march 2010 ceri commodity report - natural gas · ceri commodity report - natural gas page 8...

Relevant • Independent • Objective

PAGE 1

March 2010

CERI Commodity Report - Natural Gas

CERI COMMODITY REPORT - NATURAL GAS

Editor-in-Chief: Mellisa Mei ([email protected])

CONTENTS

FEATURED ARTICLE................................................ 1

NATURAL GAS PRICES ........................................... 2

WEATHER ............................................................... 4

CONSUMPTION AND PRODUCTION ......................... 6

TRANSPORTATION ................................................. 8

STORAGE ................................................................10

LIQUEFIED NATURAL GAS ......................................13

DRILLING ACTIVITY................................................15

2010 INDUSTRY EVENTS ........................................17

The Canadian Energy ResearchInstitute – A Year of Renewal,and Rebirth

The past several years have been a period of great successfor the Canadian Energy Research Institute (CERI). WhileCERI has experienced many challenges, fiscal year 2010 (April1, 2010 to May 31, 2011) represents a year of renewal, andrebirth for the organization.

CERI exists primarily to provide objective,independent, and relevant research and analysis oncritical energy and environmental issues. In carrying outthis mission, CERI contributes to expanding thecountry’s knowledge base on key energy issues facingCanadians in these tumultuous times.

In order to focus and maximize the benefits of CERI’sresearch, the Board of Directors has decided to restructurethe organization, and implement a new business model thatrelies solely on sponsorships to fund research, and to makethat research as widely available as possible. The organizationwill no longer conduct customer-specific research. Rather,the organization will focus all of its efforts on producing high

quality research on key issues of interest to governmentsand industry. Our next fiscal year, which began April 1, 2010,will be a transition year, in which the new business modelwill be put into operation.The funding of the 2010/2011research budget has been committed, and will be sharedequally by the provincial government, the federalgovernment, and industry, to fund three research projects.There have been some discussions with industryrepresentatives regarding options to secure industry’s shareof funding in an efficient and equitable manner. An optionthat has emerged as a consensus is to use the Broad IndustryInitiatives (BII) program to collect industry’s share. The SmallExplorers and Producers Association of Canada (SEPAC) Boardhas ratified this approach, while on the Canadian Associationof Petroleum Producers (CAPP) side, the BII committee hasrecommended approving this approach.

On behalf of CERI and the staff, I would like to express ourappreciation of your continuing support, which has enabledCERI to provide important economic analyses and insightson energy and environmental issues over the last 35 years.The Canadian Energy Research Institute’s sponsors grouphas approximately 100 members: producers, transportationand service companies, end-users, financial institutions,associations, universities, and other organizations. As well,various federal, provincial, municipal, regional and localgovernments and their regulatory and monitoring agenciesalso sponsor CERI.

We wanted to bring these developments to your attentionas CERI firmly believes that this new mandate will positionthe organization to better provide valuable research andpolicy direction to industry and governments. While thecommodity reports may undergo some changes, they willcontinue to be published. The 2010 oil conference (April19/20th) will be going ahead as planned. If you are notalready attending, I encourage you to register and attendthe oil conference, not only to show your support for CERI,but also to hear from our excellent panel of speakers, andnetwork with fellow guests.

If you have any questions or comments, please do nothesitate to contact myself, or any of our dedicated staffmembers.

Peter HowardInterim President & CEOCanadian Energy Research Institute


PAGE 2

SOU

RCE

: C

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PAGE 3

SOU

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PAGE 4

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: E

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: N

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: N

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.


PAGE 5

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PAGE 6

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PAGE 7

SOU

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: S

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PAGE 8

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PAGE 9

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PAGE 10

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PAGE 11

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ere

58pe

rcen

tbe

low

the

5-ye

arav

erag

eof

238

BC

F.•T

hevo

lum

eof

natu

ralg

asw

ithdr

awn

from

US

stor

age

durin

gth

e20

09/2

010

win

ter

heat

ing

seas

onto

tale

d2.

2TC

F,ex

ceed

ing

with

draw

als

mad

edu

ring

the

prev

ious

win

terb

y26

perc

ent.

•Abo

veav

erag

ein

ject

ions

ofna

tura

lgas

into

Can

adia

nan

dU

Sst

orag

ear

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pect

eddu

ring

the

mon

thof

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il,as

wea

ther

fore

cast

sar

epr

edic

ting

norm

alto

abov

eno

rmal

tem

pera

ture

s.


PAGE 12

SOU

RCE

: C

ERI,

Pla

tts

Gas

Dai

ly.

SOU

RCE

: C

ERI,

Pla

tts

Gas

Dai

ly.

SOU

RCE

: C

ERI,

Pla

tts

Gas

Dai

ly.

SOU

RCE

: C

ERI,

Pla

tts

Gas

Dai

ly.

-100-8

0

-60

-40

-20020406080100

JF

MA

MJ

JA

SO

ND

5-Ye

ar A

vg.

2009

2010

US

Wes

tern

Con

sum

ing

Reg

ion

Sto

rage

In

ject

ions

/Wit

hdra

wal

sBC

F, M

onth

End

-700

-500

-300

-10010

0

300

500

JF

MA

MJ

JA

SO

ND

5-Ye

ar A

vg.

2009

2010

US

Eas

tern

Sto

rage

In

ject

ions

/Wit

hdra

wal

sB

CF,

Mon

th E

nd

-250

-200

-150

-100-5

0050100

150

200

JF

MA

MJ

JA

SO

ND

5-Ye

ar A

vg.

2009

2010

US

Pro

duci

ng R

egio

n S

tora

ge

Inje

ctio

ns/W

ithd

raw

als

BC

F, M

onth

End

-100

0

-800

-600

-400

-2000

200

400

600

800

JF

MA

MJ

JA

SO

ND

5-Ye

ar A

vg.

2009

2010

US

Sto

rage

In

ject

ions

/Wit

hdrw

als

BC

F, M

onth

End


PAGE 13

SOU

RCE

: U

.S.

DO

E.SO

URCE

: U

.S.

DO

E.

SOU

RCE

: U

.S.

DO

E.SO

URCE

: U

.S.

DO

E.

024681012141618202224

Feb-

09A

pr-0

9Ju

n-09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Cove

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ntEl

ba Is

land

Ever

ett

NE

Gat

eway

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tern

US

LN

G Im

port

s B

y Fa

cilit

yB

CF

024681012141618202224

Feb-

09A

pr-0

9Ju

n-09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Gul

f Gat

eway

Free

port

Lake

Cha

rles

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ne P

ass

Cam

eron

US

GO

M L

NG

Im

port

s B

y Fa

cilit

yB

CF

0510152025303540

Feb-

09A

pr-0

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n-09

Aug

-09

Oct

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Dec

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Feb-

10

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tN

iger

iaTr

inid

adNo

rway

BC

F

US

LN

G Im

port

s B

y O

rigi

n

02468101214

JF

MA

MJ

JA

SO

ND

2008

2009

2010

Vol

ume-

Wei

ghte

d A

vera

ge L

NG

Pri

ceV

olum

e-W

eigh

ted

Ave

rage

LN

G P

rice

Vol

ume-

Wei

ghte

d A

vera

ge L

NG

Pri

ceV

olum

e-W

eigh

ted

Ave

rage

LN

G P

rice

US$

/MM

Btu


PAGE 14

SOU

RCE

: N

EB a

nd U

S D

OE.

SOU

RCE

: E

IA,

U.S

. D

OE.

SOU

RCE

: U

.S.

DO

E.

01234567

Feb-

09A

pr-0

9Ju

n-09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

US

LN

G E

xpor

ts t

o Ja

pan

BC

F

01234567

Feb-

09A

pr-0

9Ju

n-09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Con

ocoP

hilli

psM

arat

hon

US

LN

G E

xpor

tsB

y E

xpor

ter

BC

F

LNG

Im

port

ers

and

Shi

pper

s

Can

adia

n LN

G I

mpo

rter

s in

201

0 (A

s of

Jan

uary

31,

201

0)

Com

pany

Vol

ume

(BCF

)%

of

Tota

l LN

G Im

port

s

Rep

solE

nerg

y C

anad

a Lt

d.14

.610

0To

tal

14.6

100

U.S

. LN

G Im

port

ers

in 2

010

(As

of F

ebru

ary

28, 2

010)

Com

pany

Vol

ume

(BC

F)%

of

Tota

l LN

G

Impo

rts

BG

LN

G S

ervi

ces

20.2

19.8

Dis

trig

as27

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xcel

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nerg

y C

ompa

ny8.

88.

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tal G

as &

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er12

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empr

a LN

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arke

ting

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4.1

Tota

l10

2.2

100.

0

LNG

Shi

pper

s to

the

U.S

. in

2010

(A

s of

Feb

ruar

y 28

, 201

0)

Com

pany

Vol

ume

(BC

F)%

of

Tota

l LN

G

Shi

pmen

ts

Atla

ntic

LN

G 2

/3 C

ompa

ny2.

62.

5A

tlant

ic L

NG

Com

pany

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5.3

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8.9

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GG

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ural

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ovis

iona

mie

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5.8

5.6

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LN

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as C

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imite

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as L

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7

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toil

AS

A, R

WE

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ge A

S,

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s N

orge

AS

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5.7

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ketin

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0S

tato

il A

SA

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5.8

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en L

NG

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pany

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.; TO

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& P

ower

Ltd

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2To

tal

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210

0.0

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LN

G R

e-E

xpor

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pdat

e

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ocoP

hillip

s, w

hich

ow

ns 5

0 pe

rcen

t of t

he F

reep

ort L

NG

faci

lity,

was

gra

nted

au

thor

izat

ion

to re

-exp

ort u

p to

500

BC

F of

fore

ign

sour

ced

LNG

from

the

Free

port

LNG

te

rmin

al in

Nov

embe

r 200

9.•In

Mar

ch 2

010,

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epor

t LN

G s

ubm

itted

an

appl

icat

ion

to a

men

d th

e U

S D

OE’

s or

igin

al

expo

rt au

thor

izat

ion,

to a

llow

the

re-e

xpor

t of f

orei

gn s

ourc

ed L

NG

to a

ny c

ount

ry (i

nclu

ding

th

ose

prev

ious

ly a

ppro

ved)

that

is c

apab

le o

f im

porti

ng L

NG

, and

with

whi

ch tr

ade

is n

ot

proh

ibite

d by

U.S

. law

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heni

ere

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ketin

g ha

s fil

ed a

n ap

plic

atio

n w

ith th

e U

S D

OE

in M

arch

, to

amen

d th

e or

igin

al e

xpor

t aut

horiz

atio

n is

sued

for S

abin

e Pa

ss, t

o in

crea

se th

e cu

mul

ativ

e re

-exp

ort

volu

me

limit

from

64

BCF

to 5

00 B

CF

over

two

year

s, a

nd a

llow

the

re-e

xpor

t of f

orei

gn

sour

ced

LNG

to a

ny c

ount

ry (i

nclu

ding

thos

e pr

evio

usly

app

rove

d) th

at is

cap

able

of

impo

rting

LN

G, a

nd w

ith w

hich

trad

e is

not

pro

hibi

ted

by U

.S. l

aw.

•Citi

grou

p En

ergy

exp

orte

d 2.

7 BC

F of

LN

G fr

om th

e Fr

eepo

rt LN

G te

rmin

al in

Dec

embe

r 20

09, a

nd 3

.4 B

CF

of L

NG

from

the

Sabi

ne P

ass

LNG

term

inal

in M

arch

201

0.

Sou

rce:

US

DO

ES

ourc

e: U

S D

OE

01234

JF

MA

MJ

JA

SO

ND

Free

port

LNG

Impo

rts (B

CF)

5-Ye

ar A

vg.

2008

2009

2010

02468

JF

MA

MJ

JA

SO

ND

Sabi

ne P

ass

LNG

Impo

rts (B

CF)

5-Ye

ar A

vg.

2008

2009

2010


PAGE 15

SOU

RCE

: C

ERI,

CAO

DC,

Bak

er H

ughe

s.SO

URCE

: C

ERI,

CAO

DC.

SOU

RCE

: C

ERI,

CAO

DC.

SOU

RCE

: C

ERI,

CAO

DC.

0

500

1,00

0

1,50

0

2,00

0

2,50

0

3,00

0 Jan-

02Ja

n-03

Jan-

04Ja

n-05

Jan-

06Ja

n-07

Jan-

08Ja

n-09

Jan-

10

WCS

BUS

Nor

th A

mer

ican

Act

ive

Rig

sR

igs

0

100

200

300

400

500

600

700

800

900

1,00

0 Jan-

02Ja

n-03

Jan-

04Ja

n-05

Jan-

06Ja

n-07

Jan-

08Ja

n-09

Jan-

10

Act

ive

Rig

sTo

tal R

ig D

rillin

g Fl

eet

Can

adia

n R

ig F

leet

Uti

lizat

ion

Wee

kly

Ave

rag

e A

ctiv

e R

igs

Rig

s

0

100

200

300

400

500

600

700 Ja

n-08

Mar

-08

Jun-

08Se

p-08

Dec-

08M

ar-0

9Ju

n-09

Sep-

09D

ec-0

9M

ar-1

0

BC

AB

SK

WC

SB

Act

ive

Rig

s by

Pro

vinc

eW

eekl

y A

vera

ge

Rig

s

-

100

200

300

400

500

600

700

800

15

913

1721

2529

3337

4145

49

5-Ye

ar A

vg.

2009

2010

Wes

tern

Can

ada

Act

ive

Rig

sW

eekl

y A

vera

ge

Rigs

Wee

k N

umbe

r


PAGE 16

SOU

RCE

: C

ERI,

Bak

er H

ughe

s.SO

URC

E:

CERI

, Ba

ker

Hug

hes.

SOU

RCE:

CE

RI,

Bake

r H

ughe

s.

0

500

1,00

0

1,50

0

2,00

0

2,50

0 Jan-

02Ja

n-03

Jan-

04Ja

n-05

Jan-

06Ja

n-07

Jan-

08Ja

n-09

Jan-

10

Ons

hore

Gas

-Dir

ecte

dG

OM

Gas

-Dire

cted

Tota

l Oil-

Dire

cted

Rig

s

US

Tot

al A

ctiv

e R

igs

0 20

40

60

80

100

120

140 Ja

n-02

Jan-

03Ja

n-04

Jan-

05Ja

n-06

Jan-

07Ja

n-08

Jan-

09Ja

n-10

Oil-

Dire

cted

Gas

-Dir

ecte

d

US

Gul

f of

Mex

ico

Act

ive

Rig

sR

igs

In M

arch

, the

ave

rage

num

ber o

f gas

-di

rect

ed G

OM

rig

s in

crea

sed

to 2

4 rig

s,

follo

win

g fiv

e m

onth

s of

dec

linin

g ac

tivity

.0%10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1,00

0

1,20

0

1,40

0

1,60

0

1,80

0

2,00

0

2,20

0 Jan-

02Ja

n-03

Jan-

04Ja

n-05

Jan-

06Ja

n-07

Jan-

08Ja

n-09

Jan-

10

Oil-

Dire

cted

Gas

-Dire

cted

Gas

-Dire

cted

%

US

Tot

al A

ctiv

e R

igs

Rig

s

Nor

th A

mer

ican

Rig

Act

ivit

y

•The

mon

thly

aver

age

WC

SB

rigut

iliza

tion

rate

decl

ined

to44

perc

enti

nM

arch

.H

owev

er,t

hecu

rren

trig

utiliz

atio

nra

teis

97pe

rcen

tgr

eate

rth

anth

eut

iliza

tion

rate

reco

rded

inM

arch

2009

.•D

urin

gth

em

onth

ofM

arch

,the

num

ber

ofrig

sop

erat

ing

inth

eW

CS

Bde

clin

edby

appr

oxim

atel

y31

perc

ent,

toan

aver

age

of35

0rig

s.•N

early

75pe

rcen

toft

hede

clin

ein

activ

eW

CSB

rigs

was

attri

buta

ble

toA

lber

ta.

•Mon

th-o

ver-

mon

th,

Sask

atch

ewan

and

Brit

ish

Col

umbi

aex

perie

nced

a12

perc

enta

nd10

perc

entd

eclin

ein

rigac

tivity

,res

pect

ivel

y.•In

Mar

ch,t

heto

taln

umbe

rofr

igs

oper

atin

gin

the

US

incr

ease

dby

5pe

rcen

t,or

69rig

sfro

mth

epr

evio

usm

onth

,to

1419

rigs.

•The

mon

thly

aver

age

incr

ease

into

tal

US

gas

rigs

exce

eded

the

aver

age

incr

ease

into

talo

ilrig

sby

64pe

rcen

t.•O

n-sh

ore

natu

ralg

as-d

irect

edrig

activ

ityin

crea

sed

byan

aver

age

of39

rigs

inM

arch

,w

hile

the

aver

age

num

ber

ofrig

sop

erat

ing

inth

eG

OM

incr

ease

dby

3rig

s.•D

urin

gQ

120

10,

natu

ral

gas-

dire

cted

rigs

acco

unte

dfo

ran

aver

age

of66

perc

ento

ftot

alU

Srig

s,do

wn

from

78pe

rcen

tin

Q1

2009

,and

81pe

rcen

tin

Q1

2008

.


PAGE 17

2010 Industry Events Calendar

For further information on these conferences, visit our website at www.ceri.caTo register, contact Capri Gardener at [email protected] or 403-220-2380

CERI 2010 Oil ConferenceMarkets, Margins and Message:

Oil in an Age of Uncertainty

Often the oil market is seen simply as the interaction ofsupply and demand. But it is becoming ever clearer thatthe Canadian oil market may be experiencing somefundamental changes that will impact on how we participatein future markets; what our margins are going to be, andperhaps most importantly, what our message should be.

Fairmont Palliser, Calgary, AlbertaApril 18-20, 2010

CERI 2010 Petrochemical Conference

As the first signs of an economic recovery start tomaterialize and the survivors start ramping up production,will the market be the same as before or has the gamechanged? Alberta’s gas industry is still in the doldrumsand NGL supply is declining as a result of declining gasproduction, precipitated by soft market prices. On thehorizon is the growing potential for the Marcellus shalegas play in the US to become a significant NGL supplier tothe Sarnia area, which has been one of Alberta’s long-time markets. Feedstock issues, the unknown elementsof climate change policy, and the long-term issue ofIndustry competitiveness are all issues that are extremelyimportant to both Government and Industry.

Delta Lodge at Kananaskis, AlbertaJune 6-8, 2010

march 2010 ceri commodity report - natural gas · ceri commodity report - natural gas page 8...

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