Today’s report (week ended 10 May): EIA net change: +106 bcf, EA: +106 bcf
- Fundamentals were essentially flat across our supply-demand ledger except for res-com demand, which plummeted by 2.8 bcf/d w/w.
Next Thursday’s report (week ending 17 May): EA preliminary: +110 bcf
- Once more, our balances show fairly flat fundamentals w/w. A 1 bcf/d w/w drop in power generation drives our projected higher injection.
Today’s Panorama will look at several pipelines with announced in-services dates this year. However, with daily production trending the way it has of late—generally flat but with lots of flow data noise from maintenance—it would be unwise to gloss over the impacts of a heavy maintenance season this shoulder season. Before the start of May, our estimate for m/m growth was 0.5 bcf/d. Given an essentially flat production reading for the week in progress, there is some risk that the number will fall toward 0.3-0.4 bcf/d m/m, even assuming a moderate clip of weekly gains on the order of 0.2-0.3 bcf/d through the end of the month.
Looking at basin-level production flow data, no single region stands out as an outperformer (see Fig 1). The typical driver of sequential growth, Appalachia, has registered a 0.2 bcf/d m/m decline on a month-to-date basis, according to flow data. Permian production has come off m/m, according to our sample, with a 0.5 bcf/d gap between this month’s peak daily production and its lowest, as we have seen more maintenance and also some price-responsiveness from producers choking back/shutting-in output. We expect such vacillating flows to be business-as-usual until the 2.0 bcf/d Gulf Coast Xpress enters service. GoM production was similarly down as flows have come off through Destin.
While 2019 is not the banner year for new pipeline additions like 2018 was, the remainder of 2019 still has several projects with announced in-service dates. To assess how timely some of those pipes might be, we have looked to FERC and the latest round of earnings calls to try to gauge progress.
In what came as little surprise, NextEra announced that the beleaguered 2.0 bcf/d Mountain Valley Pipeline (MVP) would be ‘unlikely’ to meet its Q4 19 in-service date. Progress since the start of the year has been glacial (see Fig 2), according to construction updates submitted to FERC. Aside from the variety of legal challenges, cost overruns and environmental violations, less than a 1% advancement in progress in welding from January through mid-May has occurred and just slightly over 1% more progress has taken place for backfill and tie-in activities. There was a notable step-up in progress on spreads E and F in terms of right-of-way and trenching between April and May, but notably not much progress on welding. We do not expect MVP online before H2 20 at the earliest.
The shippers on Midship (ex Cheniere)—Marathon Oil, Devon and Gulfport—did not specifically mention timing of the pipe in their Q1 19 earnings calls or company presentations. However, the lack of mention should not be conflated with a potential delay as progress on the pipe still suggests that a Q4 19 in-service date could be met. Clearing and grading of the project continues to progress, while two of the four compressor stations are near 30% complete. The project has run into some issues with topsoil, erosion control and sediment, but the problems reported to FERC do not appear dire enough to materially impede progress. Related to those issues with erosion control and sediment, formal landowners’ complaints against Midship were filed with FERC within the past week. We will continue to monitor those to assess if remediation of those problems starts to look burdensome enough to delay the pipe.
Meetings between IEnova, TransCanada and CFE to discuss contract renegotiation on the Sur de Texas-Tuxpan pipeline are due to take place this week, according to local sources. It is unclear if any such renegotiation would hamper the in-service date of the pipeline as CFE is already remitting payments to TransCanada for the line. However, we remain cautious on the timing of the pipe given local protests and other issues. Additionally, a public tender announced within the past several hours for an additional seven cargoes into Altamira from May-July suggests that the pipeline is likely delayed until late July at the earliest as those cargoes would backfill supply from the pipe.
|Fig 1: Monthly production by basin, bcf/d||Fig 2: MVP construction, percent compete|
|Source: Ventyx, EIA, Energy Aspects||Source: FERC, Energy Aspects|
|Fig 3: Midship construction, percent complete||Fig 4: Weekly EIA storage change, bcf|
|Source: FERC, Energy Aspects||Source: EIA, Energy Aspects|