2019 Summer Outlook Markets Matter www.ngsa.org 1 Understanding - - PDF document

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2019 summer outlook
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2019 Summer Outlook Markets Matter www.ngsa.org 1 Understanding - - PDF document

Sep 29, 2023 44 likes •147 views

2019 Summer Outlook Markets Matter www.ngsa.org 1 Understanding the Symbols Upward market pressure Flat market pressure Downward market pressure | 2 2019 SUMMER OUTLOOK 2 1 2019 Summer Outlook: Outline Looking ahead to Summer 2019

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2019 Summer Outlook

Markets Matter

www.ngsa.org 2 | 2019 SUMMER OUTLOOK

Upward market pressure Flat market pressure Downward market pressure Understanding the Symbols

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3 | 2019 SUMMER OUTLOOK

2019 Summer Outlook: Outline

  • Looking ahead to Summer 2019
  • Market pressure points:

– Weather – Economy – Demand – Storage – Production

  • Wild card factors
  • Summer expectations
  • Summary

4 | 2019 SUMMER OUTLOOK

LAST SUMMER

2018 (April‐October) Actual

THIS SUMMER

2019 Forecast

ACTUAL SEASON (NOAA):

11% warmer than previous summer and 20% warmer than 30‐year average

1,477 Cooling degree days (NOAA)

FORECAST:

14% cooler than last summer, 3% warmer than 30‐year average

1,272 Cooling degree days

Summer‐to‐summer pressure

  • n natural gas prices

Demand: Summer Weather

Data Sources: National Oceanic and Atmospheric Administration, Energy Ventures Analysis

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5 | 2019 SUMMER OUTLOOK

Demand: Economy

SUMMER SEASON

Period‐to‐period change

LAST SUMMER

2018 Actual

THIS SUMMER

2019 Forecast

Economy

Solid growth Steady growth

GDP Growth 2.9% 2.5%

World GDP Growth

3.0% 2.8% Unemployment Rate 3.9% 3.6% Manufacturing 2.5% 1.1% CPI 2.7% 2.3% Consumer Sentiment Index 98.2 97.7

Summer‐to‐summer pressure

  • n natural gas prices

Data Source: IHS Markit Macroeconomic Advisers, May 2019

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Demand: Customer Demand

SUMMER SEASON

Period‐to‐period Change

LAST SUMMER

2018 Actual

THIS SUMMER

2019 Forecast

Customer Gas Demand

  • Electric
  • Industrial
  • Residential/Commercial
  • Pipeline exports ‐ Mexico
  • LNG exports (net)

79.6 Bcf/d 32.1 Bcf/d 21.5 Bcf/d 11.9 Bcf/d 4.7 Bcf/d 3.3 Bcf/d 82.1 Bcf/d 31.3 Bcf/d 22.1 Bcf/d 11.0 Bcf/d 5.5 Bcf/d 6.0 Bcf/d Change from previous year +13.4 % + 3.1 % Growth sector Electric + 16.3% Exports + 44% Summer‐to‐summer pressure

  • n natural gas prices

Data Source: Energy Ventures Analysis, Inc.

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7 | 2019 SUMMER OUTLOOK

Demand: U.S. LNG Exports Grow as Projects Come Online 2016‐2020

Note: Mexican natural gas supply sources 2011‐2020. Data Source: BP Statistical Review, SENER, EVA. Data: Energy Ventures Analysis, Inc., 2019

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Projects

2019‐2023 2.0 Bcf/d Total Natural Gas Demand

>$135 Billion Investment to Build Increase of 3.7 Bcf/d by 2023

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Projects

2015‐2018 1.7 Bcf/d Total Natural Gas Demand Added

Focus: Industrial Demand Peak Growth Phase

Natural Gas Spurring 80 Major Industrial Projects 2015–2023

Data Source: Energy Ventures Analysis, May 2019 Photo courtesy: Chevron U.S.A. Inc., 2017 (Pascagoula)

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9 | 2019 SUMMER OUTLOOK

  • Strong structural growth

this summer

  • Additional 6.1 GW of new

natural gas capacity added

  • Less temporary economic

switching to natural gas

  • The most inefficient coal

plants have already retired

  • New wind (11.3 GW) and

solar (4.6 GW) acquiring some load

Power Sector: Increased Natural Gas Burn Due to Permanent Structural Change & Some Temporary Price‐driven Switching

Data Source: Energy Ventures Analysis, Inc.

Substantial Summer Electric Demand Projected

10 | 2019 SUMMER OUTLOOK

Electric Demand for Natural Gas in Focus: 2019 Permanent Structural Growth Outpaces Temporary Economic Switching

Data Source: Energy Ventures Analysis, Inc.

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11 | 2019 SUMMER OUTLOOK

Demand: Summer Storage

SUMMER SEASON

Period‐to‐period Change

LAST SUMMER

2018 Actual

THIS SUMMER

2019 Forecast

Season starting point 1,391 Bcf 1,130 Bcf Average weekly injections 60 Bcf 85 Bcf End of injection season 3,247 Bcf 3,745 Bcf Projected Summer‐to‐summer pressure

  • n natural gas prices

Data Sources: Energy Information Administration and Energy Ventures Analysis

12 | 2019 SUMMER OUTLOOK

Supply: Summer Production – RECORD PRODUCTION

SUMMER SEASON

Period‐to‐period change

LAST SUMMER

2018 Actual

THIS SUMMER

2019 Forecast

Summer average production

(Lower 48)

82.6 Bcf/d 89.4 Bcf/d Canadian imports (net) 5.4 Bcf/d 4.7 Bcf/d Summer‐to‐summer pressure

  • n natural gas prices

Data Source: Energy Ventures Analysis

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13 | 2019 SUMMER OUTLOOK

Focus on Supply: Diverse Production April 2018‐April 2019

Dry & Associated Gas Increase Including 8 Major Deepwater Projects

Data Source: Energy Ventures Analysis, Inc.

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2 4 6 8 10 12 Feb‐18 Mar‐18 Apr‐18 May‐18 Jun‐18 Jul‐18 Aug‐18 Sep‐18 Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19 Jun‐19 Jul‐19 Aug‐19 Sep‐19 Oct‐19 Nov‐19 Dec‐19 Jan‐20 Feb‐20 Mar‐20 Apr‐20 May‐20 Jun‐20 Jul‐20 Aug‐20 Sep‐20 Oct‐20 Nov‐20 Dec‐20 Jan‐21 Bakersfield Compressor Station WT‐1 Compressor Station Modification Permian North Expansion (El Paso) North Texas (Energy Transfers) Gulf Coast Express El Paso South Mainline Expansion Permian Highway Pipeline Permian to Katy Bluebonnet Market Express Whistler

PERMIAN PIPELINE TAKEAWAY CAPACITY VS. PRODUCTION GROWTH

BCFD

Focus on Supply: New Takeaway Capacity 2019‐2020 Brings Long‐awaited Relief to Permian

Data Source: Energy Ventures Analysis, Inc.

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15 | 2019 SUMMER OUTLOOK

Summer Outlook: Wild Cards

  • Hurricane activity
  • Tariff impact on industrial

sector

  • Stable market provides

buffer from most wild cards

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This Season’s Summer Outlook

SUMMER SEASON

Period‐to‐period Change

THIS SUMMER

2019 Forecast

Weather Economy Overall demand Storage Summer production

Summer‐to summer pressure

  • n natural gas prices

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17 | 2019 SUMMER OUTLOOK

Natural Gas Outlook: Summer of Flexibility

  • Huge production growth
  • Associated gas significant contributor due to value of oil, NGLs
  • Efficiencies in drilling and production make wells more productive at

lower cost

  • Pipeline infrastructure expansions provide greater deliverability
  • Deepwater projects contribute to overall supply diversity
  • Summer (April‐October) demand growth
  • Driven by exports and new industrial projects
  • Moderated by more normal summer temperatures impact on electric

and residential/commercial sectors

  • Exports provide growth, stability to market
  • Welcome outlet for strong production
  • Overall, stable natural gas outlook for consumers and a

diverse market for producers

18 | 2019 SUMMER OUTLOOK

About NGSA

  • Represents major producers and suppliers of

domestic natural gas

  • Integrated and independent companies: 14 members
  • Promotes benefits of competitive natural gas markets,

reliable and efficient transportation and delivery, benefiting customers and suppliers of natural gas

  • Only Washington, D.C. natural gas association with a

dedicated focus on downstream gas industry issues

  • Includes the Center for LNG

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2019 Summer Outlook

Markets Matter

Contact:

Daphne Magnuson dmagnuson@ngsa.org @natgas_ngsa www.ngsa.org

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