Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav

[Tom Nolan + 2,443]

Gas prices in Europe surged past 80 euros a megawatt-hour in the second week of November, as gas orders via a key Russian pipeline indicated flows will remain below normal in spite of Russian President Vladimir Putin’s promises to send more gas to the region starting November 8th. Furthermore, a pipeline capacity auction held on Sunday showed no increase in supplies from Russia to Europe. Meanwhile, gas shipments entering Germany’s Mallnow remained reduced while gas flows to Poland were increasing, depleting stocks in Germany. Elsewhere, a damaged pipeline in Bulgaria and the end of a 25-year transit deal between Spain and Algeria added further pressure. Natural gas prices hit an all-time high of 162 euros a megawatt-hour on October 5th, and have since declined by about 50% on hopes that supplies will increase with the help of Russia.

EU Natural Gas

https://tradingeconomics.com/commodity/eu-natural-gas

[Tom Nolan + 2,443]

https://community.oilprice.com/topic/24742-looming-european-gas-crisis-in-winter-and-north-african-factor-a-must-read-by-cyril-widdershoven/

 

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https://oilprice.com/Energy/Natural-Gas/Natural-Gas-Stocks-To-Watch-As-The-Energy-Crisis-Goes-Global.html

Natural Gas Stocks To Watch As The Energy Crisis Goes Global

By Alex Kimani - Oct 04, 2021, 6:00 PM CDT

• The natural gas sector has grabbed plenty of attention of late as shortages around the world sent prices soaring by more than 130% year-to-date
• Oil companies that are also large gas producers can provide investors with exposure to both the natural gas boom and the recent oil price rally
• Companies that are central to the natural gas supply chain, particularly LNG companies, can provide investors with great exposure to the current price rally

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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https://oilprice.com/Energy/Crude-Oil/US-Consumers-To-Foot-The-Bill-For-Surge-In-Natural-Gas-Exports.html

U.S. Consumers To Foot The Bill For Surge In Natural Gas Exports

By Tsvetana Paraskova - Nov 08, 2021, 4:00 PM CST

• Record American natural gas exports amid sluggish domestic production growth have raised prices for the fuel
• The U.S. benchmark price Henry Hub has more than doubled since the beginning of 2021
• A total of 48 percent of U.S. homes will pay 30 percent higher bills for heating this winter,

Join Our Community

U.S. consumers and utilities will be paying much higher prices for natural gas and energy this winter, as record American natural gas exports amid sluggish domestic production growth have raised prices for the fuel. 

The global natural gas supply crunch has impacted U.S. prices, too. But it has also drawn record volumes of gas exports out of America this year, leaving lower volumes for the domestic market, on which major natural gas producers are sticking to capital discipline to reward shareholders and are not rushing to raise output.  

As a result, utilities have started to warn customers they would be paying higher prices for heating and energy this winter.   

A total of 48 percent of U.S. homes will pay 30 percent higher bills for heating this winter, as 48 percent is the share of U.S. households that use gas as the primary fuel for space heating, the Energy Information Administration (EIA) said at the end of last month. 

The U.S. benchmark price Henry Hub has more than doubled since the beginning of 2021 due to relatively flat U.S. dry natural gas production and surging liquefied natural gas (LNG) exports amid high demand and record LNG prices in Asia.

This winter, retail natural gas prices in the United States are expected to rise on average to $12.93 per thousand cubic feet (Mcf) from $10.17/Mcf last winter. This would be the highest price since the 2005–06 winter average, as per EIA data.

The administration also projects higher energy bills for households using propane, heating oil, and electricity.

Evidence of higher consumer prices has started to show in recent days. For example, Eversource, an energy provider in New England, warned its customers in Connecticut last week that they would see their natural gas bills rise by 14 percent in November, and electricity bills would start to rise as of the beginning of next year. 

Eversource's vice president of energy supply, James Daly, told The Wall Street Journal that the cost of natural gas had risen by 20 percent from this time last year, while wholesale electricity prices in New England were now 50 percent higher than a year ago. 

More than the global rally in natural gas prices, which has had some impact on U.S. benchmark prices, the key reasons for higher natural gas and energy bills have been this year's record American exports amid flattish domestic gas production. 

U.S. LNG exports jumped to record highs in the first half of 2021, on the back of rising spot demand in both the winter and summer months from Asia and Europe and lower U.S. benchmark gas prices than international prices.

In the third quarter of 2021, the top U.S. LNG exporter, Cheniere Energy, exported a record number of 141 cargoes, the company said in its Q3 earnings presentation.

While much high LNG prices in Asia compared to the U.S. benchmark continue to incentivize American exports, domestic natural gas production is not rising too much despite the high Henry Hub prices in recent months. Many shale gas producers prefer to reduce debts and reward investors. 

"But really, we're staying away from growing. We're happy with where we are right now and just focusing on that free cash flow. So haven't been tempted and just want to see delivering and getting the balance sheet in pristine shape," Paul M. Rady, CEO and chairman at Antero Resources, said on the Q3 earnings call at the end of October. 

Ahead of the coldest months, with recovering demand after the pandemic and the high export volumes, U.S. working natural gas stocks totaled 3,611 billion cubic feet (Bcf) for the week to October 29, per EIA data last week. This was 8 percent lower than the year-ago level and 3 percent lower than the five-year (2016–2020) average for the week. 

The EIA warned American households last month: prepare to pay more for your heating and electricity this winter amid higher energy prices, including in the United States.

By Tsvetana Paraskova for Oilprice.com

 

[Tom Nolan + 2,443]

https://www.zerohedge.com/commodities/natgas-stabilization-sparks-massive-gains-hedge-fund-hurt-september-surge

NatGas 'Stabilization' Sparks Massive Gains For Hedge Fund Hurt By September Surge

by Tyler Durden

Tuesday, Nov 09, 2021 - 06:59 AM

For at least one hedge fund, the last few months have been the worst of times and the best of times.

Amid the chaotic energy crisis erupting around the world, Miami-based Statar Capital, which manages about $2bn in assets, suffered major losses in September, as natural gas prices surged and purged.

At the time, The FT reported that the fund suffered losses of about $130 million in the first two-and-a-half weeks of September (leaving the fund down 7.7% for September) as Statar had lost money in European natural gas but made money in US natural gas this year, said one person close to the firm.

 

However, in a remarkable turnaround since then, The FT reports that, according to multiple people familiar with the performance, the fund, headed by Ron Ozer, a former trader at Citadel and DE Shaw, made about 23.5% last month, bagging over $400 million in profits in October.

It appears that after the chaotic moves in September, October's relatively rangebound environment (for both NatGas prices and vols) helped support Statar's strategy.

Source: Bloomberg

The FT reports that Statar was able to profit from market volatility, repeatedly using declines in short-term contracts as a chance to increase positions before taking profits during rebounds in price, said one person familiar with its positioning.

Source: Bloomberg

Notably, October also saw European NatGas prices retrace back towards US (chart below is oil barrel equivalents to offer some context), but recently prices have started to decouple once again...

Source: Bloomberg

This huge return in October makes Statar one of the big hedge fund winners from a volatile month for some markets, during which bonds also experienced a large upheaval. Statar was one of last year’s top-performing hedge funds, gaining 59 per cent.

As The FT notes, commodity markets have been hard going for hedge funds over the past decade, as lengthy periods of declining prices have made it harder to make money, and a number of firms, including Armajaro Asset Management and Astenbeck Capital Management, have shut funds. However, Statar has previously said that this exodus of capital had helped create “the best opportunity set for natural gas trading in many years”.

We wish Ozer well in the rest of the year but note that given Putin's recent actions, things may be about to get significantly more exciting once again

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Natural-Gas/Gas-Prices-Plunge-After-Gazprom-Says-It-Starts-Sending-Gas-Into-European-Storage.html

Gas Prices Plunge After Gazprom Says It Starts Sending Gas Into European Storage

By Tsvetana Paraskova - Nov 09, 2021, 12:00 PM CST

• Gazprom, On Tuesday, started implementing a plan to send natural gas into five storage sites in Europe
• Gas prices in Europe plunged on Tuesday after spiking on Monday

Join Our Community

Russia’s gas giant Gazprom said on Tuesday it had approved and started implementing a plan to send natural gas into five storage sites in Europe, sending European gas prices down today after a spike on Monday.

The volumes and the transportation routes for the gas flows have been determined, Gazprom said in a brief statement, easing concerns on the market and sending prices lower on Tuesday morning.

Natural gas prices at the Dutch TTF hub, the benchmark for European gas, traded 2 percent lower early on Tuesday, “with data signaling an increase in Russian gas flows via Ukraine to Slovakia. Also the Mallnow link via Poland has seen a small pickup,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said.

On Monday, natural gas prices at the key European hubs surged as no additional Russian supply was flowing to Europe at the start of this week.

Russia had signaled at the end of October that Gazprom would start filling its storage sites in Europe within days.

Russian President Vladimir Putin told Gazprom’s CEO Alexei Miller on October 27 that as soon as the Russian gas giant completes filling Russia’s underground storage by or on November 8, “I would like you to start consistent and planned work on increasing the amount of gas in your underground depots in Europe – in Austria and Germany,” per the English translation on the Kremlin website.

On November 8, there was no sign that Gazprom would boost natural gas deliveries to Europe, which sent prices soaring again.  

The Kremlin doesn’t see “any violations of the order given by Russian President Vladimir Putin to increase gas injection into underground storage facilities in Europe, but the questions should be addressed to Gazprom, Russian Presidential Spokesperson Dmitry Peskov said on Monday,” Russian news agency TASS reported on Monday. 

On Tuesday, gas flows on the Yamal-Europe pipeline were flowing again to Germany, after more than a week of reverse flows eastward to Poland or stop of the flows, according to German data cited by Reuters.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

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https://www.zerohedge.com/weather/severe-blast-arctic-air-could-hit-us-next-week

A "Severe Blast" Of Arctic Air Could Impact US Next Week 

by Tyler Durden

Tuesday, Nov 09, 2021 - 03:45 PM

Weather observer Electroverse is forecasting a "severe blast" of Arctic air to encompass parts of the US Lower-48 beginning late next week. 

Cap Allon, Electroverse's editor, wrote a note Tuesday which outlines how a possible Arctic air mass will pour into the U.S. from Canada beginning on Nov. 18. 

Allon said, "a word of caution, though: this forecast is still in the unreliable time frame — the models could easily shift. But saying that, the GFS predicting such a widespread blast of cold and with such confidence, too, does lead me to believe that this, or something similar, is indeed about to play out — and if it does, cold-records will be threatened across almost every state."

 

GFS 2m Temperature Anomalies (C) Nov 22 [tropicaltidbits.com].

GFS models also predict heavy snow for some parts of the country through Thanksgiving. 

GFS Total Snowfall (inches) Nov 9 – Nov 25 [tropicaltidbits.com].

Colder weather could complicate things for some power plants transitioning to coal from natural gas because of high prices. The ability to source coal this winter has become extremely hard. 

Last month, Ernie Thrasher, CEO of Xcoal Energy & Resources, the largest U.S. exporter of fuel, said demand for coal will remain robust well into 2022. He warned about domestic supply constraints and power companies already "discussing possible grid blackouts this winter." 

A pure-play on cold weather and heightened coal demand is Peabody Energy, the largest coal company globally, which has seen earnings triple amid the global energy crunch. 

So if forecasts are right about next week, expect colder weather and soaring energy costs. In the meantime, the green transition will be placed on hold this fall/winter (in terms of the percentage of power generation on the grid) as the world returns to coal.

[Tom Nolan + 2,443]

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[Tom Nolan + 2,443]

Friday Nov 12th in the U.S., Natural Gas prices flew down more than 5% two hours after open.  ...to 4.88

https://tradingeconomics.com/commodity/natural-gas

Here's the previous day's script of Thursday

US natural gas prices traded around $5 per million British thermal units, around levels not seen since the third week of September and more than 23% below a 12-year high of $6.5 hit on October 6th as stockpiles rose to near-normal levels ahead of the winter heating season amid mild weather. The EIA said that stockpiles in the Lower 48 states sit just 3.2% below what is normal for this time of year after weekly figures showed domestic stockpiles increased by 7 billion cubic feet last week. Still, gas prices in the US remain supported by robust demand for US exports as global prices remain elevated.

~~~~~~~~~~~

EU Natural Gas

https://tradingeconomics.com/commodity/eu-natural-gas

European gas prices extended gains to above 78 euros a megawatt-hour on Friday, having touched an over 1-week low at 68 on Wednesday after Belarus President Alexander Lukashenko threatened to shut down the transit of gas via a key pipeline linking Russia to Europe in response to new EU sanctions against Lukashenko’s regime. Adding to the bullish momentum, Norwegian flows to the continent also tumbled amid unplanned outages while temperatures in northwest Europe are forecast to fall below normal levels from Sunday. Earlier in the week, gas prices declined as Russia boosted supplies to Europe after President Vladimir Putin ordered Gazprom to fill its storage sites in Austria and Germany. Natural gas prices hit an all-time high of 162 euros a megawatt-hour on October 5th and have since declined by more than 50% on hopes that supplies will increase with the help of Russia.

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Crude-Oil/Rosneft-Sees-Possible-Supercycle-In-Oil-And-Gas-Markets.html

Rosneft Sees Possible Supercycle In Oil And Gas Markets

By Tsvetana Paraskova - Nov 12, 2021, 9:00 AM CST

• Rosneft CEO: ''We may witness a new super cycle on the oil and gas markets''
• The rebound in global demand for oil and gas and the gap between supply and demand could lead to structurally higher crude prices

Join Our Community

Rosneft chief executive Igor Sechin said that the rebound in global demand for oil and gas and the gap between supply and demand could lead to a new supercycle for oil and gas

The rebound in global demand for oil and gas and the gap between supply and demand could lead to a new supercycle for oil and gas, Rosneft’s chief executive Igor Sechin said on Friday.

“Despite the uncertainty in the global economy due to the difficult epidemiological situation, we observe a rapid growth in demand for traditional energy resources,” Sechin said in a statement, commenting on Rosneft’s Q3 earnings and the outlook for the future.

“As structural discrepancies between supply and demand on global energy markets are further revealed, we may witness a new super cycle on the oil and gas markets. Under these conditions, the Company holds responsible to the consumers of our energy products and increases investments into the new projects,” the top executive of Russia’s largest oil producer said.

Rosneft’s CEO became the latest oil industry official to say that already high oil and gas prices could rise even further.

At the end of last month, Saudi Aramco’s chief executive Amin Nasser said that crude oil production capacity was dwindling globally, and more investments in new production are needed urgently.

Earlier this week, Nasser said that the world would see its level of spare oil production capacity dwindle next year as jet fuel demand returns to pre- or near-pre-crisis levels.

“Expanding capacity in our industry takes around 5-7 years, and there is not enough investment in the world to increase capacity, this is a huge concern,” Nasser said at the Nikkei Global Management Forum, as carried by Reuters.

Global annual upstream spending needs to increase by as much as 54 percent to $542 billion if the oil market is to avert the next supply shortage shock, Moody’s said last month.

“Our analysis demonstrates that upstream companies will need to increase their spending considerably for the medium term to fully replace reserves and avoid declines in future production,” Moody’s Vice President Sajjad Alam said.  

By Tsvetana Paraskova for Oilprice.com

[Tom Nolan + 2,443]

https://oilprice.com/Latest-Energy-News/World-News/Russia-Belarus-Didnt-Coordinate-With-Moscow-Threat-To-Halt-Gas-To-Europe.html

Russia: Belarus Didn’t Coordinate With Moscow Threat To Halt Gas To Europe

By Charles Kennedy - Nov 12, 2021, 2:30 PM CST

[Tom Nolan + 2,443]

https://tradingeconomics.com/commodity/eu-natural-gas

EU Natural Gas

European gas prices extended gains to 79 euros a megawatt-hour on Monday, ahead of Russia gas auctions for December transit capacity through Ukraine and Poland later on the day. Meanwhile, gas flows via Mallnow in Germany increased over the weekend, as shipments from Russia recovered but are still well below last year’s levels. Adding to the bullish momentum, below-normal temperatures in northwest Europe are likely to expand across the continent during the week while gas inventories are at their lowest level in more than a decade. Last week, Belarus President Alexander Lukashenko threatened to shut down the transit of gas via a key pipeline linking Russia to Europe in response to new EU sanctions against Lukashenko’s regime. Natural gas prices hit an all-time high of 162 euros a megawatt-hour on October 5th and have since declined by more than 50% on hopes that supplies will increase with the help of Russia.

[Tom Nolan + 2,443]

https://www.zerohedge.com/commodities/germany-regulators-suspend-nord-stream-2-approval-gas-prices-jump-12

German Regulators Suspend Nord Stream 2 Approval; European Gas Prices Surge

by Tyler Durden

Tuesday, Nov 16, 2021 - 07:20 AM

European natural gas prices surged as much as 12% Tuesday after Germany's energy regulator unexpectedly suspended a key steop in the approval process for the Nord Stream 2 pipeline. According to Bloomberg, the Federal Network Agency halted the Nord Stream certification process necessary to pump natgas directly from Russia into Germany. It was initially expected the certification would've been completed in early 2022, but that now appears to be unlikely. 

The move comes as Nord Stream 2 AG, the operator of the pipeline, decided to set up a German subsidiary in a bid to meet European Union rules requiring gas producers to be legally separate from entities transporting the fuel. Russia’s Gazprom PJSC is the owner of Nord Stream 2.

The German regulator said the entity "must then meet the requirements of the Energy Industry Act for an independent transport network operator." It added, "the certification process remains suspended."  

The announcement sent benchmark European gas prices surging as traders fear the decision means Europe won’t get much needed gas to ease tight supplies this winter.  Dutch month-ahead gas, the European benchmark, soared as high as 12% to above 88 euros a megawatt-hour.

“If one believes that flows could only start after certification has been completed, this means that flows via Nord Stream 2 will be further delayed, with negative implications for European gas balance over winter,” said Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies.

The timing of the suspension comes at the worst possible moment. Europe faces a massive energy crunch as natgas stockpiles are the lowest in a decade just as Europe faces its first cold winter blast. Widespread below-average temperatures continue to plague parts of the continent, as the following chart of NW Europe Heating Degree Days shows.

Meanwhile, Europe's natgas storage levels are the lowest since 2013.

The suspension deprives Europe of fresh supplies upwards of 55bn cubic meters of gas per year transited in an undersea pipeline across the Baltic Sea from Gazprom facilities in Russia to Germany then distributed throughout Europe, effectively bypassing pipelines running through Ukraine.

James Waddell at Energy Aspects, a consultancy, told FT, "any remaining hopes that this pipeline would be available for the winter are completely dashed now." 

"Increasingly, it's looking like it may not start up until the second half of next year. 

"The lack of gas in storage and the lack of Russian supplies mean we essentially have to cut into industrial demand in order to preserve crucial gas supplies for the power and heat networks. Europe is having to heavily reduce industrial gas demand in a way we haven't seen in decades," Waddell said.

Meanwhile, perhaps sensing that Europe's was going to make things complicated, late on Monday Goldman Sachs' Samantha Dart wrote  that "today's auction of Yamal pipeline capacity for December points to no bookings from Gazprom, vs our 45 mcm/d expected." And while "booking volumes do not guarantee flow, as illustrated by Yamal flows for October and thus far in November at 14 mcm/d and 10 mcm/d, respectively, vs bookings at just over 30 mcm/d for both months" she added that the lack of bookings "keeps supply uncertainty elevated into the end of the year." 

Delaying Nord Stream 2's certification indefinitely, especially if coupled with further Russian supply cuts, could be a disaster for Europe which is now facing the first cold blast of the season, as energy inflation and supply chain disruptions due to the energy crisis and pandemic could metastasis into a "winter of discontent," fueling socio-economic instabilities. As much as European officials oppose the pipeline and want energy independence from Russia, the continent desperately needs Gazprom to survive this winter. 

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Energy-General/Russias-Biggest-Move-Yet-To-Take-Control-Of-The-European-Gas-Market.html

Russia's Biggest Move Yet To Take Control Of The European Gas Market

By Simon Watkins - Nov 15, 2021, 7:00 PM CST

• Russia has managed to secure the largest share in Iran’s huge Chalous gas discovery, a move that could have huge economic and geopolitical consequences
• A senior Russian official believes this was the final act in securing control over the European energy market
• While Iran appears to have lost out economically on this deal, it will provide the Islamic Republic geopolitical support and the IRGC a nice slush fund

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Crude-Oil/The-US-Shale-Patch-Is-Back-In-Growth-Mode.html

The U.S. Shale Patch Is Back In Growth Mode

By Tsvetana Paraskova - Nov 15, 2021, 6:00 PM CST

• U.S. shale production is finally ready to grow again, with output set to climb next year due to increased spending in the Permian
• The rise in output will be lower than 2018 and 2019 due to the newfound capital discipline of shale companies 
• Inflation and labor costs are the two major problems U.S. companies will have to deal with going forward

Join Our Community

U.S. shale production is back to growth mode as producers continue to add rigs onshore. Output will continue to climb over the next year as some large oil firms plan to raise spending in the Permian, which has been and will be the key driver of America’s tight oil production growth. 

Still, the rise in shale output will be slower than in the boom years of 2018 and 2019, as most operators continue to stick to capital discipline, while surging costs and labor shortages are major headwinds to significant production growth.   

Next month, total U.S. shale production from the major tight oil plays is set to return to March 2020 levels, which was before companies slashed drilling activity in response to the plunge in prices and demand with the start of the pandemic. Shale output is set to rise 8.68 million barrels per day (bpd) in December, driven by an increase in Permian production, according to estimates from Rystad Energy quoted by Bloomberg. In November, Permian shale production is projected to hit 5.043 million bpd.

All projections expect U.S. shale production to grow in the coming months and lead to a 600,000 bpd-800,000 bpd increase in total American crude oil production in 2022 compared to 2021.  

Capital discipline is still key for the shale patch, but some majors signaled in the Q3 earnings calls that they could add more rigs in their Permian operations. 

ExxonMobil, for example, said its Permian production in Q3 averaged around 500,000 oil-equivalent barrels per day, up by 30 percent from the third quarter of 2020.  

“We may see a couple of more rigs come on here as we go forward” with a focus on efficiencies, Exxon’s CEO Darren Woods said. 

Chevron, for its part, will add two more rigs and completion crews in the Permian this quarter, CFO Pierre Breber said on the earnings call. 

BP’s U.S. shale unit BPX plans to raise capital spending in the Permian to $1.5 billion in 2022 from $1 billion this year, BP’s chief financial officer Murray Auchincloss said on the company’s call. 

Related: Oil Prices Under Pressure As Bearish Factors Mount

ConocoPhillips will also boost activity in the Permian, but as with the majors, it will be a measured approach to raising drilling operations. 

“I wouldn’t call it a ramp. I would call it slow steady growth because I think that will build the most efficiency in our operations,” Tim Leach, Executive Vice President, Lower 48, said earlier this month, referring to ConocoPhillips’s plans for Permian growth.  

Yet, other shale operators signal more discipline and unwillingness to increase production. Diamondback Energy, for example, has said it will not increase its crude oil production next year despite the surge in prices.

Annual U.S. crude oil production will average 11.1 million bpd in 2021, increasing to 11.9 million bpd in 2022, largely as a result of onshore operators increasing rig counts, which will offset production decline rates, the EIA said in this month’s Short-Term Energy Outlook (STEO). 

In its Monthly Oil Market Report (MOMR) released last week, OPEC forecast U.S. shale production to grow by 610,000 bpd annually - an average of 7.85 million bpd in 2022. 

“With the current pace of drilling and well completion in oil fields, production of crude oil is forecast to grow by 0.6 mb/d y-o-y, to average 11.66 mb/d, and to exit 2022 at 12.1 mb/d. This forecast assumes ongoing capital discipline, limited active drilling rigs, completion crews and labour shortages,” said the cartel about overall American crude oil production.

But the oil industry in Texas sees cost inflation and skilled labor supply as the main headwinds to production growth going forward. 

Costs rose sharply for a second quarter in a row, the Q3 Dallas Fed Energy Survey showed at the end of September. 

“The greatest headwind is skilled labor supply and access to expanding credit on our reserve base loan,” an E&P firm executive wrote in comments in the survey. An executive at an oil and gas support service firm noted that “Labor continues to be a struggle, and wages are at an all-time high because of inflation and printing too much money with all of the free giveaways. We are all going to have to pay for this sooner or later.” 

Overall, U.S. shale is returning to growth after the COVID crisis, but the pace of this growth would be much slower than pre-pandemic rates due to capital discipline, labor shortages, and surging costs. 

By Tsvetana Paraskova for Oilprice.com

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The Real Reason Russia Isn’t Pumping More Gas

By Alex Kimani - Nov 15, 2021, 5:00 PM CST

• While plenty of traders have accused Russia of withholding natural gas from Europe, it is now looking like the natural gas giant simply cannot significantly increase exports

• Natural gas prices originally fell when Putin promised to open the taps, but prices are climbing again now that Russia is failing to book additional pipeline capacity

• While Russia could build out the infrastructure to provide more gas, it would need guarantees of long-term demand in the form of new contracts

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Natural Gas Prices Could Spike As Europe Braces For Its First Cold Blast

By ZeroHedge - Nov 15, 2021, 1:00 PM CST

• Temperatures on the European mainland, and in the UK are set to slide starting next week
• This first cold blast of the season is going to test the energy supplies across Europe
• Higher heating demand could intensify the already fierce battle for liquefied natural gas cargoes

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https://oilprice.com/Energy/Natural-Gas/US-Natural-Gas-Prices-Could-Soon-Hit-6.html

U.S. Natural Gas Prices Could Soon Hit $6

By Charles Kennedy - Nov 16, 2021, 10:00 AM CST

• Research firm HFI noted that the latest 10-15-day weather forecast is pointing towards colder than usual weather
• The EIA said last week it expected average natural gas prices to reach $5.53 per mmBtu over the next months

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Natural gas prices in the United States could hit $6 per million British thermal units if forecasts for a cold start to the winter season materialize, HFI Research has reported.

In a Seeking Alpha article, the research firm noted that the latest 10-15-day weather forecast is pointing towards colder than usual weather, while supply is not growing and gas in storage is unlikely to grow further this year after an injection of 20 billion cu ft last week.

The analysis noted that the cold spell may be temporary, citing forecast data for Alaska. However, it would be enough to push prices higher while production seems to be in decline.

The Energy Information Administration reported last week that natural gas in storage was about 3 percent below the average for early November, which would hardly be a reason for worry with regard to prices if it weren’t for exports. These are running at record rates, leaving less gas available at home and adding upward pressure to prices.

Because of this situation, the EIA said last week it expected average natural gas prices to reach $5.53 per mmBtu over the next months. In its latest Short-Term Energy Outlook, the authority reported an average October price for gas of $5.51, compared to a first-half 2021 average of just $3.25 per mmBtu.

“We expect that factor, along with rising U.S. natural gas exports and relatively flat production through March, will keep U.S. natural gas prices near recent levels before downward price pressures emerge,” the EIA said in its report.

“Because of uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months, with winter temperatures to be a key driver of demand and prices,” the EIA added.

Another driver will undoubtedly be the production of natural gas in the Lower 48, as noted by HFI Research. With that in decline, prices will likely have even further than $5.50 to go in the right winter conditions.

By Charles Kennedy for Oilprice.com

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Exxon Puts Shale Gas Assets Up For Sale

By Irina Slav - Nov 16, 2021, 10:30 AM CST

Exxon has put up for sale natural gas assets in the Barnett Shale in Texas, Reuters has reported, citing a confirmation of the news by the company.

The assets include 2,700 wells spread across 182,000 acres, according to the report. So far, no buyer has been identified, and no agreements have been reached on the sale, a spokeswoman for the company said.

Reuters cited an unnamed source as estimating the value of the assets at $400 and $500 million. Exxon, according to the report, will accept bids by December 21 and hopes to complete the sale process in January.

The sale is part of a divestment strategy undertaken by the supermajor after it was hit with a loss of $22.4 billion last year. The strategy aims to slim the company down to its most lucrative operations.

At the same time, however, the Wall Street Journal reported last month that Exxon was considering exiting several large oil and gas projects due to the growing ESG pressure from investors.

According to that report, the board of directors of the company was concerned about the $30-billion LNG project Exxon is leading in Mozambique and another gas project in Vietnam, among others.

Right now, the time is good for selling gas assets, given the direction prices are taking. This week, bullish attitudes to natural gas were reinforced by weather forecasts for a colder than usual start of the winter in the United States, which combined with record-high exports to produce higher gas futures prices and spur predictions that gas could hit $6 per million British thermal units.

In shale oil, however, Exxon is expanding production. The company reported average daily output of some 500,000 bpd from its Permian assets during the third quarter, which was almost a third higher than the same period last year.

CEO Darren Woods said that Exxon might “see a couple of more rigs come on here as we go forward.”

By Irina Slav for Oilprice.com

https://community.oilprice.com/topic/24822-report-the-major-tight-oil-basins-update-november-2021/

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US natural gas futures surged more than 5% to near $5.3 per million British thermal units on Tuesday, in line with a jump in gas prices in Europe after Germany suspended the certification of Nord Stream 2 pipeline from Russia to Germany, saying the operating company had to be compliant with the German law, and raising prospects that exports of liquefied-natural from the US to Europe will remain high. The amount of gas flowing to US LNG export plants averaged 11.0 bcfd so far in November, up from 10.5 bcfd in October as the sixth train at Cheniere Energy Inc's LNG.A Sabine Pass plant in Louisiana started producing LNG in test mode, Reuters reported. At the same time, cold weather forecasts for the US raised prospects of rising demand for domestic heating.

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https://oilprice.com/Latest-Energy-News/World-News/UAE-Speeds-Up-20-Billion-Natural-Gas-Projects.html

UAE Speeds Up $20 Billion Natural Gas Projects

By Tsvetana Paraskova - Nov 17, 2021, 11:30 AM CST

The Abu Dhabi National Oil Company (ADNOC) is set to imminently award engineering and construction contracts for a major offshore natural gas field to increase gas production and exports, sources familiar with the plans told Bloomberg on Wednesday.

ADNOC, which pumps nearly all the oil in the United Arab Emirates (UAE), is focusing not only on boosting crude oil production capacity, but also on increasing natural gas output to make OPEC’s third-largest producer self-sufficient in gas this decade.

According to Bloomberg’s sources, ADNOC could award the engineering and construction works for the Dalma offshore gas field as soon as this week, with first gas expected in 2025.

Investments in all gas concessions in which Italy’s Eni partners with ADNOC could reach $20 billion, Eni’s chief executive Claudio Descalzi said in 2018, Bloomberg notes.

ADNOC already announced earlier this week a record $6 billion investment to expand its crude oil production capacity to 5 million barrels per day (bpd) by 2030, from around 4 million bpd now.

The Abu Dhabi company wants to develop the country’s natural gas resources, too, in order to make the UAE self-sufficient in gas and export more of the fuel, especially to the fast-growing Asian markets.  

“The UAE is strengthening its position as a regional leader in natural gas and the emerging blue Hydrogen market,” Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO, said at the Gastech conference in September.

“Building strong partnerships is at the center of the UAE’s approach to growth and it invites new and existing partners to take advantage of opportunities in its gas businesses,” ADNOC said at the time.

ADNOC’s unit ADNOC LNG has sought expressions of interest from international engineering firms for a planned LNG export terminal at Fujairah, which would deliver the fuel to the key Asian markets, including China, India, Pakistan, and Japan, sources with knowledge of the developments told Upstream last month.  

By Tsvetana Paraskova for Oilprice.com

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