north american natural gas outlook3 $0 $20 $40 $60 $80 $100 $120-100,000 200,000 300,000 400,000...
TRANSCRIPT
1
North American Natural Gas Outlook Fundamentals and Price Outlook for 2013 and Beyond
February 6th, 2013
2 www.BentekEnergy.com
BENTEK Energy Market Information
Agenda:
A Mucho Robusto Gas Market - What’s in Store for 2013
Gas Demand to Pull Market
Natural Gas Production Response and the Evolution of Supply
Storage Inventory and Prices for the Next Five Years
3 www.BentekEnergy.com
$0
$20
$40
$60
$80
$100
$120
-
100,000
200,000
300,000
400,000
500,000
600,000
Fu
el C
ost
of
Ge
nera
tio
n (
$/M
Wh
)
To
tal In
sta
lled
Cap
acit
y (
MW
)
Coal Gen Cap Gas Gen Cap CAPP HH
2009-Present: Fuel Price Competition and Shift to Natural Gas
Source: BENTEK GENCast, Platts Gas Daily, Coal Trader
Power
Investment
Power
Buildout Supply
Investment
Robust
Equilibrium
4 www.BentekEnergy.com
-800
-600
-400
-200
0
200
400
600
800
-40
-30
-20
-10
0
10
20
30
40
Bcf
Bcf/
d
Res/Comm Power Burn Accumulated Difference
Over Past 15 Months: Res/Comm Down 0.9 Tcf
Power Up Over 1.5 Tcf
YOY Deltas Show Power Gains in Absence of Weather
Source: BENTEK Supply Demand Report
5 www.BentekEnergy.com
2.3
-0.4 -0.3
1.6
4.0
0.0
-2.2
0.2
2.0
Do
m P
rod
LN
G
Can
Im
po
rts
Su
pp
ly
Po
wer
Ind
ustr
ial
Res/C
om
Mex E
x
Dem
an
d
2012 vs. 2011 - US Net Short 0.4 Bcf/d
Supply Side Demand Side
On July 1st, U.S. was nearly 2 Bcf/d long versus 2011.
Source: BENTEK Supply & Demand Report
6 www.BentekEnergy.com
-0.6 -0.2 -0.4 -1.2 -1.0
0.5
6.9
0.4
6.8
Do
m P
rod
LN
G
Can
Im
po
rts
Su
pp
ly
Po
wer
Ind
ustr
ial
Res/C
om
Mex E
x
Dem
an
d
2013 vs. 2012 – Getting Shorter - 8 Bcf/d
Supply Side Demand Side
Source: BENTEK Supply & Demand Report
7 www.BentekEnergy.com
$3.85
$4.20
$1.98
$3.20
0
500
1000
1500
2000
2500
3000
April 2010 April 2011 April 2012 April 2013
YOY Inventory vs. Henry Hub Price
Inventory Price
Enter 2013 At Higher Price = New Environment
Source: BENTEK Market Call, EIA
8 www.BentekEnergy.com
15.0
20.0
25.0
30.0
35.0
40.0
U.S. Power Burn Per Degree (Bcf/d)
2009-11 2012
Power Burn Up Significantly in 2012 – Can This Continue in 2013?
6 Bcf
3 Bcf
Source: BENTEK Power Burn and Associated Data Sets
2013?
9 www.BentekEnergy.com
Evolution of Power Sector Development By Region
In US, nearly 16 GW of new gas
under construction, in the face
of 30 GW of coal retirements.
Source: Platts Power Plant Buildout Database
16 GW at 50%
Utilization and 7.5 Heat
Rate = 1.44 Bcf/d of
new gas demand.
10 www.BentekEnergy.com
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
YTD Change in Power Burn by Pipeline, 2007 VS 2012
Eastern Pipes: +82%
Transco, TX Eastern, Tenn: +35%
Midcon Pipes: +13%
Source: BENTEK Data Warehouse and Associated Data Sets
11 www.BentekEnergy.com
Power Generation Growth in the Northeast
4.4 GW Under Construction with
Another 13.2 GW Proposed – Exploit
Prod Gains and Soak Up Supply.
Source: Platts Power Plant Buildout Database
12 www.BentekEnergy.com
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Bcf/
d
Northeast Power Burn
History Forecast
Power Burn Expected To Continue to Increase
Source: BENTEK CellCast and Cell Model
Increase of 1.2 Bcf/d (23%)
13 www.BentekEnergy.com
Majority of Power Growth Along Eastern Seaboard
5.4 Bcf/d in Pipeline Expansions by 2017
• SONAT South System III: 375 MMcf/d, June 2012
• Transco Mid-South: 225 MMcf/d by July 2013
• Gulf South Southeast Market: 450 MMcf/d, Q4 2014
• Elba Express: 255 MMcf/d by December 2014
• Transco Atlantic Access: 1.8 Bcf/d by late 2014
All targeting power demand growth
Most designed to takeaway Marcellus supply
Source: BENTEK Southeast/Gulf Observer Expansions, Demand Analytics
Ahead of the Curve – 3.7 GW Under
Construction with 2.5 GW Proposed.
14 www.BentekEnergy.com
Southeast To Absorb Excess Supply
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Bcf/
d
Southeast Power Burn
History Forecast
Increase of 1.3 Bcf/d (16%)
Source: BENTEK CellCast and Cell Model
15 bentekenergy.com
(2.2)
(3.6)
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Bcf/
d
Canadian Imports LNG Sendout Mexican Exports
LNG Exports Net Imports
U.S. Net Imports Near
Zero by 2017
U.S. On Track to Export More than it Imports
Source: BENTEK Forward Curve
16 www.BentekEnergy.com
Mexican Demand – Driven By Power – Is Growing
CC Norte III (2015)
954 MW
CC Guaymas II
(2017) 747 MW
CC Guaymas III
(2018) 747 MW
Topolobampo I (2016) 320 MW
CC Topolobampo II (2016) 700 MW
CC Topolobampo III (2017) 700 MW
Guaymas I (2015)
108 MW
CC Norte V (2022)
944 MW
CC Norte IV (2019)
918 MW
CC Norte II (2013)
459 MW
CC Norte VI (2025)
918 MW
2013 – 2025
9,302 MW
1.0 Bcf/d @ 50%;
7.5 heat rate
P. Libertad
620 MW (2014)
Mazatlan (2016)
300 MW
Source: Comision Federal de Electricidad (CFE)
CC Mazatlan
(2021)
867 MW
El Paso Wilcox Lateral: 185 MMcf/d,
Apr. 2013
El Paso Samalayuca Lateral: 97 MMcf/d,
Jul. 2013
El Paso Sasabe: 200-770 MMCf/d,
Jul. 2014
Total El Paso: 482-1,052 MMcf/d
17 www.BentekEnergy.com
U.S. Gulf Coast LNG Exports - Base
0
1
2
3
4
5
6
7
2016 2017 2018 2019 2020
Bcf/
d
Sabine Pass Exports Cameron Exports Freeport Exports
Cove Point Exports Total US Capacity
Source: BENTEK Forward Curve
18 www.BentekEnergy.com
0
10
20
30
40
50
60
70
80
Bcf/
d
Industrial ResComm Power Burn
U.S. Power Burn Drives Demand Growth
Source: BENTEK Forward Curve
33%
40%
37% 38%
19 www.BentekEnergy.com
48.0
50.0
52.0
54.0
56.0
58.0
60.0
62.0
64.0
66.0
Bc
f/d
2011 2012 2013 2013 Fcst
U.S. Gas Production Will Increase In 2013
Source: BENTEK Supply and Demand Report, Dry Production
Maintenance &
Freeze-offs
2011 Avg. = 61.4 Bcf/d
2012 Avg. = 63.8 Bcf/d
2013 Est. = 65.6 Bcf/d
Hurricane Isaac
20 www.BentekEnergy.com
7/-1
198/-4
40/-21
57/-61
13/-1
9/+3
32/-5
18/-11
29/+9
96/+21
4/-19
5/+1
222/-18
30/+17
5/-5
36/-7
21/-12
5/+0
Active rig count: January 4, 2013 / Change in rig count from January 6, 2012
Rig Increases Dry Gas Focused Areas
Rig Increases Liquids-Rich/Oil Focused Areas
Rig Declines Source: BENTEK, January 2013
Sliding Oil Prices, Depressed NGLs, and Continued
Weakness in Gas Pushes Rig Counts Lower
1/-2
97/+11
57/+0
38/+15
58/-43
16/-14 209/-28
439/-19
43/-39
TOTAL
1824
CHANGE
-287
12/-10 PICEANCE
CALIFORNIA
MICHIGAN
POWDER RIVER
GREEN RIVER
WIND RIVER
OTHER ROCKIES
WILLISTON
SAN
JUAN
UINTA
OTHER
APPALACHIAN
D-J
MARCELLUS WET
MARCELLUS
DRY
UTICA
ILLINOIS
ARK FAYETTEVILLE
ARK WOODFORD
OFFSHORE
TX GULF
EAGLE FORD
PERMIAN
ANADARKO
FT
WORTH
AL-MS-FL
LA GULF
EAST
TX
ARLKA
OTHER
MIDCONTINENT
TX GULF
25/-44
RATON 1/+0
HH
($/MMBtu)
WTI
($/Barrel)
Mt. Belvieu
($/Gal)
Jan. 6, 2012 $2.97 $103 $1.44
Jan. 4, 2013 $3.20 $93 $0.96
21 www.BentekEnergy.com
0.80
0.90
1.00
1.10
1.20
1.30
1.40
400
600
800
1000
1200
1400
1600
Wells D
rilled
Per
Mo
nth
Per
Rig
To
tal
Wells
Dri
lled
an
d R
igs A
cti
ve
Wells Per Month Per Rig Horizontal Rig Count Horizontal Wells Drilled
Switch to Pad Drilling in Oil and Gas Plays
Driving Drilling Times Lower Increasing Rig Output
Source: BENTEK, RigData as of 1/13/2013
22 www.BentekEnergy.com
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
-
50
100
150
200
250
300
350
400
Well p
er
Rig
per
Mo
nth
No
. W
ells D
rill
ed
/Acti
ve R
igs
Eagle Ford Wells Drilled vs. Active Rigs
Wells per Month per Rig Horizontal Rigs Horizontal Wells Drilled
Eagle Ford Wells Drilled Surge in 2012
Source: BENTEK, RigData as of 1/13/2013
23 www.BentekEnergy.com
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
-
20
40
60
80
100
120
140
160
180
200
Well p
er
Rig
per
Mo
nth
No
. W
ells D
rill
ed
/Acti
ve R
igs
Marcellus Wells Drilled vs. Active Rigs
Wells per Month per Rig Horizontal Rigs Horizontal Wells Drilled
Marcellus Wells Drilled Surge in 2012
Source: BENTEK, RigData as of 1/13/2013
24 www.BentekEnergy.com
Barn
ett
Marcellus Production Will Grow Despite Rig Cuts
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Potential Northeast Production Profile (Bcf/d)
Legacy Production Lean Marcellus Wet Marcellus Utica
• Production Hits 16 Bcf/d by 2018!
• Assumes 50% Rig Count Decline
Source: BENTEK Production Monitors
25 www.BentekEnergy.com
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
IRR
$2 $5
Diverse Resource Base Maintains Pressure on Gas Prices
Note: Oil $80
NGL 30% of Crude
Support U.S. Production in Weak Price Environment Higher Pricing Drives Dry Gas Growth
Lower Gas Price Sensitivity High Gas Price Sensitivity
26 www.BentekEnergy.com
Production Growth Centered Around Residue Gas
+0.7
Bcf/d
-1.5
Bcf/d
-0.6
Bcf/d
-1.1
Bcf/d
+8.4
Bcf/d +1.4
Bcf/d
+4.7
Bcf/d
-0.2
Bcf/d
+0.2
Bcf/d
Note: Forecasts
Compare 2012 to 2017
(Bcf/d)
Source: BENTEK CellCast, CellModel
27 www.BentekEnergy.com
U.S. NGL Production to Increase by 1.5 MMb/d
2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
3.60
3.80
4.00
2012 2013 2014 2015 2016 2017 2018
MM
b/d
Source Market Call: NGLs, Updated as of 1/18/2013
28 www.BentekEnergy.com
50.9 54.0 55.2 57.1
61.5 63.8 65.6 68.1 70.7
74.2 76.4 80.4
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
U.S. Dry Gas Production Forecast to Grow
16.6 Bcf/d from 2012 to 2018
+2.6 Bcf/d Per Year +3.0 Bcf/d Per Year 1.8 Bcf/d
Source: BENTEK Forward Curve
29 www.BentekEnergy.com
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
U.S. Supply/Demand Balance
Dry Production US Production Forecast
US Demand US Demand Forecast
U.S. Goes Supply Long By 2017
11%
14%
25%
27%
Need 2.3 Bcf/d of Mexico
and 2.4 Bcf/d of LNG to
Balance Market in 2017/18!
Source: BENTEK Supply Demand and Forward Curve
30 www.BentekEnergy.com
1,200
1,700
2,200
2,700
3,200
3,700
4,200
$2.80
$3.00
$3.20
$3.40
$3.60
$3.80
$4.00
$4.20
$4.40
$4.60
$4.80
$5.00
$5.20
Storage Inventory (Bcf) NYMEX (Feb 5) BENTEK Fcst (Feb 2013)
NYMEX Forward Curve Expectations
NYMEX – Feb 5, 2013
BENTEK Forecast – Feb 2013
Source: BENTEK Forward Curve, NYMEX
31 www.BentekEnergy.com
U.S. Storage / Supply Glut Less Prevalent in 2013 than
2012 = Higher Average Price = Less Demand Upside
YOY
However, High-er Price Environment A Boon For
Producers – Look for Prod Gains As Market Gets
Shorter
Production Growth Centered Near Liquids and Oil Rich
Heavy Hydrocarbon Plays
Get Ready for Cheap-er Energy – Henry Hub to
Average $4.19, WTI Drop of Over 25% Over Next Five
Years
Conclusions and Takeaways
32 www.BentekEnergy.com
BENTEK Energy
BENTEK is an energy market analytics company focused on the natural gas, oil, and liquids markets and related energy sectors.
Jack Weixel
Director, Energy Analysis
Contact Any Analyst at 303.988.1320
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