Volume 12, Issue 43 | December 12, 2014

Editor's Note

Interesting Facts

Weeks in Review for December 5 - December 11, 2014

Last week we saw natural gas prices on the New York Mercantile Exchange (NYMEX) drop 12.9% while power prices on the PJM fell 9%. For this seven-day report period, the market closed relatively flat. The average 12-month price for natural gas on NYMEX rose less than 1% closing at $0.356/therm while the 12-month average price for peak power on the PJM also rose less than 1%. 

There were no major news stories to rattle the markets this week. Apparently, analysts have already factored in the news that natural gas production is at an all-time high and energy demand for December is expected to be slightly lower than normal, as most forecasters are predicting a mild December. 

Since it was a slow news week, let's look at some interesting facts.

According to EIA, natural gas production reached an all-time high in 2013. Now, as we near the end of 2014, we continue to set single day production records. Shale gas gets most of the credit for the spike in our natural gas supplies.  In fact, shale gas is now the country's largest source of natural gas. The shale gas boom is the biggest reason that both natural gas and electricity prices are trading at today's low levels.

Another interesting fact relates to crude oil. Did you see that crude oil prices dropped below $60 per barrel? This was the lowest price posted in five years. According to the USA Today, "the slide came after Saudi Arabia, the world's No. 2 oil producer after the U.S., suggested it would not cut production to prop up prices." Some analysts  believe oil prices may continue to drop. This recent price drop is a welcomed gift to most consumers.    

Although it was a slow news week, it was a good week for most energy budgets as oil prices, natural gas prices and electricity prices all traded at relatively low levels. However, don't be lulled to sleep. Winter does not officially start until December 21st. 


Renewable Energy

WGES Recognized with EPA Green Power Leadership Award

WGES Recognized with EPA Green Power Leadership Award

Washington Gas Energy Services (WGES) has received a 2014 Green Power Leadership Award from the U.S. Environmental Protection Agency (EPA). The annual awards recognize the country’s leading green power suppliers for efforts to grow and advance the nation’s voluntary green power market.

“EPA is pleased to recognize Washington Gas Energy Services with a Green Power Supplier of the Year award for its leadership in expanding the nation’s renewable energy industry,” said EPA Administrator Gina McCarthy. “Through its support and development of new renewable energy capacity, Washington Gas Energy Services is helping to address climate change and put our country on a path to a future powered by renewable resources.”


WGES has been a green power leader since 2002, when we supported one of the first wind farms in the PJM grid. Today, WGES maintains its leadership by working to provide green power throughout the mid-Atlantic region, and offers a suite of Green‐e Energy certified local and national wind power products: WGES CleanSteps® WindPower, WGES PA WindPower and WGES National WindPower. All of our standard electricity offerings to residential customers include 5 percent wind power, above and beyond what is mandated by RPS. Since 2003, WGES customers have purchased approximately 4 billion kWh of wind power. WGES customers can also opt to green their entire energy supply by choosing wind power and carbon offsets. To learn more about our green products, visit www.wges.com/commercialgreen


"Since 2002, Washington Gas Energy Services has been able to offer customers a growing and diverse portfolio of innovative clean energy options," said Laura Pagliarulo, manager, green products, for WGES. "We are honored to receive this award from the U.S. Environmental Protection Agency, and look forward to upholding our role as a leader in the industry by continuing to provide our commercial and residential customers with efficient, green electricity and natural gas options."


Natural Gas Fundamentals

Natural Gas Storage Update: Two In A Row

 

 

Current Week

Last Week 

Net Change 

This Week Last Year 

Prior 5 Year Average 

 

Stocks (Bcf) 

Stocks (Bcf) 

(Bcf) 

Stocks (Bcf) 

Average (Bcf) 

Total Lower 48 

3,359

3,410

-51

3,545

3,710

The winter withdrawal season, which started  November 1st, is off to a slow start. According to the Energy information Administration,  this week's withdrawal was only 22 Bcf.  

This was the second consecutive withdrawal that fell below historical averages. The week's  withdrawal was 29% smaller than the five-year average of 72 Bcf and was tiny compared to last year's withdrawal of  92 Bcf.

As the weather has moderated in December, less gas has been pulled out of storage. If we can keep these withdrawals below historical averages, we can chip away at the storage deficit that resulted from last year's brutally cold temperatures. The storage fields ended the week 9.5% below the five-year average.  


Rig Count for Natural Gas

Weekly Drilling Rig Update: The active U.S. gas rotary rig count for natural gas released by Baker and Hughes for the week ending December 5, 2014 was 344 rigs. There was no change from the previous week. The count is 31 rigs lower than the count reported this same week last year. We are 51% below the five-year average gas rig count of 709.


NYMEX Natural Gas Monthly Settlements for the Past 12 Months

(Price per therm at the well-head)

This was the closing price of gas at the well head for each of the past 12 months. The closing price for a month occurs on the 3rd business day prior to the start of the month. 

Jan-14

$0.4407

May-14

$0.4795

Sept-14

$0.3957

Feb-14

$0.5557

June-14

$0.4619

Oct-14

$0.3984

Mar-14

$0.4855

July-14

$0.4400

Nov-14

$0.3728

Apr-14

$0.4584

Aug-14

$0.3808

Dec-14

$0.4282


NYMEX Values per Month for the Forward 12 Months

Thursday, December 11, 2014

(NYMEX - Price per therm at the Henry Hub well-head)

Jan-15

$0.3634

June-15

$0.3472

Nov-15

$0.3619

Feb-15

$0.3663

July-15

$0.3509

Dec-15

$0.3799

Mar-15

$0.3626

Aug-15

$0.3517

12-month avg.

$0.3563

Apr-15

$0.3441

Sept-15

$0.3502

11/2014-3/2015

$0.3592

May-15

$0.3439

Oct-15

$0.3530

Crude Oil

$ 60/barrel 


NYMEX Graph for Natural Gas - 12 Month Average Price per Therm at the Louisiana Well-Head

(Excludes Interstate Transportation)

 


PJM Electricity

PJM Graph for Electricity - 12 Month Average Peak Power Price

On-Peak 1 Year Forward Price



Weather

Local Heating Degree Days*

 
 
 



Heating Degrees Day** 

 

Nov - 14

Dec - 14

Jan - 14

Feb - 14

Mar - 14

April - 14

 Actual

  505

 

 

 

 

 

 Normal

 466

 

 

 

 

 

 Departure from Normal

8%

  

    

 

 

 

 Colder

 

 

 

 

 

**Heating degree days are calculated by comparing the day’s average temperature to a 65 degree baseline. If the day’s average temperature is above 65, there are no heating degree days that day. If the day's average temperature is less than 65 degrees, subtract the average temperature from 65 to find the number of heating degree days for that day.