Wyoming Pipeline Authority Public Meeting. Anne Swedberg, Manager, North American Power and Gas Content

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1 Wyoming Pipeline Authority Public Meeting Anne Swedberg, Manager, North American Power and Gas Content Platts, McGraw Hill Financial. All rights reserved. Benposium 2015.

2 Key Take-Aways US production growth outpacing demand gains; LNG and Mexico exports needed to balance market Dramatic growth in US NE affecting flow patterns across the continent West production flattening Gas pushing from East to West (displacements) Rockies gas needs new demand in the West and SW

3 Summer Outlook

4 Summer 2015 versus Summer 2014 Bcf/d Driven by price (1.00) Source: BENTEK Market Call short Term NG

5 4.9 Bcf/d of New Pipeline Capacity Arrives in 2015 MMcf/d MMcf/d REX E2W: IN-OH STATE LINE TO HAMILTON W 1, Transco CS 195 South Project Added Capacity In- Service Supply Area Demand Area REX East-to-West 1200 June OH Midcon Transco SE Leidy 525 ~June PA SE TGP Niagara 158 Nov PA Canada TCO East Side 310 Nov PA NE TETCO Uniontown 425 Nov PA/WV/OH Midcon TGP Broad Run 590 Nov WV SE TETCO Open 550 Nov OH SE ANR Glenn Karn 400 Nov NE Midcon NFG Northern Access 140 Nov NE NE

6 Power demand in the Northeast and Southeast expected to jump 20% Bcf/d Power Demand: Summer 15 vs (0.2) (0.4)

7 Bcf/d Coal to gas switching 40 US Potential Coal-to-Gas Switching Bentek HH Forecast: $2.55/ MMBtu Summer 2014 $4.19 / MMBtu Gas Price Northeast Southeast Texas Midcon Market Midcon Producing Southwest Rockies

8 Midcon Market to see most significant shift at price below $2.50 MMcf/d 1,200 1,000 Coal Generation at Risk Vs. Gas Price NE SE Texas Midcon Market Midcon Producing $4 $3.50 $3 $2.50 $2 $1.50 $1 Southwest Rockies

9 Incremental demand growth needed to reduce total ending inventory Bcf/d 2015 US Supply and Demand Balance Target Season Ending Inventory (Tcf) Y-O-Y Increase in Res/Comm/Industrial Y-O-Y Increase in MX Exports Total Incremental Demand (Over 2014) Baseload Power Growth Incremental Demand Needed

10 All long term weather forecasts pointing towards a mild summer

11 The Northeast effect What has to give

12 Northeast Production Continues to Climb, Off-Setting Declines in Other Regions Bcf/d Bcf/d Production 40% 35% 30% 50 Northeast Net flows 25% % % (5) % 5% 0 0% Rest of US Northeast % of Northeast

13 Marcellus and Utica Supply Growth Pushes Flows Back Across the Southwest & West -1.3 Bcf/d +6.0 Bcf/d -4.1 Bcf/d Net Change In Flows: Annual Averages

14 Bcf/d Bcf/d Net Northeast flows to the Midcon Market flip Midcon Market (Season-to-date) (1.0) (2.0) (3.0) (4.0) Northeast West Canada Southeast Rockies Midcon Producing East Canada Midcon Producing (Season-to-date) (0.5) (1.0) Rockies Southeast Texas

15 Bcf/d Expansions on ANR and REX have Changed the Midcon supply Midwest Flows from Northeast (0.5) (1.0) (1.5) (2.0) (2.5) Midwestern Texas Gas ANR-OH REX

16 Bcf/d REX Receipts from the NE at all time high 1.40 REX East-to-West production receipts near max capacity Markwest Seneca Processing Plant Dominion East Ohio Receipts Segment Operating Capacity Eureka Hunter Gathering System Segment Design Capacity Outflows to Midcon (IN/OH to Hamilton E2W)

17 REX East-to-West: Targets Existing Demand in 2015 & Increasingly Targets SE Demand through 2020 Delivery Points (East-to-West) Expected Capacity (MMcf/d) ISD Peak Summer/ Winter Avg. Daily (MMcf/d) Receipt Location Delivery Location Vectren Decatur /23 REX - Decatur County, IN ANR Pipeline at Shelby Q /300 REX - Shelby County, IN Citizens Morgan /16 REX Morgan County, IN PEPL Putnam 300 TBD 124/86 REX Putnam County, IN Midwestern Edgar /170 REX Edgar County, IL Trunkline Douglas 400 Post /3 REX - Douglas County, IL Ameren Moultrie /14 REX - Moultrie County, IL Behind Vectren Decatur City Gates Along ANR northbound and Southbound to LA Behind Citizens City Gates Possible reversal to deliver southbound Delivers ~ Bcf/d northbound towards Chicago (NE at expense of SE via Tennessee Pipeline) Delivers southbound to LNG demand Lake Charles Behind Ameren City Gates NGPL Moultrie (New null point) 1750 Q /148 REX - Moultrie County, IL Delivers to LDCs / Chicago and TxOk, South Texas, LA along Gulf Coast Mainline

18 Bcf Midcon storage inventories trend towards filling to 5-yr Average Midcon Storage 2015 Deficit to 5-Year Avg. 5-Year Average 2014

19 PG&E Storage Trending Towards Reaching Capacity Bcf 300 PG&E Storage Note: 2015* uses 5-year average injections; 2015** uses 5-year max rate (2011) 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 surplus to 5 yr Storage Capacity 2015* 2015**

20 SoCal Storage on Track to Surge Beyond Total Storage Capacity Bcf SoCal Storage Inventory Note: 2015* uses 5-year average injections; 2015** uses 5-year max rate (2014); 2015*** uses 5-year min rate (2013) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2015 surplus to 5 yr Storage Capacity 2015* 2015** 2015***

21 Hydro output in PNW falls below 5- year minimum GWh/d BPA daily hydro generation (GWh/d) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr range

22 PNW Power Burn Likely to Set New High Due to Poor Hydro Outlook MMcf/d 1,200 PNW Power Burn 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-year range Forecast

23 Bcf/d Southwest and Texas Production Feeding the West 16.0 MidCon/Southwest Production 14.0 Decreases (0.6) Increases Decreases (0.1) Anadarko Permian San Juan

24 Southwest Demand Expectations

25 Bcf/d Net Change in Southwest Natural Gas Fundamentals from 2014 to Fundamentals 1.8 Bcf/d of Inflows Required to Balance (0.5) (0.2) (0.2) (0.1) 0.0 Source: BENTEK Cell Model

26 Southwest Will Lead Demand Gains Across the Western US Bcf/d 12 California/Southwest Demand Total Demand 2020: 9.2 Bcf/d Bcf/d above Power ResComm Industrial Source: BENTEK Cell Model Power 2020: 4.0 Bcf/d Bcf/d above 20153

27 Production Outlook for the West

28 Bcf/d West Production continues downward trend since 2009, ROX experiences slight increase Rockies leading production declines * Rockies CA/Southwest

29 DJ Production Increase Offset by Declines in Other Rockies Plays Bcf/d Dry Plays Decline, Wet Plays Offset with Growth Other down by 0.2 Bcf/d Uinta down 0.1 Bcf/d PRB down by 0.2 Bcf/d Piceance down by 0.2 Bcf/d GRO down 0.3 Bcf/d DJ up 0.2 Bcf/d Denver-Julesburg Green River-Overthrust Piceance Powder River Uinta Other Forecast

30 Longer term outlook

31 Total Supply Production Imports from Canada LNG Demand from Power ResComm Demand Industrial Demand Exports to Mexico LNG Exports Pipe Loss Total Demand Bcf/d Incremental Change 2014 v (1.8) Fundamentals (0.1) Bcf/d Exports Required (0.5) Source: BENTEK Cell Model

32 Bcf/d Northeast Continues to Drive Growth 1/1/2009 8/1/2009 3/1/ /1/2010 5/1/ /1/2011 7/1/2012 2/1/2013 9/1/2013 4/1/ /1/2014 6/1/2015 1/1/2016 8/1/2016 3/1/ /1/2017 5/1/ /1/2018 7/1/2019 2/1/2020 9/1/ Texas+Southeast+Midcon Southwest+Rockies Northeast+Midwest Source: Bentek CellCAST

33 Bcf/d The Supply & Demand Balance Production Demand Net imports Source: Bentek CellCAST

34 Key Takeaways US production growth outpacing demand gains; LNG and Mexico exports needed to balance market Dramatic growth in US NE affecting flow patterns across the continent West production flattening Gas pushing from East to West (displacements) Rockies gas needs new demand in the West and SW

35 Q&A Anne Swedberg, Manager, North American Gas and Power Content 2013 Platts, McGraw Hill Financial. All rights reserved.