Last updateWed, 21 Mar 2018 8pm


Natural Gas Prices, Production, Exports Increased in 2017

Overall, natural gas prices at key regional trading hubs were less volatile in 2017 than in previous years, as pipelines that came online throughout the year eased some infrastructure constraints that affect regional prices, according to the U.S. Energy Information Administration. In the Northeast, which tends to have large price spikes during periods of cold weather, new pipeline capacity, along with warmer winter weather, helped to moderate price volatility. However, record cold temperatures at the end of December in the eastern U.S. led to record high demand for natural gas and significant price spikes at many trading locations.

Additional takeaway capacity in the Appalachian region, the region with the largest U.S. natural gas production growth in 2017, continued to narrow price differences between Henry Hub and nearby trading hubs such as Dominion South in western Pennsylvania, Transco Zone 6 NY in New York City, and Algonquin Citygate near Boston. 

Pipeline Capacity Expansions Accelerating in U.S. Northeast

With projects such as Columbia Gas Transmission’s Leach Xpress and Energy Transfer Partners’ Rover pipeline, “[t]he U.S. northeast should realize an increase of more than 3 Bcf/d of natural gas pipeline capacity by the end of this quarter, compared with an increase of 2.3 Bcf/d in volumes in the fourth quarter of 2017,” Argus Media  reports.

“The projects this quarter should provide more takeaway capacity than what six smaller projects brought to the region in the fourth quarter of 2017.” 

EIA Forecasts Increasing Global Crude Production Through 2019

The U.S. Energy Information Administration’s (EIA) new Short-Term Energy Outlook forecasts Brent crude oil to average $60 per barrel (b) in 2018 and $61/b in 2019, slightly higher than the $54/b average in 2017. In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with U.S. crude oil production increasing more than any other country.

EIA forecasts the West Texas Intermediate (WTI) crude oil spot price will average $55/b in 2018 and $57/b in 2019, or $4/b and $5/b, respectively, lower than Brent prices. This price difference is expected to narrow from the $6/b average price difference seen in the fourth quarter of 2017 because current constraints on the capacity to transport crude oil from the Cushing, OK storage hub (the geographic location associated with the WTI price) to the U.S. Gulf Coast are expected to gradually lessen. 

Federal Move Could Unlock 65 Billion Barrels of Oil Equivalent

A proposal by the Trump administration to make nearly all offshore areas in the U.S. available for oil and gas exploration drilling could attract billions of dollars of investment and potentially unlock up to 65 billion barrels of oil equivalent (boe), according to Rystad Energy.

This figure excludes resource potential from western and central areas of the Gulf of Mexico – both coastal and deep waters. It includes, however, the eastern part of the Gulf, which is currently under congressional moratorium until the end of June 2022. 

Fourth Quarter Saw Strong Global Chemicals Production

Data collected and tabulated by the American Chemistry Council (ACC) shows that growth in global chemistry during November was buoyed by a synchronized up-swing in the global economy. Global chemicals production rose 0.6% in November, following a 0.5% gain in October. During November, production gains were broad-based with all regions growing. The Global Chemical Production Regional Index was up 3.1% year-over-year on a three-month moving average basis and stood at 112.4% of its average 2012 levels in November.

During November, capacity utilization in the global business of chemistry gained 0.4% to 81.0%. This is up from 80.3% last November but is below the long-term (1987-2016) average of 88.8%. 



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