US Nat Gas futures touches $10

[tim443]

So much for the “Cheap” in “Cheap & Clean”?

Anymouse

https://energynow.ca/2022/08/u-s-natural-gas-futures-hit-10-…

U.S. Natural Gas Futures Hit $10 for First Time Since 2008

August 23, 2022 Energy Now Media

Aug 23, 2022
(Bloomberg) US natural gas prices rose above $10 per million British thermal units for the first time since 2008, extending a scorching rally driven by persistent concern that global stockpiles of the heating and power-plant fuel aren’t enough to meet winter demand.

Gas prices have surged all over the world after Russia’s invasion of Ukraine intensified a global energy crunch, leaving countries scrambling to secure scarce cargoes of liquefied natural gas. European gas supplies are a concern after an unusually hot summer, leaving the region more reliant on cargoes from exporters including the US to shrink the shortfall.

The key Nord Stream pipeline from Russia to Germany will stop for three days of maintenance on Aug. 31, raising concerns that the conduit won’t restart as planned after the work.

In the US, inventories are well below normal after blazing summer heat boosted electricity demand. Production from shale fields, meanwhile, has been growing only modestly. US exports dropped after an explosion at a key terminal in Texas in early June, but they’re expected to rebound in October as the facility restarts.

https://www.eia.gov/energyexplained/natural-gas/imports-and-…

Most of U.S. natural gas imports are from Canada
In 2021, about 99% of U.S. total annual natural gas imports were from Canada and nearly all by pipelines. A small amount of CNG came by truck from Canada—0.01% of total natural gas imports. About 1% of total U.S. natural gas imports came as LNG, of which 99% were from Trinidad and Tobago. U.S. natural gas imports are generally highest in winter when imports help meet increases in natural gas demand for heating.

[Hawkwin]

So much for the “Cheap” in “Cheap & Clean”?..

US natural gas prices rose above $10 per million British thermal units for the first time since 2008,

Wait, what?

counts on his fingers, and runs out of fingers

So we are back to where prices were 14 years ago. Doesn’t mean that it is still cheap - especially when one factors in inflation?

https://www.macrotrends.net/2478/natural-gas-prices-historic…

https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm

[TucsonBones]

…more reliant on cargoes from exporters including the US to shrink the shortfall.

Cheniere is well positioned to be the exporter of the incremental liquefied natural gas supplied to the global market over the next few years, particularly as demand ramps up from China.
$LNG up 94.44% YtD

[Leap1]

Doesn’t mean that it is still cheap - especially when one factors in inflation?

It is not cheap at all and will probably short term and long term go higher. If Putin is not ousted it will definitely longer term stay higher.

It means the American public will much more easily adopt Photovoltaics. That is long term as well. The American public will be really getting on board after this winter. This is a big win for the USA. Solar in comparison is becoming a deal.

[jaagu]

So much for the “Cheap” in “Cheap & Clean”?

Anymouse

================================================================

Now all the utilities with natural gas fired power plants are paying through the nose for this fuel. This makes solar, wind and energy storage the cheapest energy even cheaper. Electricity rates are going to go higher in the states with the most natural gas power plants like Texas, Florida and Pennsylvania.

The 3 states producing most electricity from natural gas in 2020 were:
Texas (248 TWh)
Florida (188 TWh)
Pennsylvania (120 TWh)

Jaak

[waterfell]

So we are back to where prices were 14 years ago. Doesn’t mean that it is still cheap - especially when one factors in inflation?

Cheaper compared to what, though? At $10 per million BTU, natural gas is a rather expensive way to generate electricity, when you compare it against nuclear power, for instance.

The average heat rate for nat gas fired power plants in the US is 7732 BTU/kwh.

https://www.eia.gov/electricity/annual/html/epa_08_01.html

($10 / 1E6 BTU) x (7732 BTU / kwh) = $0.077 / kwh or 7.7 cents / kwh
That 7.7 cents per kwh is just for fuel cost. Add in another half-cent for operating and maintenance costs (O&M), and the total operation cost for natural gas is 8.2 cents per kwh.

The same O&M plus fuel cost for nuclear is 2.2 cents per kwh.
https://www.eia.gov/electricity/annual/html/epa_08_04.html

An established nuclear power plant is less expensive to operate on a per kilowatt-hour basis.

As reported by Tim in another post, this is why the Japanese PM wants to restart Japan’s idled nuclear power plants, as well as build new plants.

https://www.reuters.com/world/asia-pacific/japan-pm-call-dev…

TOKYO, Aug 24 (Reuters) - Japan will restart more idled nuclear plants and look at developing next-generation reactors, Prime Minister Fumio Kishida said on Wednesday, setting the stage for a major policy shift on nuclear energy a decade after the Fukushima disaster.

The comments from Kishida - who also said the government would look at extending the lifespan of existing reactors - highlight how the Ukraine crisis and soaring energy costs have forced both a change in public opinion and a policy rethink toward nuclear power.

Today the front-month futures contract is trading at $9.32 per MMBTU, so it is still a little shy of the $10 benchmark.

https://www.cmegroup.com/markets/energy/natural-gas/natural-…

• Pete

[jaagu]

waterfell writes:
Cheaper compared to what, though? At $10 per million BTU, natural gas is a rather expensive way to generate electricity, when you compare it against nuclear power, for instance.

============================================

waterfell is way off claiming that natural gas is $10 per million BTU for electrical power generation.

For electrical power generation natural gas prices were below $5 per million BTU in 2021 and has risen in 1Q2022 to $5.68 and 2Q2022 to $7.19.

https://www.eia.gov/outlooks/steo/data/browser/#/?v=8&f=…

Jaak

[CMFJambo]

$7.78 seems a forecast for 3Q22…

Up to date … from last report Natural Gas Weekly…my bold

https://www.eia.gov/naturalgas/weekly/#tabs-storage-3

For the week ending Wednesday, August 17, 2022)
Prices
Henry Hub spot price: The Henry Hub spot price rose $1.62 from $7.89 per million British thermal units (MMBtu) last Wednesday to $9.51/MMBtu yesterday.

Natural Gas up because stocks (replenished Apr-Oct) are 10% less than the 5-year average.
And as someone mentioned above the Europe situation this winter is bleak.

Over supply of natural Gas produced in USA is going to export as LNG and via pipeline to Mexico (power use) instead of to storage as in the past.

Freeport LNG is delayed restarting until November. Restart will add 22% to exports.
When Freeport starts LNG train 4 in 2023 it will add another 18% to export capability.

Production of natural gas is rising but only 1% …about at late 2019 levels.
USA demand for gas is flat to down last week 97.6% of 2021
Imports from Canada up 20% at times but only 4.5% of total supply.
We have diverted much of our spot priced LNG exports to Europe from Asia.

12.3% (5.4 Bcf/d) week-over-week decline in natural gas consumed for electric power generation,

This mostly due to cooler temps but also coal substituting for gas remains a thing…especially in Ohio and Mississippi watersheds. Though 4% less than 2021 and 19% less than 2016-2018 coal units still operate at high capacity in summer. The way I’m looking at the electric power data …the utilities and wholesale generators are passing costs through rather well. Wholesale power prices up 2.0x to 2.2x over 2016-2021 prices.

Electricity data https://www.eia.gov/electricity/wholesale/index.php
Coal data https://www.eia.gov/coal/production/quarterly/

No data on coal April-June.

PJM (mid Atlantic + OH KY + Chicago)running 21% coal as I type; 44% gas; 30% nuke; 5% renewable

Texas reports daily generation fuel use by month… July typical here (I picked 5-July)
Wind 27%
Coal 15%
Gas 44% 80/20 mix of combined cycle and older steam or direct fired turbines
Nuke 8%
Solar 6%

Looking a Texas in April 64% of July’s generation
Wind 46% (10% more production than July; higher % of smaller total;
Coal 16% (68% of July production)
Gas 17% In April gas was $6.50/mm btu
Nuke 13% flat production April / July
Solar 6%

ERCOT data https://www.ercot.com/gridinfo/generation/

Coal price $5/mm btu in April / $8 now - using Illinois basin (preferred if you have scrubbers for Sulphur Dioxide removal). Wyoming and Utah coal only $0.88 - $1.00/ mmbtu but higher train costs.

Midwest (MISO = IN MI IL MN) right now 42% coal / 37% gas / 14% nuke / 7% wind-solar-hydro

So Mid Atlantic and Midwest using coal to displace higher priced gas. (This afternoon PJM will ramp up the afternoon a/c load with coal). Texas uses their abundant wind and keeps nuclear on 100% to displace expensive gas in spring but less choice in the heat.

My crystal ball: I see the war lasting and Russian gas staying in Russia or going to China. USA Qatar & Nigerian LNG as well as Norwegian and Algerian gas via pipeline going to Europe.

More exported gas by USA means high prices stay…gaas in storage stays low…until Russia returns to being a large supplier or new LNG comes on-line (Europeans - Total & ENI are exploring LNG projects and funding them in gas-rich sub Saharan Africa)

Joe
Community Fool
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