09/08/2022 | Press release | Distributed by Public on 09/08/2022 14:11
From late 2021 through August 2022, the natural gas price differential between the Waha Hub in West Texas and Henry Hub in Louisiana widened. The price of natural gas traded at the Waha Hub, which is near Permian Basin production activities, averaged $1.13 per million British thermal units (MMBtu) below the Henry Hub price in August, according to Natural Gas Intelligence. In comparison, in August 2021, natural gas at the Waha Hub traded at an average 26 cents/MMBtu below the Henry Hub price.
Regional natural gas prices can be influenced by in-region production rates and the availability of infrastructure to transport natural gas to high-demand regions. Maintenance on various pipelines transporting natural gas from the Permian region to consuming markets has contributed to a wider price differential at the Waha Hub. On May 2, natural gas flows on Kinder Morgan's Permian Highway Pipeline out of the region decreased and the Waha Hub price fell to $1.82/MMBtu below Henry Hub. Last month, maintenance on the El Paso Natural Gas Pipeline, which reduced flows from West Texas into the Desert Southwest and California, contributed to the Waha Hub price discount to Henry Hub reaching $1.78/MMBtu on August 26.
Most natural gas production in the Permian region is associated gas, which is a by-product of (or associated with) crude oil production. Natural gas production in the Permian region more than doubled in the past five years, from an average of 7.8 billion cubic feet per day (Bcf/d) in 2017 to an annual high of 16.7 Bcf/d in 2021 as a result of increasing crude oil production in the region over the same time period.
From 2018 through early 2020, natural gas production in the Permian region grew faster than pipeline take-away capacity. To ensure their natural gas could be placed into the market given limited transportation capacity, producers sold their natural gas at discounted prices, resulting in a wider differential to the Henry Hub price. In 2019, the Waha Hub price differential to Henry Hub averaged $1.66/MMBtu.
In 2021, additional pipeline capacity to transport natural gas out of the Permian production region was put in service and the price differential between Waha Hub and Henry Hub narrowed. Increased pipeline capacity enabled producers to deliver natural gas from the producing area to demand centers in Mexico and along the Texas Gulf Coast, including liquefied natural gas (LNG) export facilities. Since April 2022, additional pipeline projects to deliver natural gas out of the Permian production region have been announced and, if completed as planned, would expand pipeline takeaway capacity by approximately 4.2 Bcf/d by the end of 2024.
Daily spot prices by region are available on the EIA website.
See also:
Spot Prices ($/MMBtu) |
Thu,
1-Sep |
Fri,
2-Sep |
Mon,
5-Sep |
Tue,
6-Sep |
Wed,
7-Sep |
Henry Hub | 9.25 | 8.98 | Holiday | 8.47 | 8.13 |
New York | 8.30 | 7.83 | Holiday | 7.88 | 7.56 |
Chicago | 8.80 | 8.38 | Holiday | 7.93 | 7.60 |
Cal. Comp. Avg.* | 11.33 | 10.39 | Holiday | 9.96 | 9.50 |
Futures ($/MMBtu) | |||||
October Contract | 9.262 | 8.786 | Holiday | 8.145 | 7.842 |
November Contract | 9.330 | 8.850 | Holiday | 8.212 | 7.901 |
Data source: Natural Gas Intelligence and CME Group as compiled by Bloomberg, L.P. *Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg. |
U.S. natural gas supply - Gas Week: (9/1/22 - 9/7/22) | |||
Average daily values (billion cubic feet)
|
|||
this week
|
last week
|
last year
|
|
Marketed production |
111.4
|
110.4
|
103.9
|
Dry production |
99.8
|
98.9
|
91.8
|
Net Canada imports |
5.8
|
5.6
|
4.4
|
LNG pipeline deliveries |
0.1
|
0.1
|
0.1
|
Total supply |
105.7
|
104.5
|
96.3
|
Data source: PointLogic |
U.S. natural gas consumption - Gas Week: (9/1/22 - 9/7/22) | |||
Average daily values (billion cubic feet)
|
|||
this week
|
last week
|
last year
|
|
U.S. consumption |
70.1
|
71.6
|
63.0
|
Power |
40.0
|
41.3
|
34.4
|
Industrial |
21.6
|
21.4
|
20.4
|
Residential/commercial |
8.5
|
8.9
|
8.2
|
Mexico exports |
5.5
|
5.7
|
6.2
|
Pipeline fuel use/losses |
6.7
|
6.7
|
6.1
|
LNG pipeline receipts |
11.2
|
11.0
|
10.6
|
Total demand |
93.5
|
95.0
|
85.9
|
Data source: PointLogic |
Rigs | |||
Tue, August 30, 2022
|
Change from
|
||
last week
|
last year
|
||
Oil rigs |
596
|
-1.5%
|
51.3%
|
Natural gas rigs |
162
|
2.5%
|
58.8%
|
Note: Excludes any miscellaneous rigs |
Rig numbers by type | |||
Tue, August 30, 2022
|
Change from
|
||
last week
|
last year
|
||
Vertical |
26
|
-16.1%
|
13.0%
|
Horizontal |
695
|
0.1%
|
50.1%
|
Directional |
39
|
-2.5%
|
254.5%
|
Data source: Baker Hughes Company |
Working gas in underground storage | |||
Stocks
billion cubic feet (Bcf) |
|||
Region |
2022-09-02
|
2022-08-26
|
change
|
East |
635
|
614
|
21
|
Midwest |
776
|
747
|
29
|
Mountain |
159
|
157
|
2
|
Pacific |
238
|
241
|
-3
|
South Central |
887
|
881
|
6
|
Total |
2,694
|
2,640
|
54
|
Data source: U.S. Energy Information Administration Form EIA-912, Weekly Underground Natural Gas Storage Report |
Working gas in underground storage | ||||
Historical comparisons
|
||||
Year ago
(9/2/21) |
5-year average
(2017-2021) |
|||
Region |
Stocks (Bcf)
|
% change
|
Stocks (Bcf)
|
% change
|
East |
699
|
-9.2
|
735
|
-13.6
|
Midwest |
838
|
-7.4
|
843
|
-7.9
|
Mountain |
191
|
-16.8
|
191
|
-16.8
|
Pacific |
243
|
-2.1
|
274
|
-13.1
|
South Central |
944
|
-6.0
|
1,001
|
-11.4
|
Total |
2,916
|
-7.6
|
3,043
|
-11.5
|
Data source: U.S. Energy Information Administration Form EIA-912, Weekly Underground Natural Gas Storage Report |
Temperature - heating & cooling degree days (week ending Sep 01) | ||||||
HDDs
|
CDDs
|
|||||
Region |
Current total
|
Deviation from normal
|
Deviation from last year
|
Current total
|
Deviation from normal
|
Deviation from last year
|
New England |
1
|
-7
|
-1
|
53
|
33
|
3
|
Middle Atlantic |
0
|
-5
|
0
|
67
|
35
|
-2
|
E N Central |
1
|
-8
|
0
|
47
|
16
|
-29
|
W N Central |
1
|
-12
|
-1
|
62
|
19
|
-9
|
South Atlantic |
0
|
-1
|
0
|
97
|
17
|
-8
|
E S Central |
0
|
-1
|
0
|
91
|
18
|
-5
|
W S Central |
0
|
0
|
0
|
116
|
7
|
-9
|
Mountain |
0
|
-16
|
-2
|
74
|
15
|
6
|
Pacific |
1
|
-6
|
-3
|
65
|
25
|
9
|
United States |
1
|
-6
|
-1
|
75
|
21
|
-6
|
Data source: National Oceanic and Atmospheric Administration Note: HDDs=heating degree days; CDDs=cooling degree days |
Average temperature (°F)
7-day mean ending Sep 01, 2022
Data source: National Oceanic and Atmospheric Administration
Deviation between average and normal temperature (°F)
7-day mean ending Sep 01, 2022
Data source: National Oceanic and Atmospheric Administration