2021-2022 winter outlook
TRANSCRIPT
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2021-2022 WINTER OUTLOOKMARKETS MATTER
EMBARGOED UNTIL OCT. 7, 2021
22021-2022 Winter Outlook |
Understanding the Symbols
Upward market pressure
Flat market pressure
Downward market pressure
32021-2022 Winter Outlook |
2021-2022 Winter Outlook: Outline
LOOKING AHEAD TO WINTER 2021-2022
Economy Weather Demand Production/Supply Storage
Wild Card Factors
Market Pressure Points
Winter Expectations
SUMMARY
42021-2022 Winter Outlook |
Demand: Economy
Winter SeasonPeriod-to-period change
Last Winter2020-2021
ACTUAL
This Winter2021-2022
FORECAST
Economy Rebound falteredGaining
momentum
GDP Growth 0.6% 10%
Unemployment Rate 6.4% 5.2%
Consumer Sentiment Index 79.6 70.3 now
Winter-to-winter pressureon natural gas prices
Data Sources: Moody’s Analytics, Bureau of Labor Statistics,
University of Michigan, Energy Ventures Analysis
52021-2022 Winter Outlook |
Demand: Winter Weather (November-March Heating Season)
Last Winter 2020-2021 ACTUAL
This Winter 2021-2022 FORECAST
Actual winter heating season:
3% colder than previous winter
1% warmer than last three winters
3,398 Heating degree days (NOAA)
Forecast:
1% colder than last year
Same as last three winters
3,410 Heating degree days (EVA)
Winter-to-winter pressure
on natural gas pricesData Source: Energy VenturesAnalysis.
Much warmer than average
Warmer than average
Average
Colder than average
Maps
depict
Dec-Feb
62021-2022 Winter Outlook |
Demand: Customer Demand
Winter SeasonPeriod-to-period change
Last Winter2020-2021
ACTUAL
This Winter 2021-2022
FORECAST
PREVIOUS 3-
YEAR
WINTER
AVERAGE
Domestic Demand▪ Residential/Commercial
▪ Power burn
▪ Industrial
Subtotal
Exports
▪ Pipeline exports - Mexico
▪ LNG exports
Subtotal
Total Natural Gas Demand*
37.3 Bcf/d
26.7 Bcf/d
23.9 Bcf/d
87.9 Bcf/d
5.4 Bcf/d
10.3 Bcf/d
15.7 Bcf/d
110.9 Bcf/d
37.1 Bcf/d
24.5 Bcf/d
24.9 Bcf/d
86.5 Bcf/d
6.4 Bcf/d
12.0 Bcf/d
18.4 Bcf/d
111.9 Bcf/d
37.9 Bcf/d
27.2 Bcf/d
24.7 Bcf/d
87.0 Bcf/d
5.1 Bcf/d
7.8 Bcf/d
12.9 Bcf/d
109.9 Bcf/d
Growth sector Exports +15% Exports +17%
Winter-to-winter pressureon natural gas prices
*includes “Lease, Plant and Pipeline Fuel”
Data Source: Energy VenturesAnalysis.
72021-2022 Winter Outlook |
Electric Growth: Structural Growth vs. Economic Switching
Power Burn Increase from 2013-2014 Winter:
Structural Growth vs. Economic Switching
Data Source: Energy VenturesAnalysis
Note: 2021/22 winter prices are NYMEX settlements as of 9/27
0.7
1.11.6 2.3
3.4
5.76.7 6.9 7.0
0.1
3.2
-0.6
0.7
0.2
2.8
-0.2
-2.5
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
20
14
-20
15
20
15
-20
16
20
16
-20
17
20
17
-20
18
20
18
-20
19
20
19
-20
20
20
20
-20
21
20
21
-20
22
Structural Changes Economic Dispatch Henry Hub Prices
BCFD $/MMBTU
82021-2022 Winter Outlook |
Focus: Industrial Demand Peak Growth Phase
Natural Gas Spurring 22 Major Industrial Projects 2021-2024
$32 Billion
Investment to Build
Increase of
1.0 Bcf/d by 2024
18 New Projects
14 Petrochemical2 Steel2 Fertilizer
3 Expansions
2 Fertilizer1 Steel
1Re-start
1 Steel
In addition to
53 COMPLETED
Projects for additional
$79 billion and 1.7
Bcf/d from 2016-2020
Data Source: Energy VenturesAnalysis, September 2021
Photo Courtesy: Chevron U.S.A. Inc., 2017 (Pascagoula)
92021-2022 Winter Outlook |
U.S. LNG Exports: Steady Growth Expected to Continue
Data Source: Energy VenturesAnalysis, EIA
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Ju
l-19
Oct-
19
Ja
n-2
0
Ap
r-2
0
Ju
l-20
Oct-
20
Ja
n-2
1
Ap
r-2
1
Ju
l-21
Oct-
21
Ja
n-2
2
Ap
r-2
2
Sabine Pass Cove Point CameronElba Island Freeport Corpus ChristiCalcasieu Pass Feedgas Deliveries
BCFD
Forecast
U.S. LNG Export Capacity vs. Feedgas Deliveries
102021-2022 Winter Outlook |
Supply: Winter Production and Imports
Winter SeasonPeriod-to-period change
Last
Winter2020-2021
ACTUAL
This Winter 2021-2022
FORECAST
3-YEAR
WINTER
AVERAGE
Winter average production(Lower 48)
89.9 Bcf/d 93.7 Bcf/d 91.2 Bcf/d
Canadian imports (net) 5.5 Bcf/d 5.2 Bcf/d 5.0 Bcf/d
LNG imports 0.1 Bcf/d 0.3 Bcf/d 0.3 Bcf/d
Winter-to-Winter pressureon natural gas prices
Data Source: Energy VenturesAnalysis.
112021-2022 Winter Outlook |
Recession Impact: Growth of Associated Gas Production Slows
Data Source: EIA, Energy VenturesAnalysis.
Production Growth by Basin, 2021 vs. 2020 (through August)
Non-associated
Gas Production Change
1.4 BCFD
Associated
Gas Production Change
-2.1 BCFD
122021-2022 Winter Outlook |
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Jan
-17
Apr-
17
Jul-
17
Oct-
17
Jan
-18
Apr-
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Jul-
18
Oct-
18
Jan
-19
Apr-
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Jul-
19
Oct-
19
Jan
-20
Apr-
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Jul-
20
Oct-
20
Jan
-21
Apr-
21
Jul-
21
Anadarko Appalachia Bakken Eagle Ford
Haynesville Niobrara Permian
Efficiencies in Production, Drilling
-40%
-30%
-20%
-10%
0%
10%
20%
1/1
/202
0
2/1
/202
0
3/1
/202
0
4/1
/202
0
5/1
/202
0
6/1
/202
0
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/202
0
8/1
/202
0
9/1
/202
0
10/1
/20
20
11/1
/20
20
12/1
/20
20
1/1
/202
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2/1
/202
1
3/1
/202
1
4/1
/202
1
5/1
/202
1
6/1
/202
1
7/1
/202
1
Growth of Completed DUC wells Growth of New Rigs
Drilling Uncompleted Wells Inventory
in Major U.S. Producing Areas
New Gas Supply Source Growth Indicators:
DUC vs Rig
Data Source: EIA
Data Source: EIA; Energy Ventures Analysis
132021-2022 Winter Outlook |
Pipeline Delays and Cancellations in the Northeast
Data Source: EIA, Energy VenturesAnalysis
Northeast Production Pipeline Takeaway:
Annual Expansion vs. Total
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
0
0
0
0
0
1
1
1
1
1
1
2017 2018 2019 2020 2021 2022 2023 2024
Constitution Pipeline(Cancelled)
Diamond East Project(Cancelled)
Atlantic Coast Pipeline(Cancelled)
PennEast Pipeline(Cancelled)
Northeast SupplyEnhancement Project (OnHold)Northern Access 2016Project (On Hold)
Mountain Valley Pipeline(On Hold)
Actual Cumulative Capacity
Proposed CumulativeCapacity
Cumulative Capacity
(BCFD)
Cancelled/Delayed Capacity
(BCFD)
142021-2022 Winter Outlook |
New Pipeline Capacity Bringing Long-Awaited Relief to Permian
Data Source: OPIS PaintLogic, Energy VenturesAnalysis.
0
2
4
6
8
10
12
14
16
18
2017 2018 2019 2020 2021 2022 2023 2024 2025
Bakersfield Compressor Station WT-1 Compressor Station Modification
Permian North Expansion-El Paso North Texas
Gulf Coast Express El Paso South Mainline Expansion
Permian Highway Pipeline Agua Blanca Expansion
Whistler Pecos Trail (Pending)
Permian Pass (Pending) Permian to Katy (Pending)
Bluebonnet Market Express (Pending)BCFD
Permian Production Takeaway Capacity
152021-2022 Winter Outlook |
Supply: Winter Storage
Winter SeasonPeriod-to-period change
Last Winter2020-2021
ACTUAL
This Winter 2021-2022
FORECAST
Start-of-winter inventory 3,924 Bcf 3,627 Bcf
Compared to 5-year average(Percent of total storage inventory)
1% higher 3% lower
Average daily withdrawal from storage
15.3 Bcf 12.9 Bcf
New storage capacity + 0 Bcf + 0 Bcf
Winter-to-winter pressureon natural gas prices
Data Source: Energy Information Administration and Energy VenturesAnalysis.
162021-2022 Winter Outlook |
Winter Outlook: Wild Cards
COVID Wave ?
LNG Exports
Weather
172021-2022 Winter Outlook |
This Season’s Winter Outlook
Winter SeasonPeriod-to-period change
This Winter2021-2022 FORECAST
Economy
Weather
Overall demand
Winter supply
Storage
Winter-to-winter pressureon natural gas prices
182021-2022 Winter Outlook |
Natural Gas Outlook: Flexible, Responsive Gas Market
• Exports grow strong and steady along with new gas-fired generation and increased industrial demand
• Exports – LNG and pipeline increase as production and supply issues trouble Europe and Asia
• Power burn fueled by structural growth
• Economic recovery boosts industrial demand
• Winter supply combination of production and storage
• Efficiencies in drilling and production continue to make non-associated gas economic
• Non-associated gas growth outpaces associated gas
• Production, storage, Canadian imports support supply growth
192021-2022 Winter Outlook |
About NGSA
• Represents major producers and suppliers of domestic natural gas
• Integrated and independent companies: 8 members
• Founded in 1965
• Only national natural gas association representing producers and suppliers with a dedicated focus on downstream issues
• Promotes benefits of competitive natural gas markets, resulting in reliable and efficient transportation and delivery, increased supply and demand
• Combined with the Center for LNG
212021-2022 Winter Outlook |
Last Year’s Projection: How Did We Score? (Background Slide)
PredictedPressure on Prices
ActualPressure on Prices
Score
Correctly predicted:
We correctly projected record-breaking
demand and supply. However, supply
abundance outpaced demand due to very
warm winter and new pipeline capacity.
Result: Downward pressure on prices
• Last winter 2020-2021 average Henry
Hub price = $3.09 MMBtu
• Previous winter 2019-2020 average
Henry Hub price = $2.08 MMBtu
Data Source: Gas Daily