Thursday’s EIA report (week ended 22 Mar) – EA Final Estimate: -33 bcf
- We forecast Thursday’s EIA report will show the final withdrawal of the heating season, of 33 bcf. Gas-weighted HDDs (GWHDDs) slipped by 5% w/w, lowering res-com demand by 1.5 bcf/d w/w to 28.0 bcf/d. This was partially offset by small 0.2 bcf/d w/w bumps from both LNG feedgas demand, as Corpus Christi T2 started receiving gas intake, and power burn.
- Rising supply also contributed to a lower w/w withdrawal. Total Lower 48 production grew by 0.2 bcf/d w/w thanks to gains of 0.1 bcf/d each in the Rockies and Bakken. Net imports from Canada also rose, by 0.3 bcf/d w/w. Restrictions at Westcoast Energy Station 4B eased by 0.3 bcf/d between 13–20 March, allowing more gas to flow through the downstream Sumas border point.
Next Thursday’s report (week ending 29 Mar) – EA Estimate: +8 bcf
- Our forecast calls for the current week to see the season’s first injection, of 8 bcf. GWHDDs are projected to drop by another 5% w/w, with res-com demand set to lose 2.5 bcf/d w/w as a result. Industrial demand will also suffer as gas use for industrial heating declines by 0.3 bcf/d w/w.
- Based on current weather forecasts, we now project end-March storage levels of 1.13 tcf. This represents the lowest end-of-winter carryout since the 2014 polar vortex and is 260 bcf lower y/y (though withdrawals continued into the third week of April in 2018).
- A 0.8 bcf/d w/w jump in total Lower 48 output will also factor into the switch to net injections. The gains will come from a diverse geography of gas plays. We forecast that Bakken output will hit a new weekly record of 1.9 bcf/d (+0.1 bcf/d w/w). The Rockies’ slow recovery from early winter freeze-offs will continue with a further 0.2 bcf/d in w/w growth. In the South Central, Haynesville receipts are on pace to increase by 0.1 bcf/d w/w.
- Permian output is also on track to surge by 0.3 bcf/d w/w, despite a force majeure affecting outflows from the basin. Equipment failures on El Paso Natural Gas (EPNG)’s Lordsburg and Florida compressors began on 18 March. Repair work will run through 8 April, reducing capacity on EPNG’s Line 2000 by up to 0.3 bcf/d. With less capacity available for higher weekly production, Waha prices are spiralling, including a sub-zero close of -$0.62/mmbtu on 26 March.
- We forecast LNG feedgas demand will decline by 1.3 bcf/d w/w from last week’s record high of 5.4 bcf/d. The declines are concentrated at Sabine Pass. Cheniere began maintenance on T1 and T2 at the terminal on 22 March, with each train worth approximately 0.7 bcf/d.
|Fig 1: Regional flows and fundamentals model, bcf|
|Source: Energy Aspects|
|Fig 2: Balance forecasts, bcf/d|
|Source: Energy Aspects|