According to the U.S. Energy Information Administration (EIA) website article published on April 6, 2023:
Pennsylvania natural gas production fell by 2% in 2022
Marketed natural gas production in Pennsylvania fell by 2% in 2022 to an average of 20.5 billion cubic feet per day (Bcf/d) compared with the record-high average of 20.9 Bcf/d in 2021, according to Natural Gas Monthly. Pennsylvania accounted for 19% of total U.S. marketed natural gas production in 2022 and produced more natural gas than any other state except Texas. Production in Pennsylvania comes largely from the Marcellus shale gas play.
Natural gas production in Pennsylvania is influenced by drilling activity, well productivity, and infrastructure available to transport natural gas to demand centers. Drilling activity in Pennsylvania, as measured by rig and permit counts in the state, generally declined over the last 10 years. Pennsylvania averaged 384 permits and 59 rigs per month in 2013, compared with 83 permits and 18 rigs per month in 2021. In 2022, the rig and permit counts increased slightly to an average of 87 permits and 24 rigs per month.
Even as rig and permit counts fell in recent years, Pennsylvania raised its natural gas production by improving well productivity. Over the last decade, advances in hydraulic fracturing and horizontal drilling drilling led to rapid production growth. An important indicator of new well productivity is the volume of natural gas produced during the first six months of production. In 2013, a new well’s first six months of production in Pennsylvania averaged 0.7 billion cubic feet (Bcf); by 2021, that number had grown to a record high of 2.2 Bcf. Well productivity fell by 7% in 2022.
As natural gas production grew in Pennsylvania during the last 10 years, the infrastructure necessary to transport natural gas from Pennsylvania to demand centers also grew. Since 2013, over 11.5 Bcf/d of interstate pipeline takeaway capacity has entered service to transport natural gas out of Pennsylvania. Although natural gas pipeline takeaway capacity out of Pennsylvania has grown every year since 2014, the rate of increase has slowed in recent years. In 2022, no new interstate pipeline takeaway capacity was added in Pennsylvania. Most interstate pipelines transporting natural gas out of Pennsylvania ran close to maximum capacity in 2022.
Several pipeline projects that contribute to expanding natural gas takeaway capacity out of Pennsylvania have been proposed to enter service in 2023 or later, such as the 1.05 Bcf/d Regional Energy Access Project and the 0.4 Bcf/d Northeast Supply Enhancement Project. Natural Gas Pipeline Project Tracker, which is updated quarterly, tracks completed and recently approved natural gas pipeline projects.
Market Highlights:
(For the week ending Wednesday, April 5, 2023)
Prices
- Henry Hub spot price: The Henry Hub spot price rose 22 cents from $1.95 per million British thermal units (MMBtu) last Wednesday to $2.17/MMBtu yesterday.
- Henry Hub futures prices: The April 2023 NYMEX contract expired last Wednesday at $1.991/MMBtu. The May 2023 NYMEX contract price decreased to $2.155/MMBtu, down 3 cents from last Wednesday to yesterday. The price of the 12-month strip averaging May 2023 through April 2024 futures contracts declined 8 cents to $3.000/MMBtu.
- Select regional spot prices: Natural gas spot price changes were mixed this report week (Wednesday, March 29 to Wednesday, April 5). Price movements at major pricing hubs ranged from a decrease of $0.60/MMBtu at SoCal Citygate in Southern California to an increase of $3.61/MMBtu at Northwest Sumas on the Washington-Canada border.
- Prices across the Northeast fell this week, averaging slightly higher than the Henry Hub. At the Algonquin Citygate, which serves Boston-area consumers, the price dropped 51 cents from $2.54/MMBtu last Wednesday to $2.03/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price decreased 3 cents from $1.95/MMBtu last Wednesday to $1.92/MMBtu yesterday. Across the Northeast, natural gas consumption in all sectors combined fell 5%, or 1.0 billion cubic feet per day (Bcf/d), week over week, according to data from S&P Global Commodity Insights, mostly due to a decrease in residential and commercial sector consumption. In the Appalachia region, residential and commercial sector consumption fell by 19% (0.6 Bcf/d) because warmer weather reduced demand for heating.
- In the Midwest, prices rose in line with the Henry Hub this week. At the Chicago Citygate, the price increased 15 cents from $2.01/MMBtu last Wednesday to $2.16/MMBtu yesterday. Total natural gas consumption across all sectors in the Midwest fell 22% (3.4 Bcf/d) week over week, according to data from S&P Global Commodity Insights. The largest decrease was a 29% (2.4 Bcf/d) decline in residential and commercial sector consumption. Temperatures in the Chicago Area averaged 50°F this report week, 5°F higher than normal for this time of year, leading to 73 fewer heating degree days (HDDs) than last week.
- Across the Rockies and the West, prices rose this week, with the notable exception of SoCal Citygate in Southern California, which fell 60 cents from $9.25/MMBtu last Wednesday to $8.65/MMBtu yesterday, bringing it nearer to other major hubs in the West. The price at Northwest Sumas on the Canada-Washington border, the main pricing point in the Pacific Northwest, rose $3.61 from $2.54/MMBtu last Wednesday to $6.15/MMBtu yesterday. In the Seattle City Area, temperatures averaged 45°F this report week, 4°F lower than normal, leading to 138 HDDs, which is 24 HDDs more than normal. The price at Malin, Oregon, the northern delivery point into the PG&E service territory, rose 16 cents from $6.08/MMBtu last Wednesday to $6.24/MMBtu yesterday. The price at PG&E Citygate in Northern California rose 17 cents, from $7.14/MMBtu last Wednesday to $7.31/MMBtu yesterday. Temperatures in the Sacramento Area averaged 51°F, which is 7°F lower than normal, leading to 70 HDDs, which is 31 HDDs more than normal. Further south, in the Riverside Area, inland from Los Angeles, temperatures averaged 53°F, which is 8°F lower than normal, leading to 79 HDDs, which is 47 HDDs more than normal. Total natural gas consumption in all sectors across the West and Rocky Mountain regions declined by 5% (0.7 Bcf/d) week over week, led by a 9% (0.6 Bcf/d) decline in residential and commercial sector consumption.
Daily spot prices by region are available on the EIA website.
- International futures prices: International natural gas futures prices increased this report week. According to Bloomberg Finance, L.P., weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia rose 24 cents to a weekly average of $12.96/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands rose $1.48 to a weekly average of $14.96/MMBtu. In the same week last year (week ending April 6, 2022), the prices were $33.99/MMBtu in East Asia and $36.25/MMBtu at TTF.
- Natural gas plant liquids (NGPL) prices: The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 15 cents/MMBtu, averaging $7.36/MMBtu for the week ending April 5. Ethane prices fell 3%, while natural gas prices at the Houston Ship Channel rose 2% week over week, narrowing the ethane premium to natural gas by 9%. Ethylene spot prices fell 1%, while the ethylene to ethane premium remained relatively unchanged. The Brent crude oil price rose 9%, while propane prices rose only 4%, resulting in a 17% increase in the propane discount relative to crude oil. Normal butane prices rose 4%, isobutane prices remained relatively unchanged, and the natural gasoline price rose 3%.
Supply and Demand
- Supply: According to data from S&P Global Commodity Insights, the average total natural gas supply was unchanged from last week, averaging 105.0 Bcf/d. Dry natural gas production decreased by 0.4% (0.4 Bcf/d), and average net imports from Canada increased by 10.4% (0.4 Bcf/d) from last week.
- Demand: Total U.S. natural gas consumption fell by 7.1% (5.6 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights. Natural gas consumed in the residential and commercial sectors declined by 17.8% (4.9 Bcf/d) week over week. Natural gas consumed in the power generation sector declined by 0.4% (0.1 Bcf/d), and natural gas consumed in the industrial sector declined by 2.7% (0.6 Bcf/d). Natural gas exports to Mexico increased 0.5% and natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 13.9 Bcf/d, or 0.9 Bcf/d higher than last week.
Liquefied Natural Gas (LNG)
- Pipeline receipts: Overall weekly average natural gas deliveries to U.S. LNG export terminals increased by 6.9% (0.9 Bcf/d) week over week to average 13.9 Bcf/d this report week, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Louisiana increased by 3.2% (0.3 Bcf/d) to 8.4 Bcf/d, while deliveries to terminals in South Texas increased by 16.5% (0.6 Bcf/d) to 4.3 Bcf/d. Natural gas deliveries to terminals outside the Gulf Coast were essentially unchanged.
- Vessels departing U.S. ports: Twenty-eight LNG vessels (10 from Sabine Pass, 5 from Freeport, 4 each from Cameron and Corpus Christi, 3 from Calcasieu Pass, and 2 from Cove Point) with a combined LNG-carrying capacity of 105 Bcf departed the United States between March 30 and April 5, according to shipping data provided by Bloomberg Finance, L.P.
Rig Count
- According to Baker Hughes, for the week ending Tuesday, March 28, the natural gas rig count fell by 2 rigs from a week ago to 160 rigs; the Cana Woodford and Haynesville dropped 1 rig each. The number of oil-directed rigs fell by 1 rig from a week ago to 592 rigs. The Mississippian and Permian each dropped one rig, and one rig was added in an unspecified producing region. The total rig count, which includes 3 miscellaneous rigs, stands at 755.
Storage
- Net withdrawals from storage totaled 23 Bcf for the week ending March 31, compared with the five-year (2018–2022) average net withdrawals of 0 Bcf and last year’s net withdrawals of 24 Bcf during the same week. At the end of March, which is typically considered the end of the storage withdrawal season (November–March), working natural gas stocks totaled 1,830 Bcf, which is 298 Bcf (19%) more than the five-year average and 443 Bcf (32%) more than last year at this time.
- According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net withdrawals of 17 Bcf to 34 Bcf, with a median estimate of 23 Bcf.
More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.
