![]() Prices in the Northeast decreased this week as cooler weather contributed to lower natural gas consumption.Average temperatures in the Riverside Area, inland from Los Angeles, fell 10☏ this week to 70☏, resulting in 68 fewer cooling degree days (CDD) compared with last week and 41 CDDs fewer than normal levels, leading to lower demand for air conditioning. Total consumption of natural gas in California fell 11% (0.6 billion cubic feet per day ) week over week, led by a decrease of 26% (0.6 Bcf/d) in consumption by the electric power sector, according to data from S&P Global Commodity Insights (SPGCI). The price at PG&E Citygate in Northern California fell 83 cents from $4.37/MMBtu last Wednesday to $3.54/MMBtu yesterday. The price at SoCal Citygate in Southern California fell 74 cents from $4.87/MMBtu last Wednesday to $4.13/MMBtu yesterday. California’s natural gas spot prices decreased more than other locations but remained the highest in the country.Price changes this week ranged from a decrease of 83 cents/MMBtu at PG&E Citygate to an increase of 11 cents/MMBtu at the Houston Ship Channel. Select regional spot prices: Natural gas spot prices fell at most major trading hubs this report week (Wednesday, September 13 to Wednesday, September 20).The price of the 12-month strip averaging October 2023 through September 2024 futures contracts declined 6 cents to $3.180/MMBtu. Henry Hub futures price: The price of the October 2023 NYMEX contract increased 5.3 cents, from $2.680/MMBtu last Wednesday to $2.733/MMBtu yesterday. ![]() Henry Hub spot price: The Henry Hub spot price increased 1 cent from $2.76 per million British thermal units (MMBtu) last Wednesday to $2.77/MMBtu yesterday.Market Highlights: (For the week ending Wednesday, September 20, 2023) We expect higher crude oil prices will incentivize operators to produce more oil and natural gas in the Permian region. We forecast the West Texas Intermediate (WTI) crude oil price to increase in 2024, averaging $83.22 per barrel (b) compared with $79.65/b in 2023, due in part to Saudi Arabia’s extended crude production cuts. As a result, producers in the Permian region typically respond to changes in the crude oil price when planning their exploration and production activities, including when deciding whether to deploy drilling rigs or take rigs out of operation. Most of the natural gas production in the Permian region is associated natural gas production from oil wells. According to Baker Hughes, 322 active rigs were in the Permian region as of September 15, 31 fewer rigs than at the start of the year. So far in 2023, marketed natural gas production has increased in the Permian region even as the rig count has decreased. Average first month production for Permian region wells has risen in recent years, averaging 1,912 MMcf in 2021 and 1,829 MMcf in 2022, compared with 1,301 MMcf in 2017. ![]() Specifically, well-level productivity tends to be highest during the first full month of operation.įor Permian region wells starting operations in 2023, the first full month of operations produced on average 1,849 million cubic feet (MMcf) of natural gas. The first few months of a well’s operation typically have the highest production rate, followed by declining output in subsequent months. We measure natural gas well-level productivity by a well’s monthly average natural gas output. The length of a well’s horizontal section, or lateral, which is a key factor in well-level productivity, has increased substantially for wells operating in the Permian region, from an average of less than 4,000 feet in 2010 to over 10,000 feet in 2022. oil and natural gas well-level productivity has been improving because of advances in hydraulic fracturing and horizontal drilling techniques. Improvement in Permian well-level productivity and higher crude oil prices in late 20 drive the growth in natural gas production in our forecast. ![]() We forecast Permian region natural gas production will increase by 12% (2.3 Bcf/d) in 2023 and 8% (1.8 Bcf/d) in 2024. Our forecast reflects more oil and natural gas production in the Permian region in western Texas and eastern New Mexico, which currently accounts for a quarter of all marketed natural gas production in the L48. marketed natural gas production in the Lower 48 states (L48) will grow by 5% (5.2 billion cubic feet per day ) in 2023 and 2% (2.6 Bcf/d) in 2024. In our latest Short-Term Energy Outlook, we estimate U.S. Higher Permian well productivity, crude prices drive U.S.
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