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European Natural Gas Prices Surge Ahead Of Cold Spell

European Natural Gas Prices Surge Ahead Of Cold Spell

  • The Dutch TTF benchmark price jumped by 11% on Tuesday morning, recovering from a 17% price slump last week.
  • An unplanned outage at a Norwegian gas processing plan and short covering combined to add upward pressure to gas prices.
  • Next week, temperatures could be lower than initially expected, which would boost demand for natural gas after a mild winter so far.

Europe’s benchmark gas prices have rebounded this week as traders closed short positions at the expiry of the front-month contract and some weather forecasts suggested colder weather in northern and central Europe next week than previously expected.

The Dutch TTF benchmark price jumped by 11% at over $65 (60 euros) per megawatt-hour (MWh) at the opening of trade in Amsterdam on Tuesday, extending small gains from Monday and recovering some of the losses from last week, when prices slumped by 17%.

On Monday, the prices were supported by short covering and an unplanned outage at a Norwegian gas processing plant. However, wind power generation is still expected to be strong, which could curb some demand for gas-fired power generation.

But next week, temperatures could be lower than initially expected, which would boost demand for household heating. Colder spells are set to return to northern and central Europe next week, according to weather models by Maxar Technologies Inc, cited by Bloomberg.

Still, the record gas prices in Europe could be behind us, according to ING’s revised outlook on natural gas for this year.

“Mild weather and weak industrial demand have ensured that gas storage has remained strong. The region should get through this winter comfortably and prospects also look better for the 23/24 winter,” Warren Patterson, Head of Commodities Strategy at ING, said on Monday.

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Netherlands To Shut Down Europe’s Largest Gas Field

Netherlands To Shut Down Europe’s Largest Gas Field

The Dutch government plans to close the Groningen gas field this year despite Europe’s precarious supply position. Groningen is the largest gas field in Europe.

The field is dangerous, a government official from the Hague told the Financial Times, and the government has no plans to boost production from it.

“We won’t open up more because of the safety issues,” Hans Vijbrief told the FT. “It is politically totally unviable. But apart from that, I’m not going to do it because it means that you increase the chances of earthquakes, which I don’t want to be responsible for.”

Production from Groningen has been curtailed substantially, and there were plans in place to phase out production altogether because of increased seismic activity in the vicinity of the field even before the energy crisis began in 2021.

As gas prices began to climb in the autumn of 2021 and then took off in the spring of 2022, some began speculating that the Netherlands could keep the field operating to contribute to filling the gap in gas supply left by Russian pipeline deliveries.

The Dutch government was skeptical about that from the start and instead suggested production be extended, although at a minimum rate of some 2.8 billion cu m. Now, this, too, is being reconsidered.

“It’s very, very simple: everybody who has some knowledge of earthquake danger tells me that it’s really very dangerous to keep on producing there. I’m quite convinced it’s wise to close it down,” Vijbrief told the FT.

Since the 1980s, the FT notes, there have been some 100 earthquakes annually around Groningen, resulting in more than 150,000 claims for property damage. The operator of the field, a Shell-Exxon joint venture, was ordered to start reducing output in 2013 with a view to shutting the field down eventually.

What’s Behind California’s Skyrocketing Natural Gas Bills: Insiders

What’s Behind California’s Skyrocketing Natural Gas Bills: Insiders

Californians are expecting skyrocketing natural gas bills this month, but this can’t all be blamed on the weather, according to industry insiders.

Southern California Gas Company (SoCalGas), which serves about 5.9 million households and businesses, warned customers to expect “shockingly high” January bills that could be 128 percent higher compared to December.

Those who typically paid around $65 a month last winter are likely to pay about $160 this year, SoCalGas said in a statement Dec. 29. Those with bills around $130 a month could see charges jump to $315.

Last December, wholesale natural gas prices already cost five times more than that of 2021. The utility also paid unprecedented prices for the supply in January, the company reported.

Natural gas prices rose in 2022 for five reasons, according to a biennial report (pdf) published by California Gas and Electric Utilities, a group of utility providers including SoCalGas, San Diego Gas & Electric, and SoCal Edison.

First, North American inventories fell below the five-year average last year. Second, the national supply was also strained by Europe’s steady demand for American natural gas during the Ukraine conflict.

Third, the Biden administration restricted licensing and drilling in the country for fossil fuels, and investment for such production has lagged behind the rapidly growing demand for natural gas over the past year, according to the report.

Lastly, the growing electric power sectors nationwide also consume natural gas, the company reported.

“From an economic standpoint [reducing reliance on fossil fuels] may be costly and is certainly not expected to be rapid or easy,” the utility reported. “Nonetheless, the push to find ways forward and to provide energy solutions to customers in a clean and affordable way is an imperative.”

Climate Goals Restrict Production, Grow Demand

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Coast-To-Coast Winter Storm Sends US NatGas Surging

Coast-To-Coast Winter Storm Sends US NatGas Surging

In what’s forecasted to be the first coast-to-coast major winter storm of the season across the Lower 48, traders have furiously panic bid US natural gas futures due to the prospects of increased heating demand.

On Sunday, wintery precipitation, powerful winds, and heavy rains battered Intermountain West as a powerful storm was set to traverse the rest of the country in the new week. The next stop for the storm is the Plains, South, and Northeast, according to The Weather Channel.

Heavy mountain snow has already blanketed parts of California’s Sierra. Snow will spread across the high country of Colorado and northern New Mexico today. Then this evening, the system moves into the Northern Plains. By night into Tuesday, heavy snow and strong winds could spark blizzard conditions across eastern Montana, eastern Wyoming, western Nebraska, the Dakotas, and Minnesota.

Later in the week, moisture from the storm and cold air will be in place in the East. However, it’s still early to forecast where snow will fall in the Northeast.

The storm is coupled with a cold blast pouring across the Lower 48 starting Friday. Temperatures are forecasted to dive between Friday and next Wednesday.

Most of the Lower 48 could be well under average temperatures.

Which means heating demand erupts.

And why energy traders are bidding NatGas prices higher this morning. At one point, prices were up 12% to $7.010/mmbtu.

Cold season is in — drawing down on inventories began on Nov. 10 (read: “US Flips Into Withdrawal Season” As NatGas Prices Surge).

Also, Freeport LNG is expected to ramp up exports out of its Texas facility soon, along with cold weather; this could keep a bid under NatGas prices this heating season.

Peter Zeihan: You’re Being Instructed Not to Notice This!!!

Peter Zeihan: You’re Being Instructed Not to Notice This!!!

Germany Preparing For Emergency Cash Deliveries, Bank Runs And “Aggressive Discontent” Ahead Of Winter Power Cuts

Germany Preparing For Emergency Cash Deliveries, Bank Runs And “Aggressive Discontent” Ahead Of Winter Power Cuts

While Europe has been keeping a generally optimistic facade ahead of the coming cold winter, signaling that it has more than enough gas in storage to make up for loss of Russian supply even in a “coldest-case” scenario, behind the scenes Europe’s largest economy is quietly preparing for a worst case scenario which include angry mobs and bankruns should blackouts prevent the population from accessing cash.

As Reuters reports citing four sources, German authorities have stepped up preparations for emergency cash deliveries in case of a blackout (or rather blackouts) to keep the economy running, as the nation braces for possible power cuts arising from the war in Ukraine. The plans include the Bundesbank hoarding extra billions to cope with a surge in demand, as well as “possible limits on withdrawals”, one of the people said. And if you think crypto investors are angry when they can’t access their digital tokens in a bankrupt exchange, just wait until you see a German whose cash has just been locked out.

Officials and banks are looking not only at origination (i.e., money-printing) but also at distribution, discussing for example priority fuel access for cash transporters, according to other sources commenting on preparations that accelerated in recent weeks after Russia throttled gas supplies.

The planning discussions involve the central bank, its financial market regulator BaFin, and multiple financial industry associations, said the Reuters sources most of whom spoke on condition of anonymity about plans that are private and in flux.

Although German authorities have publicly played down the likelihood of a blackout and bank runs – for obvious reasons  – the discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling power outages caused by soaring energy costs or even sabotage…

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Pakistan ‘Has No Option But To Ration’ Natural Gas Supply This Winter

Pakistan ‘Has No Option But To Ration’ Natural Gas Supply This Winter

  • The energy crisis in Pakistan has deepened this year.
  • Gas supplies available for households will be very limited this winter.
  • Pakistani households will have gas available for three hours in the morning, two hours in the afternoon, and three hours in the evening.

Pakistan has no other option but to ration natural gas supply this winter, with gas provided three times a day for cooking to households, amid acute shortages and a forex crisis in the world’s fifth most populous country, an official from the petroleum ministry told a Parliament panel this week.

The energy crisis in Pakistan has deepened this year, and now, natural gas supplies will be very limited for households, according to officials.

“There would be no gas supply (to household consumers) for 16 hours” a day, Muhammad Mahmood told the Parliament’s Standing Committee on Petroleum, as carried by the local outlet Dawn.

Pakistani households will have gas available for three hours in the morning, two hours in the afternoon, and three hours in the evening, Mahmood added.

Pakistan—whose population is the fifth largest in the world after China, India, the United States, and Indonesia—has been experiencing an energy crisis as the country cannot afford to import a lot of energy products at the current high prices. The stronger U.S. dollar and the sky-high LNG prices have worsened the country’s finances, with foreign exchange reserves down in October to their lowest level in three years.

In April, soaring prices of LNG and coal on the international markets left Pakistan with having to cut electricity supply to households and industry as the country, in a deep political and economic crisis, could not afford to buy more of the expensive fossil fuels.

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US NatGas Futures Jump As Frigid Weather Set To Swoop Across Country

US NatGas Futures Jump As Frigid Weather Set To Swoop Across Country

US natural gas futures bottomed on Oct. 24 after a 50% haircut on warmer weather. In the last two weeks, prices have staged a rally on the prospect of cold weather and tighter supplies. Last Monday, we penned a note titled “US NatGas Spikes As Temperatures Are About To Dive Nationwide.” Now, with colder weather sweeping across the US, NatGas prices are up a staggering 49% in eleven sessions.

On Monday morning alone, NatGas futures are up 10%. Bloomberg said the move higher is weather-related, “as a winter storm hits the Pacific Northwest and frigid weather is expected across most of the country.”

National Oceanic and Atmospheric Administration released a 6-10 day temperature outlook for the lower 48 states showing that most of the country will experience below-average temperatures.

An 8-14 day temperature outlook by the weather agency also points to continued below-average temperatures for much of the US.

After an unseasonably warm end of October and the first week of November, the warm spell is forecasted to turn today. Average temperatures are expected around 58 degrees Fahrenheit and will revert to a downward sloping 30-year mean of the mid-40s by mid-month.

Colder weather indicates heating demand will rise, and so will the demand for NatGas.

The latest rally in NatGas outlines how sensitive traders are to potential cold snaps, as below-normal stockpiles and surging exports could strain domestic stockpiles in a deep freeze in the months ahead.

Natural gas shortage could lead to power outages during coldest months

Joe Nolan, the CEO of Eversource, said a shortage of natural gas poses a serious health and safety threat.
HARTFORD, CT (WFSB) – Connecticut and other New England states could be in trouble this winter when it comes to natural gas.

Joe Nolan, the CEO of Eversource, said a shortage of natural gas poses a serious health and safety threat.

Nolan sent a letter to President Joe Biden in which he said something needed to be done to avoid a shortage this winter.

In the letter, Nolan said rolling blackouts could be a solution that many customers might see.

While New England energy companies warned about rolling blackouts in the past, Nolan claimed this season might be different.

“I am just concerned that if we get a polar vortex or cold snap in the region, that will not be enough fuel for the electric generating units in the area to supply electricity for our customers,” he said.

He said Eversource has roughly 20 days’ worth of supply in tanks for emergencies. However, the war in Ukraine has impacted the company’s ability to get the extra supply of natural gas it would need in a weather crisis.

Nolan said he has been working to remedy the situation. He offered four proposals to Biden, including a waiver from the Jones Act.

“There is an awful lot of liquified natural gas that’s down in the gulf that we could access if we get relief from the Jones Act, which would allow a foreign flag vessel to go to the gulf and fill up and come to the northeast and deliver liquified natural gas, which right now we are not allowed to do,” Nolan said.

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NT’s Blacktip gas field production drops, forcing shutdown of Northern Gas Pipeline

photo from a height of a power station with the sea in the background
The Channel Island power station is the main provider of electricity to the Darwin-Katherine interconnected system.(Supplied: Territory Generation)

Production from the offshore field which supplies gas for the Top End’s electricity generation has decreased by nearly 50 per cent this year — raising concerns about the long-term security of the resource.

Power and Water Corporation (PWC) has an agreement with Italian company ENI to buy gas from its Blacktip field until 2031, using the gas to generate electricity for the Darwin to Katherine grid.

But over the past 12 months, gas output from the field has been steadily dropping.

Blacktip’s production has decreased so much that there is not enough gas to run the Tennant Creek to Mount Isa pipeline, where PWC normally sends its excess supply.

Wood Mackenzie energy research analyst Anne Forbes said it was common for gas fields to have production issues, but Blacktip’s problems seemed particularly bad.

“There’s been quite a significant [production] decline, much more severe than we would generally assume would happen for this type of gas field,” she said.

“It’s been quite unexpected.”

Aging electricity infrastructure in the Northern Territory
Most of the Northern Territory’s electricity is provided by gas-fired power stations.(ABC News)

The Blacktip field is made up of 12 separate stacked reservoirs across four different geological formations — meaning it is difficult to extract gas from.

“[A gas reservoir] will always not perform as you expect — it might be better or it might be worse,” Ms Forbes said.

“In this case it’s not been as good as [ENI] had hoped.”

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Russian Gas Stops Flowing To Italy After ‘Problem’ In Austria

Russian Gas Stops Flowing To Italy After ‘Problem’ In Austria

Russian energy giant Gazprom PJSC suspended natural gas deliveries to Eni SpA, Italy’s largest oil company, on Saturday, reported Bloomberg.

“Gazprom informed that it is not able to confirm the gas volumes requested for today, stating that it’s not possible to supply gas through Austria. Therefore, today’s Russian gas supplies to Eni through the Tarvisio entry point will be at zero. Eni will provide updates in case supplies will be restored,” Eni wrote in a statement on its website. 

An Eni spokesperson told Bloomberg that Austria is still receiving NatGas from Gazprom:

“We are working to check with Gazprom whether it is possible to reactivate the flows to Italy.” 

Gazprom said NatGas flows from Austria to Italy were suspended because the Austrian operator refused to confirm “transport nominations” after recent regulatory changes in the landlocked country in the southern part of Central Europe.

It’s important to note most of the Russian NatGas delivered to Italy flows through Ukraine via the Trans Austria Gas Pipeline to Tarvisio in northern Italy on the border with Austria. Before Russia invaded Ukraine, Italy imported 95% of its NatGas, of which 45% came from Russia.

Those figures are drastically different today as Italy rejiggers its energy supply chain away from Russia and finds alternative supplies of NatGas from North Africa. Before this weekend, Russian NatGas accounted for only 10% of Italy’s imports. The new suppliers will help Italy boost storage levels ahead of winter.

“Outgoing Prime Minister Mario Draghi has been scouring the globe to secure gas supplies to protect Italy from potential supply interruptions from Russia, which has been putting pressure on the European Union over several rounds of sanctions in response to the invasion. Italy has been one of the most successful countries to source alternative supplies,” Bloomberg noted.

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Germany To Nationalize Struggling Uniper In Deepening Energy Crisis

Germany To Nationalize Struggling Uniper In Deepening Energy Crisis

Germany on Wednesday announced a move to nationalize struggling natural gas supplier Uniper SE as it strives to keep the industry functioning in the wake of a global energy crisis, according to Reuters.

Uniper is Germany’s largest importer of Russian NatGas and has suffered tremendous losses after Russian energy giant Gazprom slashed Nord Stream 1’s pipeline capacity to zero, forcing the utility to purchase natgas outside contracts on the open market at record high prices.

Berlin agreed to purchase the remaining stake owned by Uniper’s parent company, Finnish utility Fortum Oyj for  $1.69 (1.70 euro) per share. Buying Fortum’s stake means Germany will own 99% of Uniper. The cost of nationalization comes as Berlin is set to inject 8 billion euros, equivalent to around $8 billion, into the utility.

The move is to keep the lights on across German homes and businesses as the risk of power rationings increases.

“This step has become necessary because the situation has worsened significantly.

 “The state will do everything necessary to keep systemically important companies in Germany stable at all times,” Robert Habeck, Germany’s economy minister, said Wednesday.

Uniper shares crashed by as much as 39% to 2.55 euros. Shares are down 93% on the year…

In July, Berlin injected a whooping 15 billion euros ($14.95 billion) to save the utility though the move to nationalize ahead of winter shows further deterioration in energy security for Europe’s largest economy.

Here’s what Markus Rauramo, CEO and President of Fortum, said about the deal:

“Under the current circumstances in the European energy markets and recognising the severity of Uniper’s situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum.

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A Natural Gas Shortage Is Looming For The U.S.

A Natural Gas Shortage Is Looming For The U.S.

  • As natural gas demand around the world breaks new records, U.S. shale producers are struggling to keep up with demand.
  • While natural gas prices in the United States fell after a railway strike was averted last week, it looks likely that prices both at home and abroad will spike this winter.
  • A hotter-than-expected summer and a lack of alternative energy sources have left U.S. inventories below the seasonal average.

Last week, the media rushed to report that natural gas prices in the United States had fallen sharply after trade unions and railway companies reached a tentative deal that averted a potentially devastating strike.

Indeed, natural gas prices fell by nearly a dollar per million British thermal units, helped by a respectable build in inventories. And yet, inventories remain below the seasonal average, exports are running at record rates, and producers are beginning to struggle to meet demand, both at home and abroad.

Reuters’ John Kemp wrote in a recent column that domestic and international gas consumption had risen to record highs, and shale producers—the ones that account for the bulk of U.S. natural gas output—were having a hard time catching up with this demand.

Meanwhile, although higher on a weekly basis, inventories remained at the second-lowest for this time of the year for the last 12 years, Reuters’ market analyst noted. He also added there were no signs of any improvement in the level of inventories despite the rise in prices.

None of this suggests lower prices for natural gas are coming to either the United States or international markets as the northern hemisphere heads into winter. On the contrary, the latest figures suggest more financial pain for gas consumers. And they confirm, to an extent, forecasts made earlier this year.

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A Glut For Natural Gas Too?

A Glut For Natural Gas Too?

Oil is not the only energy source that is seeing a glut. Growing supplies of natural gas could soon result in a similar phenomenon.

It was only a year and a half ago that the United States, and the northeast in particular, saw supplies dwindle to exceptionally low levels, forcing prices to temporarily spike. The Northeast experienced a freezing winter, leading to high levels of consumption as millions of people tried to keep warm. Natural gas storage levels plummeted to lows not seen in years.

The severe drawdown in storage levels during that cold 2014 winter raised fears that the situation would be even worse the following year. With inventories depleted, another brutal cold could blow a huge hole in storage levels.

Related: Busting The “Canadian Bakken” Myth

And while the northeast did have a rough winter in 2015, and consumption levels were just as high as the year before, something different happened this time around: US drillers produced a record level of natural gas in 2014, allowing inventories to quickly rebuild. After storage levels ran well below their five-year average (see chart), by the beginning of 2015, as production continued to rise, storage tanks filled up and overall inventories bounced back to the average.

(Click to enlarge)

That caused residential natural gas prices to crash back down to earth late last year and in the first few months of 2015, with no repeat of gas price spikes that were seen in 2014.


As inventories rise, prices fall. While that is good for consumers, shale gas drillers are beginning to worry. As production piles up and inventory levels were rapidly repaired, what happens next? Further inventory builds could turn the adequate supplies into a glut. By November, storage levels could surpass 4 trillion cubic feet, a record high, according to energy analysts.

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