Title : Update On East Coast Natural Gas -- RBN Energy -- February 21, 2018
link : Update On East Coast Natural Gas -- RBN Energy -- February 21, 2018
Update On East Coast Natural Gas -- RBN Energy -- February 21, 2018
Impact of oil on US economy: the headline story in today's WSJ -- America's emerging petro economy flips the impact of oil.****************************************
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RBN Energy: East Coast natural gas prices hit all-time highs during "bomb cyclone."
After a three-year hiatus, winter returned to the U.S. natural gas market this year in the form of a “Bomb Cyclone” and more than a week of frigid temperatures.
The cold weather pushed Henry Hub prices above $6/MMBtu and East Coast prices higher than $100/MMBtu on some days.
This winter, the pain wasn’t just confined to New England.
Prices at Williams’ Transcontinental Gas Pipeline (Transco) Zone 5, which includes the Carolinas, Virginia and Maryland, hit all-time highs on January 5. Exports from Dominion’s Cove Point terminal in Maryland are only just getting started so it’s not liquefied natural gas (LNG) exports from the East Coast that are driving prices higher. Instead, it’s gas’s increasing role in winter power generation that has been putting pressure on East Coast gas pipeline deliverability.
Today, we begin a series explaining why prices have been so high on very cold days this winter and why more price spikes may be ahead. This winter, eastern gas prices have set records at some hubs and spiked near record highs at many others. Prices at Algonquin Citygate and Transco Zone 5 ran up to more than $100/MMBtu on January 5, and to $24/MMBtu during the week prior.
These price spikes have been driven by an increasing call on gas for power generation across the eastern U.S. On the coldest days, such as we saw when the Bomb Cyclone hit, the demand for gas as a generation and heating fuel exceeds pipeline capacity to deliver it, which begins a cascade of dominoes that results in skyrocketing prices.
How could such a calamity happen when Marcellus and Utica, two of the greatest gas producing fields in the world, sit right at the doorstep of this market? Although U.S. gas supply overall is more than plentiful, gas pipeline capacity into parts of the East Coast is not. Couple this with rising gas demand for baseload power generation and you have a recipe for price spikes, especially on the Transco system.
Either directly or indirectly, Transco serves almost all of the demand in the Carolinas and much of it from Virginia to New York City in its zones 5 and 6. We call the states in these two zones the Eastern Transco Corridor.
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