Natural Gas Market Overview & Outlook 1 2019 Year-To-Date Snapshot The natural gas front month price has declined 41% year-to-date as record injections to storage in May and June dampened sentiment. Demand has actually been the…
LNG Exports Weaker than expected feedgas demand has amplified the U.S. excess supply problem 9,000 LNG Demand to grow by an additional 2.1 Bcf/d 8,000 by end of this year 7,000 6,000 LNG Demand has grown 1.8 Bcf/d since…
Mexico Exports Mexico exports have continued to increase steadily since 2018 despite the major delays on connecting downstream projects in Mexico Reaching a high of 5.7 Bcf/d of exports, that is 60% of Mexico's total demand(1) The…
Historic Summer Weather Look The month of July and first three weeks in August had cooling degree days (CDDs) above the 5-year average for eight weeks in a row There have only been two weeks this storage injection season where CDDs…
Key Macro Takeaways Strong demand fundamentals combined with the sheer magnitude of the base supply decline are underappreciated by the market 1 U.S. Natural Gas Demand Growth to Remain Strong in 2019+, Led by Exports - Total U.S.…
U.S. Gas Supply and Base Decline Significant U.S. base decline requires substantial new supply just to maintain flat production 100 Maintenance Production Level YE 2018(1): Base Decline (27% in 2019) 86.0 Bcf/d 90 23 Bcf/d of…
U.S. Gas Supply and New Supply Wedge Material demand growth through 2023 plus base decline requires 80 Tcf of new supply YE 2023E: 97.7 Bcf/d 100 YE 2018: Current (1): 86.0 Bcf/d 90.3 Bcf/d Marketed Dry Gas Production Forecast Rest…
U.S. Gas Supply Growth Forecast Almost all U.S. gas supply growth over the next 5 years is expected to come from the Appalachian and Permian Basins YE 2023E: YE 2018(1) : Current: 97.7 Bcf/d 100 86.0 Bcf/d(1) 90.3 Bcf/d(1) Marketed…
New Gas Supply Breakdown 45% of new gas supply needed in the 2019-2023 period is forecast to come from plays with breakeven gas prices that are higher than the long-term 2020-2023 strip 2.48/MMBtu New Supply Contribution by Basin…
Natural Gas Prices Must Support Dry Gas Development Only 32% of the new gas supply needed in the 2019 through 2023 period is forecast to come from associated gas plays where natural gas price is not the driving factor for development…
Dry Gas Basin Breakeven Analysis Most of the dry gas plays in the U.S. have breakeven prices above the current 2020-2023 strip at 2.48/MMBtu - Dry gas producers will require higher realized prices than the current strip to incentivize…
Permian Gas Supply Growth While Permian associated gas is expected to be a key contributor to U.S. gas supply growth, the Permian is not expected to dominate the 90 Bcf/d U.S. dry gas supply market Permian marketed dry gas production…
Permian Associated Gas Production Growth Permian Basin associated gas production growth is limited by pipeline constraints for the next several years despite 8.0 Bcf/d of new projects forecast to come online by end of 2023 Permian…
Appalachian Gas Supply Growth Appalachian production including the Marcellus and Utica Shales, contributes 35% of U.S. natural gas supply today and is expected to grow to 36% by 2023, or 35.0 Bcf/d - 31.2 Bcf/d of current production…
U.S. Natural Gas Demand Forecast Total U.S. natural gas demand is expected to grow by 11.4 Bcf/d, or 13% from 2019 2023 driving by LNG and exports to Mexico 2019-2023 Growth % Other: 0% of demand(2) 0% 100 U.S. Dry Marketed Gas…
Near Term Natural Gas Fundamentals Power Burn Average monthly power burn increased 0.98 Bcf/d from 2018 to 2019 year to date, despite negative heating/cooling degree day comparisons, and is 20% above the five year average U.S.…
Exports Drive Demand Growth 11 Bcf/d expected increase in U.S. natural LNG projects under construction and exports gas exports from 2018-2023 to Mexico will drive U.S. demand U.S. Natural Gas Exports (Bcf/d) 20 THE U.S. IS A NET…
Growing LNG Market 3.9 Bcf/d of LNG capacity growth expected AR is a top U.S. LNG supplier with in 2019 with multiple 2nd wave commitments expected to reach projects seeking FID 700 MMcf/d by YE 2019 U.S. LNG Export Capacity…
Strong Near-Term Natural Gas Fundamentals Current 2,857 Bcf storage level is 5% below 2019 end of injection is currently trading 5-year average despite 7.6 Bcf/d year over at 3,748 Bcf which is only 1% year production growth below the…
Storage Fundamentals Build/Draw 2019 After a strong start to injections this season (four weeks outside of 5 year range), weekly injections have moderated and have been close to the 5-year average. Weekly Storage Build/Draw 300…
Dry Gas Production Trend Exit-to-exit U.S. supply growth is expected to slow dramatically to 2.4 Bcf/d or 2.6% in 2020 9.4 Bcf/d, or 12%, U.S. 4.8 Bcf/d, or 5.5%, U.S. 2.4 Bcf/d, or 2.6%, U.S. supply supply growth supply growth…
Natural Gas Rig Count is Responding to Price Gas rig count is responding to lower natural gas prices with a 14% reduction in horizontal gas rigs since March Horizontal Gas Rig Counts vs NYMEX Henry Hub 1Q 2019 NYMEX Henry Horizontal…
Completion Crew Count is Responding to Price Completion crew has recently responded to lower natural gas and oil prices with an 11% reduction in active completion crews since April Monthly Average U.S. Completion Crews 1Q 2019 NYMEX…
Summary Strong Demand Growth and Challenges to New Supply Are Underappreciated by the Market Exports Lead Strong U.S. Natural Gas Demand Growth Through 2023 LNG Exports Expected to Double in 2019 to 5.8 Bcf/d; Doubling again by…
Appendix
D&C Capital Reductions Appalachian peers announced an average 21% reduction in their 2019 drilling and completion capital spending relative to 2018 levels, moderating supply growth expectations Appalachian Peer D&C Capital Guidance…
Results in Moderated Supply Growth The top Appalachia producers(1) made up 57% of total Appalachia(2) dry gas production in 2018 Those top producers are expected to slow annual growth from 18% in 2018 to 6% in 2019 Annual Dry Gas…
U.S. Coal to Gas Switching: Momentum Continues Since 2015, natural gas has been the more economic fuel source, a trend that is expected to continue The gap between natural gas and coal electricity generation is expected to continue…
Base Decline Calculations U.S. Overall Decline Rate Detail Time Average (Bcf/d) Year-Over-Year Decline Rate (%) Q4 2018 85.28 - Q4 2019 62.42 (27%) Q4 2020 51.38 (18%) Q4 2021 44.65 (13%) Q4 2022 39.95 (11%) Q4 2023 36.37 (9%)…
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