North American gas

Published at 14:58 6 Sep 2017 by

Energy Aspects expects tomorrow’s EIA storage number to be a 72 bcf injection. Our initial forecasts for the next two EIA storage weeks are injections of 95 bcf and 90 bcf.

Hurricane Harvey continues to dampen gas demand with industrial, power and gas trade still significantly below pre-storm levels due to flooding, power outages and widespread damage (see our E-mail alert: Hurricane Harvey is still dampening gas demand on the Gulf Coast, 1 Sep 2017). Though flows into Sabine Pass initially experienced little impact, the suspension of ship traffic on the Sabine River has left LNG storage tanks near full, and flows into the facility have dropped off substantially over the past week. Yesterday, flows were just 0.3 bcf/d and they will remain low until cargo loadings resume, which may not be for a few more days according to Sabine Pilots. Mexican exports are down by 1.1 bcf/d w/w for the reference week. Flows remain 0.6 bcf/d down on the pre-storm baseline. We anticipate the current week (ending 8 Sep) will average 3.7 bcf/d.

The Eastern US is expected to see cooler-than-normal weather over the next 10 days, while the West should remain warmer than normal. Power sector demand should stay low as a result. For the current week, we expect power demand to average 28.2 bcf/d, down by 0.8 bcf/d w/w. Flow data show that Texas and Louisiana power sector demand has been around 5.5 bcf/d in recent days, still below pre-storm levels. Flows into industrial facilities have yet to recover. With the added impact of Labor Day, we see industrial demand below the 20.2 bcf/d pre-storm baseline.

Gulf output has been improving over the past few days.  Scrapes for the GoM offshore region show production ticking back to 2.7 bcf/d, compared to a pre-storm baseline of 3.1 bcf/d and a trough of 2.1 bcf/d. Onshore GoM production is near 2.2 bcf/d, compared to a pre-storm 2.4 bcf/d. Eagle Ford/South Texas production has also ticked back up in recent days but has not fully recovered. With Rover Phase 1a online since Friday, output from the Utica is averaging near 4.7 bcf/d. Despite the storm-related disruptions, we still have output trending near 73 bcf/d.

Net Canadian exports have averaged 5.0 bcf/d in the current week, roughly flat w/w. This comes despite WCSB production ticking higher since the maintenance-related disruptions last month. Over the past five days, flow data indicate WCSB production averaging 14.2 bcf/d, up from the lows around 12.6 bcf/d seen in late August. However, the reprieve is likely only temporary with works on the Fort Nelson processing plant scheduled this month.

Balances still appear loose. With total output nearing pre-storm levels and demand remaining subdued, we expect 90+ bcf injections to be reported on 14 September and 21 September, which will weigh on sentiment. Prices could also see more pressure to soften as Hurricane Irma promises more demand disruption in the south-eastern gas market.

Balance forecasts, bcf/d

Source: Energy Aspects

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