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Natural Gas Inventory: Expect A Smaller Injection Tomorrow Than Last Thursday's 70 Bcf: 55-65 Bcf Being Probable

Summary

Reporting Week Tomorrow ended 8/31, and had a 'Higher Rate' of Natural Gas Electric 'Feedstock' Usage than Week Ending 8/24: Hence 70 Bcf Injection will likely see reduction to 55-65 Bcf.

The following Thursday's Report: on 9/13 is for the week that Ends on 9/6: We Already Know: It Will Reflect 'Higher-Population-Weighted' CDDs than week ending 8/24: Net-Injection-9/13-Report ~60 Bcf.

Next 3 Weeks Thursday EIA Natural Gas Inventory Report=200 Bcf or LESS! Hence Net Injections aren't Rising Yet due to 'Unseasonable Weather' in "East"-"Midwest" Regions where 62/70 Bcf 8/24-Injections Occurred.

To maintain increased Domestic Natural Gas production we need continued investments in Upstream-Midstream-Downstream-Export Facilities: Hence Natural Gas Prices Must Support Continued Investment: ~$3 is a Probable Minimum Short-Term: ~$4 Will be Required to Increase Production/Distribution.

Peak Inventory for 2018 Likely BELOW 3.4 Tcf & Winter may provide domestic challenges to distribute ample Natural Gas to Middle Atlantic & New England where much of the Natural Gas still is Imported from Canada and the Middle East [Boston/Everett] in large regular LNG Deliveries.

Smaller Net Injections are likely over the next 3 Reporting Thursdays' from the E.I.A. Due to 'East' & 'Midwest' Regions Increased CDD's

In the last report 62/70 Bcf came from the "East" and "Midwest". That has changed though it hasn't yet been reported. The reason the 'Net Injections' are likely to be almost as high is due to the shortening length of sunlight, decreased sun angle, and possibility of greater precipitation. In essence, if this were July the 'Net Injections' would be closer to 10-25 Bcf. If Production hadn't kicked up to 83-84.5 Bcfs per day, an increase of 5-8 daily, compared to last year, we may have seen Net Withdrawals during many of the weeks this summer.

Exports Are Ramping Up: albeit Slowly Due to Infrastructural Completions

Our interest in Natural Gas is simply as a cleaner bridge to Renewables and have NO Interest in the Futures markets. However, most of our income is connected too Energy investments and that does include Coal, Oil, Nuclear as well as Renewables and Natural Gas. So I know that the TREND toward increasing 'Domestic Usage' and 'Net Exports' is going to continue and we are going to need more Natural Gas as well as the 'Takeaway Capacities' to deliver it from the fields into Regional Processing and Export Facilities [like the Gulf Coast, and 'Cove Point' [D] and 'Sabine Pass' [LNG].

100 Bcf Daily Will Be Needed by 2020: New Wells-DUCs & Infrastructural Improvements Will be Required

The 'Legacy Well' decline of 5% annually for Conventional Production is meaningless where Shale-Basins are concerned. In the Marcellus/Utica, within the Appalachian Shale Basin, 50-80% 'Legacy Declines' occur during the first 2 years. In the Permian, Natural Gas is primarily associated and a large proportion of it is currently being flared or is just leaking into the atmosphere as Methane. The Climatic Change issues aside, this wasting of the 'Associated Gas' in the Permian, NOT unlike what happened in the 'Ghawar Field' in Saudi Arabia, is actually worse because unlike 'Ghawar' the 'Permian Basin' is subject to the higher "50-80%" 'Legacy Declines' within just the first 1-2 years and those periods are being spent 'Venting' or 'Flaring' the Permian's 'Associated Gas'.

          Although Texas allows 6 months of 'Flaring', Texas Environmental Regulators don't sit around counting the days nor do they severely monitor the 'Venting' that occurs from Upstream Projects that are "Under Development". That term, "Under Development" gives both Regulators and Field Operators significantly more discretion so it is common knowledge that it is ongoing but that to be complete arbitrary about dates would be a 'Hardship' and 'Practical Difficulty' that would likely be better overlooked since they Upstream 'Start-Ups' are attempting to collect as much Natural Gas as is feasible given the current limitations in Permian 'Takeaway Capacities', as well as the requisite 'Associated Gas' Processing Plants that are needed in the production zone to convert the 'Sour/Associated' Gas into the standardized Natural Gas that can be shipped via conventional pipelines with the other natural gas produced. So, for now, the large potential Natural Gas production from the Permian is going both unrealized and much of it is being spent through 'Venting' and 'Flaring' during its most productive potential period because Crude Oil is what comes first, by far, in the Permian and most other Shale-Basins, excluding the Appalachian Basins which are to Natural Gas what the Permian is to Crude Oil.  

Increased Storage - Processing - Distribution Networks are Needed for Natural Gas & Require 'Mega' Fiscal Planning & Pre-Construction Preparations http://www.pipeline101.org/where-are-pipelines-located

The delays we are seeing for the Atlantic Coast Pipeline and a myriad of others is essentially causing bottlenecks to critical consuming regions and to Export facilities. These pipelines need long-term planning rather than emergency 'Takeaway Capacity' - Chokepoints - to motivate private investment and Federal and Regional Planning for the obvious need in the near future.

for week ending August 24, 2018 | Released: August 30, 2018 at 10:30 a.m. | Next Release: September 6, 2018: Working gas in underground storage, Lower 48 states

Historical Comparisons
Stocks
billion cubic feet (BCF)
Year ago
(08/24/17)
5-year average
(2013-17)
Region 08/24/18 08/17/18 net change implied flow Bcf % change Bcf % change
East 640 613 27 27 746 -14.2 737 -13.2
Midwest 667 632 35 35 837 -20.3 815 -18.2
Mountain 157 153 4 4 205 -23.4 189 -16.9
Pacific 241 239 2 2 300 -19.7 323 -25.4
South Central 800 798 2 2 1,062 -24.7 1,029 -22.3
Salt 183 185 -2 -2 264 -30.7 262 -30.2
Nonsalt 617 613 4 4 797 -22.6 767 -19.6
Total 2,505 2,435 70 70 3,151 -20.5 3,093 -19.0

Disclosure: I am/we are long MMM, ETN.

Additional disclosure: The increased needs for Natural Gas as both a replacement for Coal as an Electric Feedstock and a bridging technology to allow the slower but inevitable ramp-up of Renewables to occur is clear and practical. It burns very cleanly, versus coal or oil, so clean that you can use natural gas unvented inside residential structures for Hot Water, Cooking, Clothes Drying and even as substitute Firelogs as a major heating source. Besides Central Natural Gas heat, from a pipeline, we have a an 84k BTU Natural Gas Fireplace with an open fire without being vented. If that were a kerosene heater we could expect dire consequences and Coal or Wood of course would cause immediate asphyxiation. Though while Natural Gas is certainly imperfect, we have an opportunity to reduce our Toxic Emissions produced from Coal and Oil as an Energy 'Feedstock' while long-term Renewables, EVs, and Utility Scale batteries are more slowly introduced. The slowness is a combination of technological innovations still being developed and deliberate efforts by certain governments to continue to use Coal in favor of Natural Gas. The EPA recently declared that a new Trump Edict would mandate the usage of obsolete Coal burning plants and there production may be mandated by the EPA to be bought by grids despite ample cleaner energy supplies available. That is an unfortunate political circumstance that in any event is limited to no more than the next 6 years. Unfortunately, Tariffs, rather than incentives have already been levied on Solar Components - 30%, despite the loss of jobs in solar panel installation that is far greater than the few jobs saved in the dangerous and highly toxic Coal Mining industry plus the Environmental degradation to the air, water, and ground, without looking at Climatic Change. Climatic Change is a smaller issue than the Toxic Effects of Coal utilization. Bear in mind that my Graduate Theses [4] all dealt with the impacts of manmade Climatic Change. However, it is far more cost effective to save lives and decrease 'Morbidity' from the immediate effects of Coal and Oil usage, much [Oil bunkerage] is burnt in International Waters and comes with the Container Ships to the U.S. from China. There are voluntary steps in place to reduce the speed of Container Vessels using "Sludge" called "Bunkerage" as their primary fuel for the ships that bring in hundreds of billions of dollars of goods, mostly from China on an ongoing basis. I might do a BLOG on the maritime fuel issue since it impacts the West Coast of the U.S. so severely and is becoming among California's most serious environmental issues.