"Drought Adds To Pressure On US Gas Inventories" by John Kemp via Zero Hedge

[Tom Nolan + 2,443]

Drought Adds To Pressure On US Gas Inventories

by Tyler Durden

Sunday, May 29, 2022 - 12:30 PM

By John Kemp, senior market analyst

U.S. gas prices have climbed to the highest for more than 13 years as inventories remain well below average while the drought and lack of hydro generation threatens to stretch them even further.  Front-month futures prices for gas delivered at Henry Hub in Louisiana have climbed to around $9 per million British thermal units, up from $3 at the same point a year ago.

Prices are the highest after adjusting for inflation since October 2008, when the financial crisis was intensifying and the economy was heading deeper into the great recession.

In real terms, front-month prices are in the 86th percentile for all months since 1990, signalling the need for significant steps to relieve the gas shortage.

Last week, working stocks in underground storage were 348 billion cubic feet (16%) below the pre-pandemic five-year seasonal average (“Weekly natural gas storage report”, Energy Information Administration, May 26).

Inventories increased by just 430 bcf between April 1 and May 20, below the pre-pandemic seasonal average of 461 bcf, so the storage deficit is increasing rather than reducing.

The result is that the one-year calendar spread has moved into a record backwardation of almost $4 per million British thermal units as traders anticipate stocks will remain tight.

High prices signal the need to reduce consumption, including by switching from gas-fired to coal-fired generation as much as possible, while maximising drilling and production. 

The total number of rigs drilling for gas has climbed to 150, the highest since late 2019, and up from just 100 this time a year ago, according to field services company Baker Hughes.  The number of oil rigs, which produce associated gas as a by-product, has climbed to 576, up from 343 a year ago, and the highest since just before the first wave of the pandemic arrived in early 2020.

Increased drilling should ensure gas production continues increasing throughout the rest of this year and into the first quarter of 2023.

But the last two months have been hotter-than-normal for the time of year boosting air-conditioning and refrigeration demand.  The Lower 48 states have experienced a total of 171 population-weighted cooling degree days so far this year compared with a long-term seasonal average of 124.

At the same time, the worsening drought across the western states is cutting power generation from hydro-electric sources and increasing reliance on gas-fired generators. In California, drought could cut hydro to just 8% of total generation, from a median of 15% in recent years, according to the EIA.

Increased gas-fired generation is likely to make up around half the shortfall (“Drought effects on California electricity generation and western power markets”, EIA, May 2022).

Large volumes of gas will also continue to be exported in the form of LNG to Europe and Asia to cover high demand in those regions, especially for alternatives to Russian gas, tightening the market further.

Traders expect the market to remain tight, with exceptionally high prices signalling the need for even more drilling and running non-gas generation units for as many hours as possible this summer.

https://www.zerohedge.com/markets/drought-adds-pressure-us-gas-inventories

[Boat + 1,323]

All that would make sense but a couple years ago fracking gas production had gained so much that the US became net gas independant. Now projections are the US should become the worlds largest exporter of gas. To show low storage when prices are high just shows the US is selling that gas and making a killing. The US exports multiple pipelines of excess gas to Mexico. That same gas could flood storage in the US if politicians were in the pockets of US citizens instead of in the pockets of corruption.

[Old-Ruffneck + 1,217]

13 hours ago, Tom Nolan said:

At the same time, the worsening drought across the western states is cutting power generation from hydro-electric sources and increasing reliance on gas-fired generators. In California, drought could cut hydro to just 8% of total generation, from a median of 15% in recent years, according to the EIA.

Increased gas-fired generation is likely to make up around half the shortfall (“Drought effects on California electricity generation and western power markets”, EIA, May 2022).

Large volumes of gas will also continue to be exported in the form of LNG to Europe and Asia to cover high demand in those regions, especially for alternatives to Russian gas, tightening the market further.

Traders expect the market to remain tight, with exceptionally high prices signalling the need for even more drilling and running non-gas generation units for as many hours as possible this summer.

California made it's decision to go "green" and I have no sympathy. The people that voted in them lunatics, well.......................

[Ron Wagner + 702]

California has plenty of its own natural gas available to use, but they are too stupid to realize that it is a very clean source of energy and very economical. They are among the most brainwashed states in America. But, they think, it is cleaner to buy it from out of state!

[Ron Wagner + 702]

California has plenty of its own natural gas available to use, but they are too stupid to realize that it is a very clean source of energy and very economical. They are among the most brainwashed states in America. But, they think, it is cleaner to buy it from out of state!

[Ron Wagner + 702]

https://www.census.gov/library/stories/2019/02/fast-growth-in-desert-southwest-continues.html

The largest growth in population has been going into the most drought prone deserts in the country. Then they are surprised when the water is rationed. If you travel through these areas you will see many lush looking neighborhoods that look like they are using lots of water. You will even see lots of sprinkler systems and water running down streets. It is not a lack of water so much as a lack of water to WASTE. The farmers have the lowest priority compared to the populated areas. 

My topic on Water Conservation

https://docs.google.com/document/d/1s6vxrBPC_8XYQgSNK7-UuNbqsdDKflhXPDeswYFKDt0/edit

[nsdp + 449]

Cut off the water to golf courses, fountains and houses that use more than10,000 gallons per month. It is a cinch that you could cover the leakage  through the lake bottom of Lake Powell.  It would also provide enough water for whole City of Los Angeles.  Sorry , I can't fix dumb geologists who screwup  ring infiltrometers . and can't tell granite from sandstone or accurately measure water flows in rivers. . 

[Boat + 1,323]

On 6/2/2022 at 9:39 PM, Ron Wagner said:

California has plenty of its own natural gas available to use, but they are too stupid to realize that it is a very clean source of energy and very economical. They are among the most brainwashed states in America. But, they think, it is cleaner to buy it from out of state!

When you import gas because you don’t drill available gas. Your right, that’s stupid. But when you flair gas and export that gas to foreign countries. That’s equally as stupid. 

[Boat + 1,323]

21 hours ago, nsdp said:

Cut off the water to golf courses, fountains and houses that use more than10,000 gallons per month. It is a cinch that you could cover the leakage  through the lake bottom of Lake Powell.  It would also provide enough water for whole City of Los Angeles.  Sorry , I can't fix dumb geologists who screwup  ring infiltrometers . and can't tell granite from sandstone or accurately measure water flows in rivers. . 

Jailing those that’s hire illegals might work as well. California is overpopulated. 

[nsdp + 449]

1 hour ago, Boat said:

Jailing those that’s hire illegals might work as well. California is overpopulated. 

Do it in Texas as well. Then there won't be enough republicans who ain't convicted felons  to elect any one dog catcher.

[nsdp + 449]

 Old Ruff Neck, the amount of hydro does not change since water year begins October 1 each year.  My family owns 160 acres with water rights near DotZero.  WE won't know how much we get for out alfalfa until the 20th of Sept for Oct 1 2022 to Sept 30 2023.   Water will be there for hydro even if it is not for Jay's yard or pool. There are two sets of allocation, the Upper basin and Lower Basin .https://usbr.gov/ColoradoRiverBasin/  Do you even have a clue how allocations work?

I bet that you don't even know about Mt. Elbert  and pumping water over the continental divide to Denver and Ft. Collins.

Edited June 4, 2022 by nsdp
spelling

[notsonice + 1,243]

On 6/2/2022 at 9:04 PM, Ron Wagner said:

https://www.census.gov/library/stories/2019/02/fast-growth-in-desert-southwest-continues.html

The largest growth in population has been going into the most drought prone deserts in the country. Then they are surprised when the water is rationed. If you travel through these areas you will see many lush looking neighborhoods that look like they are using lots of water. You will even see lots of sprinkler systems and water running down streets. It is not a lack of water so much as a lack of water to WASTE. The farmers have the lowest priority compared to the populated areas. 

My topic on Water Conservation

https://docs.google.com/document/d/1s6vxrBPC_8XYQgSNK7-UuNbqsdDKflhXPDeswYFKDt0/edit

The farmers have the lowest priority compared to the populated areas. ??????

You obviously do not understand Western water law and senior rights. Water rights are all based on seniority and where they were granted. Then you add in dams and reservoirs and those with less senior  rights have the ability to grab (excess) water and store it in dams and reservoirs when the flows are in excess. Farmers with senior rights get their water per the rules in their rights ...nothing in water law takes away their rights or water and gives them to populated areas.

 

You will even see lots of sprinkler systems???? Every lawn, farm or ranch where you want green plants is irrigated. The whole of the Southwest at lower or flat elevations is a desert, only way to keep grass growing is with sprinklers. Only way to grow crops is with irrigation. If you think you will keep your yard from wilting away in the sun by praying for rain you will have a patch of dirt real quick.

[Boat + 1,323]

Heard tell of a 5’ plastic pipe from Northern Calif to Southern. Capture the snow and river runoff’s. Big ideas need big money. 

[nsdp + 449]

10 minutes ago, Boat said:

Heard tell of a 5’ plastic pipe from Northern Calif to Southern. Capture the snow and river runoff’s. Big ideas need big money. 

This nut doesn't know what MAOP is much less how to calclate it.

[Boat + 1,323]

On 6/2/2022 at 10:04 PM, Ron Wagner said:

https://www.census.gov/library/stories/2019/02/fast-growth-in-desert-southwest-continues.html

The largest growth in population has been going into the most drought prone deserts in the country. Then they are surprised when the water is rationed. If you travel through these areas you will see many lush looking neighborhoods that look like they are using lots of water. You will even see lots of sprinkler systems and water running down streets. It is not a lack of water so much as a lack of water to WASTE. The farmers have the lowest priority compared to the populated areas. 

My topic on Water Conservation

https://docs.google.com/document/d/1s6vxrBPC_8XYQgSNK7-UuNbqsdDKflhXPDeswYFKDt0/edit

They are not surprised by lack of water. This they group is just the human condition called greed. Humans continually have to react to others who never get it right. It’s just our process.😎 Texas is no different than Calif. Grab those dollars off any project when you can and get in line for the next project. Knowing there will be plenty of cleanup dollars needed shortly.

[Boat + 1,323]

2 hours ago, notsonice said:

The farmers have the lowest priority compared to the populated areas. ??????

You obviously do not understand Western water law and senior rights. Water rights are all based on seniority and where they were granted. Then you add in dams and reservoirs and those with less senior  rights have the ability to grab (excess) water and store it in dams and reservoirs when the flows are in excess. Farmers with senior rights get their water per the rules in their rights ...nothing in water law takes away their rights or water and gives them to populated areas.

 

You will even see lots of sprinkler systems???? Every lawn, farm or ranch where you want green plants is irrigated. The whole of the Southwest at lower or flat elevations is a desert, only way to keep grass growing is with sprinklers. Only way to grow crops is with irrigation. If you think you will keep your yard from wilting away in the sun by praying for rain you will have a patch of dirt real quick.

Like Kansas and Nebraska irrigation from that huge underground aquifer. Is it smart to run it dry for future generations to make an export buck selling grain to foreigners. Natural rain exports, why not. But dosent that water belong to all Americans. Maybe overpopulated countries shouldn’t be population enabled by our stored water. The US could do with less imports. Nuts, berries, fruit and more and more varied vegetables would be a great replacement for grain to China. PS I don’t mind a subsidy for not having children. Save our reserves and resources with a little forward thinking. This ain’t Bernie or Warren, this is 65 woke who cares with a little common sense. 

[Ron Wagner + 702]

On 6/3/2022 at 9:44 PM, Boat said:

When you import gas because you don’t drill available gas. Your right, that’s stupid. But when you flair gas and export that gas to foreign countries. That’s equally as stupid. 

I am against flaring, but we need to fully develop and use our resources including our coastlines and Alaska. Right now Europe has a one to two year critical need for natural gas.  There is plenty of natural gas and oil in many areas around the world that just needs investment. 

[Ron Wagner + 702]

On 6/4/2022 at 2:24 AM, Boat said:

Heard tell of a 5’ plastic pipe from Northern Calif to Southern. Capture the snow and river runoff’s. Big ideas need big money. 

Governor Newsome canceled the latest plan as soon as the last drought emergency ended. They are sitting on billions of dollars of money and have other ideas on how to buy votes with giveaway programs. California has a great plan that will use most of the water that runs out of the Stockton delta. It is big and expensive but is good for California in the long run.

Water conservation has barely been started in the Southwest. There are dozens of ways to get that done. See my topic. 

[Ron Wagner + 702]

On 6/4/2022 at 2:09 AM, notsonice said:

The farmers have the lowest priority compared to the populated areas. ??????

You obviously do not understand Western water law and senior rights. Water rights are all based on seniority and where they were granted. Then you add in dams and reservoirs and those with less senior  rights have the ability to grab (excess) water and store it in dams and reservoirs when the flows are in excess. Farmers with senior rights get their water per the rules in their rights ...nothing in water law takes away their rights or water and gives them to populated areas.

 

You will even see lots of sprinkler systems???? Every lawn, farm or ranch where you want green plants is irrigated. The whole of the Southwest at lower or flat elevations is a desert, only way to keep grass growing is with sprinklers. Only way to grow crops is with irrigation. If you think you will keep your yard from wilting away in the sun by praying for rain you will have a patch of dirt real quick.

Did you even scan my topic collection of ideas???

[Jay McKinsey + 1,490]

On 6/2/2022 at 7:39 PM, Ron Wagner said:

California has plenty of its own natural gas available to use, but they are too stupid to realize that it is a very clean source of energy and very economical. They are among the most brainwashed states in America. But, they think, it is cleaner to buy it from out of state!

Utter non sense! California produces all the natural gas it can and still has to import 85%. We exceeded our production capacity in 1947 and had to build the first import pipeline from Texas.

Edited June 7, 2022 by Jay McKinsey