a lot more LNG -- Royal Dutch Shell --

• global trade volumes of LNG have doubled since 2005, and will continue to rise
• the US will boast almost 10 billion cfpd of LNG export capacity by the end of 2019
• US will be the third-largest LNG exporter, right behind Australia and Qater
• that alone is amazing, but then consider this: two years ago (2016), the US had less than 1 Bcf/d of export capacity
• Shell says the global supply of LNG won't meet demand
• Shell expects the supply crunch to occur i the early 2020s mostly due to the way buyers/sellers interact
• buyers want smaller, more flexible, shorter (in duration) contracts
• sellers want the opposite to lock in prices / volumes to cover very expensive terminals ($4 billion for Cove Point)
• sellers have responded: smaller trains at Cove Point; floating terminals

March 4, 2018: with regard to the Cove Point comment below, see this Reuters story --

• first vessel carry LNG from newly constructed Cove Point LNG export terminal in Maryland has departed as of Friday (remember all the protesting again Cove Point? with revelations of Russia's meddling in US politics, the dots are starting to connect; I always thought it was Saudi Arabia sponsoring protests against shale, pipelines, natural gas -- nope, it was the Russians; if they dupe people into anti-Hillary demonstrations supporting Bernie Sanders, certainly they could do much more in the energy arena)
• the facility is still undergoing final commissioning
• Cove Point is the second big LNG export terminal in the Lower 48; after Cheniere Energy's Sabine Pass terminal in Louisiana which exported its first cargo in February, 2016
• US became an exporter of LNG in 2017 for the first time in 60 years
• the US will become the third largest LNG exporter this year (2018)

Later, 10:32 p.m. CT: see comments --

Regarding LNG and its export ...

Two developments will greatly assist US companies to bypass existing LNG producers, namely modularization and ship-based LNG plants.

Modularization: Tellurian cost to produce 27 mtpa (almost double Yamal [ Russia, Arctic]) is about $16 billion (about half Yamal) using the modularization approach.

Floating LNG: Delfin plans on using FLNGs -- ships -- to greatly lower the price to liquify gas.

Later, 9:59 p.m. CT: see first comment --

The Cove Point MD LNG just shipped its first test cargo of LNG the other day. [Think of all the jobs this "operation" has produced.]

At 750 MMcfd capacity, it will increase US exports a bit.

One year from now, pipelines will be online carrying 10 Bcfd gas out of the Appalachian Basin. This will increase AB (Appalachian Basin) production from 25 to 35 Bcfd ... simply a staggering amount.  [Again, to put that in perspective -- Bloomberg Gadfly points out that the additional 7 billion cfd growth this year is staggering -- imagine multiplying that 7 billion by four or five times -- and that's just one year from now.]

More increases will continue.

People are gonna be shocked at how much gas the US will be producing 5 years from now.

Original Post 

Natural gas, US production, EIA, the graphic:

Bloomberg, the Gadfly, January, 2018:

Again, to repeat, the US will add the equivalent of the entire output of Turkmenistan -- one of the world's largest gas exporters -- in the space of just one year.

According to a google search:

During 2009, Qatar exported over 2.4 trillion cubic feet of natural gas.

From SeekingAlpha, March 2, 2018:

The big fundamental news this week was that Lower 48 production averaged an all-time high of ~78.4 Bcf/d, and LNG exports reached ~4 Bcf/d.

80 billion x 30 days = 2,400 billion cf/month -- compare to  2,427 billion in the EIA graph at the top.

Disclaimer: I often make simple arithmetic errors, especially dealing with large numbers.

*********************************

Just Dropped In ...

... To See What Condition My Condition Was In, Kenny Rodgers and The First Edition

This Natural Gas Graphic Should Get Your Attention -- January 26, 2018

I thought the graphs at this link were striking:

But then I saw this one, the one on the right below, today, via Twitter:

Random Update Of The Appalachian Gas Field -- Incredible -- January 21, 2018

I wouldn't post / link this except for the fact I've had a very loyal reader who has been pointing this out for the past two years. From oilprice, the world's most innovate gas field -- Appalachian gas. Some data points:

• Appalachian gas production has surged over 85% since 2014
• produces more gas than all other shale plays in the US combined
• a late of pipeline projects finally coming on line in 2018
• huge and unexpected divergence between rig count and total gas output (is rig count relevant any more?)
• production per well continued to increase; has now set a record: 26,027 mcf/day (record set last month)
• a new Marcellus gas well today yields almost twice as much gas as the same with well with similar latitude/longitude in Hanynesville field, East Texas, the second largest producing gas region in the US
• now drilling super laterals -- as long as 20,000 feet long
• multi-well pad now the standard; typical pad currently expect to contain a dozen wells
• "walking" rigs; takes just a few days as opposed to months to complete a well all the while achieving 50% increase in efficiency
• latest example: Eclipse Resources drilled a Utica well in less than 17 days; length exceeding 19,000 feet
• cost of an average well has dropped from $1.2 million in 2011 to $300,000 currently
• the expected IRR for a 12-well pad with 12,000 feet lateral exceeds 100%
• the expected IRR for a 5-well pad with 5,500 feet lateral barely breaks 70% mark

Much more at the link.

A Most Incredible Graph -- Global Warming Causes A Surge In Natural Gas Use -- January 11, 2018

A stunning graphic, simply stunning:

************************************

Sun Dogs

From The Bismarck Tribune, via Twitter:

I first read about sun dogs when reading Shakespeare some years ago.

Here are two links:

• when sun dogs changed England
• wiki, with a photo from Fargo, ND, of all things