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Anybody watching natural gas?
Posted on 9/14/21 at 2:13 pm
Posted on 9/14/21 at 2:13 pm
quote:
quote:
https://www.naturalgasintel.com/natural-gas-shippers-said-onboard-for-ngtls-west-path-expansion/
NatGas Intel Page
Natural Gas Futures, Cash Prices Soar Above $5.00 as Nicholas Amplifies Production Worries
BY KEVIN DOBBS
September 13, 2021
Natural gas futures surged on Monday as a new tropical storm threatened to further shake the Gulf of Mexico’s (GOM) production foundation, a development that could hamper supply/demand balances at a time when gas in storage for winter is already light.
The October Nymex contract cruised 29.3 cents higher day/day and settled at $5.231/MMBtu. November gained 30.0 cents to $5.273.
‘Precarious’ Storage
Production last week held around 90 Bcf in Ida’s wake – about 2 Bcf/d below the summer average. Even prior to Ida, output was running shy of demand. This prevented utilities from injecting average levels of gas into storage during the summer months.
With demand strong, production light and Nicholas presenting the potential for new output cuts, futures on Monday added to big gains already made in September. The prompt month advanced 5% last week and 8% the previous week.
Bespoke cautioned that storage may fail to reach the 3.5 Tcf level it said could be needed to support heating needs if the coming winter starts early or proves particularly cold.
The U.S. Energy Information Administration’s (EIA) latest data showed utilities injected 52 Bcf natural gas into storage for the week ended Sept. 3. The increase was not enough to alleviate stockpile concerns. The build lifted inventories to 2,923 Bcf, but that was well below the year-earlier level of 3,515 Bcf and the five-year average of 3,158 Bcf.
now for the interesting part, all of that gas in the storage chart is treated (acid gasses like H2S, CO2, O2 are removed) and dehydrated gas:
1. Formaldehyde was tight because most of the available material was being diverted to the lumber industry because of the sky high lumber market post-Covid. Lumber is coming down and formaldehyde supply chain availability is loosening up
2. The DOW Plaquemine force majeure from being down from IDA put the already tight Mono-Ethanol Amine Supply Chain into an absolute emergency situation.
3. Formaldehyde and MEA are the primary ingredients to make Triazines
4. Triazines are used to economically scavenge (remove) Hydrogen Sulfide gas from natural gas supplies. Alternatives to triazine require constructing additional mechanical means and more chemicals.
5. Hydrogen Sulfide (H2S) is a naturally occurring poisonous gas that must be removed from natural gas for distribution (home/commercial use)
6. So there is a tremendous shortfall in triazine production happening right now that is expected to impact supply chain over the next 8 weeks
7. In response to not being able to economically treat the Hydrogen Sulfide in the natural gas, O&G Producers are shutting in natural gas production all over the country.
8. One major ARKLATEX operator is expecting to take 500 million cubic feet/day of natural gas off the market by this time next week because they cant afford to treat it for H2S.
9. They are not the only US producers taking production offline
10. Inflation (weaker dollar), rail car shortages and maritime supply chain issues (lack of workers/containers/ships post Covid) plus 4-6week lead time has made supplementing MEA supply chain from foreign producers difficult to next to impossible.
This post was edited on 9/14/21 at 2:40 pm
7
Posted on 9/14/21 at 3:20 pm to supatigah
I blew out of a position in UNG earlier this year in the $10 range. Seeing it around $18.50 now surely does make me chuckle… NOT! 
Posted on 9/14/21 at 3:52 pm to supatigah
Time to mortgage the house and put it all in UGAZ
Posted on 9/14/21 at 4:23 pm to white perch
Henry Hub is $5.30 today
Posted on 9/14/21 at 9:11 pm to supatigah
If you want another play, ChampionX (CHX) owns like all the patents on non-triazine scavengers and flooded towers. When triazine can’t be supplied , CHX will see significant in flows of orders for their patented chemistry.
TL;DR CHX to $50/share . Hop on the train now, don’t get left behind.
TL;DR CHX to $50/share . Hop on the train now, don’t get left behind.
Posted on 9/14/21 at 9:26 pm to supatigah
Someone always told me that BOIL is predictable...
Posted on 9/14/21 at 10:38 pm to supatigah
Great insight.
This post was edited on 9/15/21 at 9:11 am
Posted on 9/14/21 at 10:43 pm to bayoubengals88
Beat me to it.
Posted on 9/15/21 at 1:53 pm to evil cockroach
quote:
owns like all the patents on non-triazine scavengers and flooded towers.
ehhhh, not really
most non-MEA triazine alternatives are older than triazines, there are very few currently patented options that work in the same manner (injection into flow). None of the alternatives are capable of stepping in and replacing the MEA triazine market in a timely and cost effective manner in a normal market. Most are likely going to try to use Hydroxides, Amines, Glyoxal or most likely MMA Triazines to make up the shortfall, but those can cause problems and can be expensive.
cost effective alternatives like Amines, Sodium Hydroxide, Potassium Hydroxide have been around forever and typically require installing a vessel (bubble tower).
the issue is transporting sour wet field gas from well head through gathering systems into transmission systems to the gas plants for processing for distribution.
Most of those pipeline transmission systems have strict contracts and DOT ratings that require <4ppm H2S. An acid gas rated pipeline has a different set of DOT regulatory accountability requirements.
So producers can't just put natural gas with >5ppm H2S in the pipeline without penalty. Most Gas Plants are not set up for high H2S gas coming in anyway.
It's a mess that will be resolved with using higher priced products or simply shutting in production until the MEA Supply Chain clears up
what will most likely happen is high H2S Gas wells are being shut in first, then some oil/gas wells in high H2S areas will follow. So look for natural gas prices to continue to go up quickly, and Oil prices to go up more slowly.
Henry Hub up to $5.46 today
This post was edited on 9/15/21 at 1:58 pm
Posted on 9/15/21 at 4:41 pm to supatigah
quote:
ehhhh, not really
most non-MEA triazine alternatives are older than triazines, there are very few currently patented options that work in the same manner (injection into flow). None of the alternatives are capable of stepping in and replacing the MEA triazine market in a timely and cost effective manner in a normal market. Most are likely going to try to use Hydroxides, Amines, Glyoxal or most likely MMA Triazines to make up the shortfall, but those can cause problems and can be expensive.
cost effective alternatives like Amines, Sodium Hydroxide, Potassium Hydroxide have been around forever and typically require installing a vessel (bubble tower).
way newer technologies out there than what you posted.
Posted on 9/15/21 at 6:24 pm to evil cockroach
Yeah I know there are new “technologies”
that are too expensive
Or cause terrible scale problems
Or cause crap loads of dithiazine solids
If these new wonder drugs can’t find a foothold in this current market they probably won’t
But that is not the point of this thread, this is about sour gas shutting in production because it can’t be treated at a cost effective level and the resulting commodity pricing opportunities this presents
that are too expensive
Or cause terrible scale problems
Or cause crap loads of dithiazine solids
If these new wonder drugs can’t find a foothold in this current market they probably won’t
But that is not the point of this thread, this is about sour gas shutting in production because it can’t be treated at a cost effective level and the resulting commodity pricing opportunities this presents
Posted on 9/15/21 at 7:11 pm to supatigah
It blows. We eat 185 million cubic feet of gas a day. That shite gets up to 10/12 it'll be ugly .
This post was edited on 9/15/21 at 7:12 pm
Posted on 9/16/21 at 8:04 am to thejudge
Going to be a great run for producers the next few months. Best times we have seen in likely ten years on the gas side. Hopefully the sub 3.00 gas is a thing of the past now that Wall Street has cut the funding to 80% of the indebted shale drillers.
Posted on 9/16/21 at 1:24 pm to evil cockroach
quote:
TL;DR CHX to $50/share . Hop on the train now, don’t get left behind.
on another note, CHX could be a good play because of other factors going on in the O&G chemicals business
CHX is one of a few O&G Chemicals companies that is basic (have their own reactors) and can make some of their most important raw materials for their products.
O&G chemicals raw materials are very short, silicons, acids, surfactants, amines, glycols specifically.
There is a LOT of US market share held by smaller to mid-sized O&G Chemical companies that rely on other companies for their products manufacturing. Inflation, disrupted supply chains, shortage of materials is causing costs to go through the roof, if you can get materials and products at all. The small to midsized companies are running out of products to sell and their scope has put them on the bottom of the allocations lists.
Soon the market will be divided into those that have products to sell to the O&G Producers and those that don't.
CHX will be one of those that are in the HAVE column, they should gain market share by default
Posted on 9/16/21 at 3:10 pm to supatigah
CNBC - European LNG Shortage
LNG shortage + uranium shortage + winter
quote:
“People are starting to throw the ‘crisis’ word around” when it comes to Europe, said John Kilduff, partner with Again Capital. He said natural gas in storage in Europe is 16% below the five-year average, and the level in storage is a record low for September.
“Europe is squarely behind the eight ball going into the winter season. It’s going to put the focus on this commodity that’s been overlooked for the last several years,” said Kilduff.
The tipping point could come in several months when it becomes clear what type of winter is ahead for Europe, and also the U.S. Some analysts say in an extreme scenario, U.S. prices could double if there is an extended cold spell, particularly in Europe where shortages could get severe.
“If the winter is mildly cold, it’s going to be problematic for sure,” said Francisco Blanch, head of commodities and derivatives strategy at Bank of America.
LNG shortage + uranium shortage + winter
Posted on 9/16/21 at 4:13 pm to DabosDynasty
On the treatment side, an indicator in the US will be the Gas Storage number.
Once we reach an equilibrium between the clean gas Natural Gas and the sour gas we can treat for CO2/H2S (with available chemical supplies) and the gas we consume, we should see the gas to storage number indicate where we are.
If the gas we can treat is below the gas we consume number, then we will see the gas in storage volume number fall as we pull treated gas out of the caverns.
If the gas we can treat is at the gas we consume number volume then the gas to storage volume will zero out.
I suspect that Gas Producers will shut in more than they actually need to relative to treatment capabilities, so they can drive the gas price up even more and take some profits. I also suspect they will push more US treated gas to LNG for sale to Europe to pull as much profit from that market as well.
an early winter or an especially cold winter here or in Europe will mess us the US Economy pretty bad, but be VERY profitable for the Gas producers
Once we reach an equilibrium between the clean gas Natural Gas and the sour gas we can treat for CO2/H2S (with available chemical supplies) and the gas we consume, we should see the gas to storage number indicate where we are.
If the gas we can treat is below the gas we consume number, then we will see the gas in storage volume number fall as we pull treated gas out of the caverns.
If the gas we can treat is at the gas we consume number volume then the gas to storage volume will zero out.
I suspect that Gas Producers will shut in more than they actually need to relative to treatment capabilities, so they can drive the gas price up even more and take some profits. I also suspect they will push more US treated gas to LNG for sale to Europe to pull as much profit from that market as well.
an early winter or an especially cold winter here or in Europe will mess us the US Economy pretty bad, but be VERY profitable for the Gas producers
Posted on 9/17/21 at 8:17 am to supatigah
Up 87% on CRK. Would take profits but winter is approaching fast.
Posted on 9/17/21 at 9:23 am to BEATbama05
I need to make a gas play but is probably too late and most upside is taken. I am already heavy in oil.
Posted on 9/17/21 at 10:07 am to GREENHEAD22
Gas is strictly all about weather this winter. No more pipe available in Appalachia and restricted capital in the oil plays means lower associated volumes. The haynesville will likely dictate most us production for the near term with the only extra takeaway to the coast. Lots of the gas drillers are heavily hedged at lower prices so they can’t jump up and pick up too many rigs with no financial backing from their lenders. Asia and Europe are both bidding against each other for lng to restock low storage. Cold weather could drive a price spike somewhere in dec-March. This may lead to chaos for Europe in particular with a looming political crises in the making. Power blackouts there are possible in certain weather scenarios. Imagine the narrative as American lng bypasses Europe for Asia. If cold weather strikes in the us prices will have to rise to the lng arbitrage spread for that volume to not go overseas. This could be $8-12 per mcf on henry hub depending upon where the market settles. Going to be a good watch this winter. The recent price increase is the market trying to get more gas production in the system in the very near term.
This post was edited on 9/17/21 at 10:10 am
Posted on 9/17/21 at 10:20 am to TigerDog83
quote:
The haynesville will likely dictate most US production for the near term with the only extra takeaway to the coast.
and there is the rub
the Haynesville has some of the most sour production in the US and is one of the first areas being shut in as we speak due to the H2S Scavenger shortage. So if the Haynesville is the US gas production driver, there will be a hiccup due to an inability to treat the sour gas economically.
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