north american natural gas outlook · bentek isd cellcast forecast 80 rigs 110 rigs +1.0 bcf/d...
TRANSCRIPT
North American Natural Gas Outlook
The Fertilizer Institute Technology & Outlook Conference November 15 , 2017
Copyright © 2016 by S&P Global. All rights reserved.
The Evolution Of The Value Gap
Source: Platts / ICE
$0
$5
$10
$15
$20
$25Commodities On BTU Equivalent
CAP Coal HH Nat Gas NGL @ Belvieu WTI Brent
-10
10
30
50
70
90
110
02468
101214161820
MM
Boe
/d
Incremental Annual Liquids & NG Production
Nat Gas NGLs Crude BCF/d
Source: Platts Analytics
62
64
66
68
70
72
74
76
78
BC
F/d
US Dry Production
2014 2015 2016 2017
12
14
16
18
20
22
24
26
28
BC
F/d
NE Dry Production
2014 2015 2016 2017
Another Record Year - US Production Tops 75 BCf/dNE Production Tops 26 Bcf/d - Up 1.8 Bcf/d YOY
2014 – 16.4 Bcf/d2015 – 19.8 Bcf/d2016 – 22.4 Bcf/d
2017 YTD 24.2 Bcf/d
2014 – 69.1 Bcf/d2015 – 71.7 Bcf/d2016 – 71.5 Bcf/d
2017 YTD – 71.8 Bcf/d
30
40
50
60
70
80
Bcf
/d
Northeast vs. Rest of US Dry Gas ProductionNortheastRest of US
Source: Platts Analytics 4
US Light Sweet Growth Leads The Story – US Grows 3.3 MMB/d Of Global 5.6 MMB/d Forecasted 2017 - 2022
0
20
40
60
80
100
MMB/
d
Global Crude To Grow 5.6 MMB/d (US Makes Up 66%)
Rest Of World Iran IraqKuwait Lybia NigeriaRussia Saudi US
0
2
4
6
8
10
12
14
MMB/
d
US Crude & Condensate
Non Shale Bakken Eagle Ford
Permian Other Shale
Non Shale ‐.6 MMB/d 2022 vs 2017 Non Shale ‐.6 MMB/d 2022 vs 2017
12.75 MMB/d 2022
NGL Production From Gas Plants Expected To Grow An Incremental MMB/d
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
MM
B/d
US NGL Supply from Gas PlantsPrior to ethane rejection
Ethane Propane Normal Butane Isobutane Natural Gasoline
+1.7 MMB/d80% growth in
NGL production
41% growth inNGL
production
Source: Platts Analytics PIRA NA NGL Monthly Forecast November 2017
6
Current Forecast Looks For 87 Bcf/d By 2022NE Is Still Forecasted As Primary Driver
+7 Bcf/d
US Gas Growth 2017 - 2022 +15 BCf/d
Source: Bentek CellCast November 2017
+1.2 Bcf/d+5 Bcf/d
+.3 Bcf/d
+1.4 Bcf/dFlat (.0)
(-.2) Bcf/d
+1.0 Bcf/d+.7 Bcf/d
7
NE Wet and Dry Windows Service Two Distinct Markets With Minimal Interconnectivity –
Wet Marcellus/Utica
NE PA Dry
MidCon
-$4
-$2
$0
$2
$4
$6
$8
$10
$12
$14
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$ M
MB
tu F
rac
Spre
ad
$ M
MB
tu F
or N
G
Recognized Gas Prices And NE NGL Frac Spread
Dominion S Henry Hub TCO App Marcellus/Utica Frac Spread @ MB
2011 Avg NGL Uplift To NE Wet Production $9.87
TCO APP $4.09DS $4.14
2016 Avg NGL Uplift To NE
Wet Production ($1.06)TCO APP $2.52
DS $1.52
2017 YTD Avg NGL Uplift To NE Wet Production$.11
TCO APP $2.81DS $2.12
2015 Avg NGL Uplift To NE Wet Production ($.60)
TCO APP $2.52DS $1.48
Natural Gas
22
27
32
37
42
47
Bcf
/d
Atlantic Coast PipelineTCO Mountaineer XpressTCO WB XPressEQT Mountain ValleyPennEastAtlantic SunriseTGP Broad RunTETCO Adair/Access/LebanonNexusTCO Leach XpressTGP SW LouisianaETP RoverNFG Northern AccessTGP Susquehanna WestREX Capacity EnhancementDTI Lebanon West IIDTI ClaringtonTCO Utica AccessTETCO Gulf MarketsBase CapacityScheduled ISDNE Production
Source: Platts Analytics’ Bentek Energy
Production Takeaway Expansions – Were Producers Overzealous With Their Capacity Obligations?
20
25
30
35
40
45
Bcf
/d
NE Infrastructure & Rig ScenariosNovember Stats @ 26 B/d and 80 Rigs
Bentek ISD Cellcast Forecast 80 Rigs 110 Rigs
+1.0 Bcf/d Oct- Nov
Exit winter @ 27.3 Bcf/d (+2.4 Bcf/d from Sept. 2017
levels)
Scheduled vs. estimated IS’s & production forecast
Source: Platts Analytics
Other Key Basins Add To 2.5 BCF/d To 2017 Supply –Associated Gas From Oil Basins & Haynesville Forecast To Continue Growth
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Bcf
/d
Growth In Key Basins Average Dec 2016 vs November 2017
Haynesville
Permian
Anadarko0
102030405060708090
100
BC
F/d
Forecasted NG Growth By Basin 2017 - 2022
Rest of US Anadarko NE Wet NE DryHaynesville DJ Eagle Ford Permian
+1.5 Bcf/d
+750 MMcf/d
+305 MMcf/d
10
Permian Is Well Piped But Faces Considerable Downstream Constraints
‐$0.50
‐$0.40
‐$0.30
‐$0.20
‐$0.10
$0.00
$0.10
0
2
4
6
8
10
12
14
16
2015 2016 2017
$/MMBtuBcf/d
Permian production, takeaway, basis
Dry gas production CapacityWaha basis (right)
14 Bcf/d
Ample “spare” capacity
Demand
11
Longer Term Exports Key To Demand Growth –Incremental Demand of 15.1 Bcf/d 2017-2022
Source: Platts AnalyticsCell Cast November 2017
0102030405060708090
100
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
BC
F/d
Power Burn Res Com/ PL Industrial To Mexico LNG
Power Burn +1.3 Bcf/d
Res Com +2.8 Bcf/d
Industrial +2.0 Bcf/d
Exports 9.1 Bcf/d
Source: Platts Analytics
0123456789
10
BC
F/d
Mexico Supply Stack
Dry Production LNG ImportsSW To Mexico Texas To Mexico
US Exports To Mexico Stall For Now – Look For Increase of 50% to 6.3 BCF/d By 2022
0.00.51.01.52.02.53.03.54.04.55.0
BC
F/d
Outflows To Mexico
SW To Mexico Texas To Mexico
Source: Platts Analytics 14
Mexico Pipeline Delays Continue To Limit Exports From The US
Average Delay for Border Crossing Pipeline: 31 days
Average Delay for Mexico Pipeline: 193 days
Now 5.6 Bcf/d of capacity is delayed past mid-2018
Source: Platts Analytics
Sabine Exports See Volatility
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
BC
F/d
Sabine Capacity vs Feedstock Gas
Train 1 Train 2 Train 3 Train 4 Feedstock
Source: Platts Analytics
$0$2$4$6$8
$10$12$14$16$18$20
$/M
MB
tu
Global NG Prices
HH JKM NBP
-$1
$0
$1
$2
$3
$4
$5
$/M
MB
tu
Netback To Henry Hub
EuropeAsia (via Panama Canal)West India DES
Exports Show Seasonal Viability Assuming Contract Costs As Sunk Cost
Source: Platts Analytics 17
Pipeline Gas Pushes Its Way Into Europe – Pushes Back On LNG
40
45
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55
60
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70
75
80
JanFebM
arA
prM
ayJunJulA
ugSepO
ctN
ovD
ec0%
3%
5%
8%
10%
13%
15%
18%
20%
23%
% Chg. Vs. Avg. 2016 2017 5 Year Avg.
Russian NG Production
0%10%20%30%40%50%60%70%80%90%
100%
2012 2013 2014 2015 2016 20170
1
2
3
4
5
6
Norwegian Share of U.K. Gas ImportsLNG Share of U.K. Gas ImportsU.K. Imports
Norwegian NG vs LNG To UK
Bearish Spot Price Outlook Tied Contract Outlook: Less China, More Portfolio, and Shaky Japan
-10-505
1015202530
Belgium
China
DR
EgyptFranceIndiaJapanJordanK
uwait
LithuaniaM
alaysiaN
eth.PakistanPolandPortfolioSingaporeS. K
oreaSpainTaiw
anThailandU
.K.
-0.5-0.4-0.20.00.20.40.50.70.91.1
2017 Y/Y 2018 Y/Y
BCF/D
Asian Preview in Western Europe: NG Greatest Market Share But Challenged by Wind/Renewables
0
20
40
60
80
100
120
140
160
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2011 2012 2013 2014 2015 2016 2017
Gas Wind Hydro NuclearCoal+Lignite Solar Other Oil
GW
Wind larger than coal
Solar larger than coal
Natural Gas
Private & Confidential 20
US LNG Exports Make Up Largest Forecasted Demand Component
‐ BENTEK expects 12 Bcf/d of LNG Liquefaction Capacity to get built‐ LNG Feedgas could reach nearly 9.1 Bcf/d annually in 2022
East Coast Export Terminals:Cove Point – 1 Bcf/d
Gulf Coast Liquefaction Capacity:Sabine Pass T1‐5 3.5 Bcf/d Freeport LNG T1‐3 2.1 Bcf/d Cameron T1‐3 2.1 Bcf/dCorpus Christi T1‐2 1.4 Bcf/dElba Island T1‐10 0.35 Bcf/d
Source: Platts Bentek November CellCast 2017
0
2
4
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8
10
12
Bcf/d
US LNG Feedgas Capacity and Forecast
Sabine Pass T1 Sabine Pass T2 Sabine Pass T3
Sabine Pass T4 Sabine Pass T5 Freeport LNG T1
Freeport LNG T2 Freeport LNG T3 Cameron LNG T1
Cameron LNG T2 Cameron LNG T3 Cove Point T1
Corpus Christi T1 Corpus Christi T2 Elba Island T1‐6
Elba Island T7‐10 LNG Export Forecast
Note, capacities shown reflect feedgas capacities, which include boil-off volumes and capacity to run the facility
l
Natural Gas
US & Australia Plan To Be Largest Contributors To Incremental LNG Supply – All Of That Supply Is Competing For Market Share Plagued By Overbuild
05
101520253035404550
BC
F/d
LNG Exports Of Major Suppliers
Algeria Australia IndonesiaMalaysia Nigeria QatarTrinidad/Tobago Russia US
0
10
20
30
40
50
60
Bcf
/d
Global LNG Demand
HH Non-DispatchPrice Responsive DemandAvailable Capacity (FID'ed)
Source: Platts Analytics/Eclipse 21
Current Flows –20% Asia, 53%
Mexico & S America
Henry Hub Price Outlook – Higher Prices Needed To Incentivize Anticipated Demand
22
$2.40
$2.60
$2.80
$3.00
$3.20
$3.40
$3.60
$3.80
$4.00
$USD
/MM
Btu
NYMEX (Nov 8) Platts HH Spot Forecast (November 2017)
$3.18 Platts Analytics Average ($3.00 NYMEX) Thru Dec 2019
Too much power burn, LNG. Not enough production
Key Takeaways
23
• US Natural Gas story is still driven by the North East • Current rig count will allow NE production to meet forecast but not fill pipeline
capacity – effect of oversubscription to producer balance sheets yet to be seen • Oil & NGL growth are forecast to be robust, bringing with it associated Nat Gas
from the Permian Basin – Haynesville grows on proximity to demand center and access to cheap pipeline capacity
• US is currently close to NG self sufficient – need for incremental supply is predicated primarily upon demand abroad
• Mexico pipeline build out will open up capacity out of US for some Permian production near term
• Longer term, global LNG markets become more of a spot market – if forecasted demand is realized then market prices will set themselves to allow adequate production to come from the US
Natural Gas
