NATURAL GAS MARKET OUTLOOK 2011 · 2017. 3. 8. · 2 Natural Gas Outlook •U.S. shale gas...
Transcript of NATURAL GAS MARKET OUTLOOK 2011 · 2017. 3. 8. · 2 Natural Gas Outlook •U.S. shale gas...
© 2005 San Diego Gas and Electric and Southern California Gas Company. All copyright and trademark rights reserved
This information is provided solely for informational purposes. Although Southern California Gas Co. (SoCalGas) has used reasonable
efforts to assure its accuracy, no representation is made that the contents are free from error or suitable for use for any particular purpose.
SoCalGas assumes no responsibility for use of, or reliance on, this information by any party, and specifically advise such parties to discuss
any decisions or actions related hereto with their own advisors and experts.
NATURAL GAS MARKET
OUTLOOK
2011
Marjorie Schmidt-Pines, Principal Regulatory Economic Advisor
Southern California Gas Company and SDG&E
Regulatory Affairs
January, 2011
2
Natural Gas Outlook
•U.S. shale gas resources drive increased U.S. production, lower prices, and lower imports of natural gas
•North America West Coast LNG terminal Operational
•U.S. storage levels this winter higher than five year average
•Industrial and electric power use drives future demand
growth
•Non-hydro renewables and natural gas are the fastest growing electricity generation sources
•Natural gas price projections are significantly lower than past years due to an expanded shale gas resource base
3
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
30% domestic gas production growth outpaces 16% consumption growth, leading to declining imports
Consumption
Domestic supply
Net imports
Projections History
AEO2011 Reference case
AEO2010 Reference case
1%
6%
11%
Source: EIA, Annual Energy Outlook 2011
2009
U.S. dry gas
trillion cubic feet per year
3
4
Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources
0
250
500
750
1000
1250
1500
1750
2000
2250
2500
2750
2000 2005 2006 2007 2008 2009 2010 2011
AEO edition
U.S. dry gas resources
trillion cubic feet
Unproved
shale gas
Unproved
other gas (including
Alaska* and
offshore)
Proved
reserves (all types &
locations)
* Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.
Source: EIA, Annual Energy Outlook 2011
827
1481
2552
245
Richard Newell, December 16, 2010 4
5
Richard Newell, December 16, 2010
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Shale gas offsets declines in other U.S. supply to meet consumption growth and lower import needs
U.S. dry gas
trillion cubic feet per year
Alaska
Non-associated offshore
Projections History
Associated with oil
Coalbed methane
Net imports
Non-associated onshore
Shale gas
Source: EIA, Annual Energy Outlook 2011
2009
11%
1%
9% 7%
9% 8%
20%
14%
8%
2%
8%
7%
45%
1%
Tight gas 28% 22%
5
6
U.S. natural gas shale
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U.S. shale gas production increased 14-fold over the last decade; reserves tripled over the last few years
0.0
1.0
2.0
3.0
4.0
5.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Eagle Ford (TX)
Marcellus (PA and other Eastern states)
Haynesville (LA and TX)
Woodford (OK)
Fayetteville (AR)
Barnett (TX)
Antrim (MI, IN, and OH)
Source: Lippman Consulting (2010 estimated)
annual shale gas production
trillion cubic feet per year
Richard Newell, December 16, 2010 7
8
Shale gas production has continued to rise rapidly over the past year
0
2
4
6
8
10
12
14
16
Jan-
09
Mar-
09
May-
09
Jul-
09
Sep-
09
Nov-
09
Jan-
10
Mar-
10
May-
10
Jul-
10
Sep-
10
Barnett Shale Fayetteville Woodford
Haynesville Marcellus Eagleford
billion cubic feet per day
Source: EIA, Lippman Consulting 8 Howard Gruenspecht, U.S. – Canada ECM, Dec 2 ,2010
9
SoCalGas Sources of Natural Gas
Deliveries
(BCF)
2002 1012
2003 958
2004 995
2005 903
2006 95965%
21%
8%
6%
SW
Rockies
Calif
Canada
SoCalGas Total Supply Mix for 2009
Source: California Gas Report,
SoCalGas 2010
10
Status of Costa Azul LNG Terminal
Costa Azul Current Operations • Costa Azul capacity split 500 MMcfd each to Sempra LNG and
Shell – However, Shell completed a “subleasing” deal with Gazprom for a quarter of the capacity
– Sempra’s long-term supplies from Tangguh project in Indonesia
– Shell has available capacity now - long-term supplies from Sakhalin project in Russia – There has been no indication when cargoes from Sakhalin might first arrive at ECA
• Sempra has been receiving regular cargoes from Tangguh approximately every 12 days since the second quarter of 2010
– Additional spot cargoes have been received from time to time
– One spot cargo was received from Peru in July 2010
• SDG&E has received nominations at the Otay Mesa receipt point periodically throughout the second half of 2010
• SoCalGas received nominations at Blythe from North Baja Pipeline- some LNG derived gas arrived, however, mainly domestic gas due to displacement.
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0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
U.S. dry gas consumption
trillion cubic feet per year
Commercial
Transportation** Residential
Central electric power
Industrial*
* Includes combined heat-and-power and lease and plant fuel. ** Includes pipeline fuel.
Source: EIA, Annual Energy Outlook 2011
2009
3%
14%
35%
18%
29%
3%
14%
32%
21%
30%
Projections History
Richard Newell, December 16, 2010
Natural gas consumption is quite dispersed; industrial
and electric power use drives future demand growth
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Natural gas, wind and other renewables account for the vast majority of capacity additions from 2009 to 2035
Coal
313 (30%)
Natural gas
351 (34%)
Hydropower*
99 (10%)
Nuclear
101 (10%)
Other
renewables
15 (1%)
Other fossil
118 (11%) * Includes pumped storage
Coal
14 (6%)
Natural gas
135 (62%)
Hydropower*
3 (1%)
Nuclear
6 (3%)
Other
renewables
27 (12%)
Other
fossil
1 (0.4%)
2009 capacity Capacity additions
2009 to 2035
1,033
gigawatts
220 gigawatts
Source: EIA, Annual Energy Outlook 2011 Richard Newell, December 16, 2010
Wind
27 (12%) Wind
32 (3%)
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End-use coal
4 (0.3%)
End-use coal
7 (3%)
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0
1
2
3
4
5
6
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
electricity net generation
trillion kilowatthours per year
Natural gas
Renewable
Projections History
Nuclear
Oil and other
Coal
20%
23%
25%
1% 1%
45%
43%
14% 10%
17%
The projected electricity mix gradually shifts to lower-
carbon options, with generation from natural gas rising
37% and renewables rising 73%
Source: EIA, Annual Energy Outlook 2011
2009
Richard Newell, December 16, 2010 13
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Southern California Gas Demand
0
200
400
600
800
1000
1200
2009 2010 2015 2020 2025 2030
Bc
f/Y
ea
r
Wholesale
EG
Noncore Non EG
Core Non Residential
Residential
Source: CGR 2010
15
U.S. Storage at High Levels This Winter
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Weather has the most impact on spot natural gas prices.
Winter 2010/11
17
Natural Gas Price History
CA AZ Border and SoCal Citygate - NGI Monthly IndexData Souce: NGI Bidweek Survey Jan. 3, 2011
1
2
3
4
5
6
7
8
1/9
8
6/9
8
11/9
8
04/9
9
09/9
9
02/0
0
07/0
0
12/0
0
05/0
1
10/0
1
03/0
2
08/0
2
01/0
3
06/0
3
11/0
3
04/0
4
09/0
4
02/0
5
07/0
5
12/0
5
05/0
6
10/0
6
03/0
7
08/0
7
01/0
8
06/0
8
11/0
8
04/0
9
09/0
9
02/1
0
07/1
0
12/1
0
$/m
mb
tu
Southern Border, SoCalNGI Bidweek ($/Dth)
SoCal CitygateNGI Bidweek ($/Dth)
T:\fuelpric.xls
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Oil vs Natural Gas Prices
Historical Oil Prices vs. Gas Prices
Equivalent Unit Cost ($/MMBtu)1 Barrel = 6.2 MMBtu
Last Updated: 12/8/2010
Source: Source: Oil prices - EIA, CA/AZ Border Gas Price - Ventyx Velocity Suite-Nymex T:\oil vs gas.xls
0
5
10
15
20
25
Jan-0
4
Apr-
04
Jul-04
Oct-
04
Jan-0
5
Apr-
05
Jul-05
Oct-
05
Jan-0
6
Apr-
06
Jul-06
Oct-
06
Jan-0
7
Apr-
07
Jul-07
Oct-
07
Jan-0
8
Apr-
08
Jul-08
Oct-
08
Jan-0
9
Apr-
09
Jul-09
Oct-
09
Jan-1
0
Apr-
10
Jul-10
Oct-
10
CA/AZ Border NG Cash ($/MMBtu)
WTI Crude Equiv ($/MMBtu)
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While Gas Prices Have Fluctuated: SoCalGas’ Transportation Costs Have Been Flat
$0.00$1.00
$2.00$3.00$4.00
$5.00$6.00$7.00
$8.00$9.00
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
$/m
mb
tu
Core Transport Noncore Transport
Core Gas Cost CA Border Index
`
Transport costs are the Volumetric & Customer Charge.
Core GN10 @ 100,000th/year and Noncore GTF/I3-D @ 1.5MMth/year.
Core Gas Cost is SCG’s core procurement rate and CA Border Index is Natural Gas Intelligence Index
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Where are Gas Futures Prices Going ?
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Feb 1
1
Mar
11
Apr 1
1
May
11
Jun
11
Jul 1
1
Aug 1
1
Sep 1
1
Oct 1
1
Nov
11
Dec
11
Jan
12
Feb 1
2
Mar
12
2011
2012
2013
2014
2015
$/m
mbtu
NYMEX Futures
price @ Henry Hub ($/mmbtu)
Futures
price @ CA/AZ border ($/mmbtu)
Natural Gas NYMEX & ClearPort Futures
Source: Henry Hub data: PROPHETX|QUOTE!'NG@[DTN:NYMEX] Border data: Ventyx Velocity Suite Updated Jan. 3, 2011
This posted information is provided solely for informational purposes. Although SoCalGas and SDG&E have used reasonable efforts to assure
its accuracy, no representation is made that the contents are free from error, or suitable for use for any particular purpose. SoCalGas and
SDG&E assume no responsibility for use of, or reliance on, this information by any party, and specifically advise such parties to discuss any
decisions or actions related hereto with their own advisors and experts.
21
Natural gas price projections are significantly lower than past years due to an expanded shale gas resource base natural gas spot price (Henry Hub)
2009 dollars per million Btu
Projections History
Source: EIA, Annual Energy Outlook 2011
2009
Richard Newell, December 16, 2010
0
1
2
3
4
5
6
7
8
9
10
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
AEO2010
Updated AEO2009
AEO2011
21
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• Gas price volatility will likely continue.
• Shale gas drives growth in natural gas production and reduces reliance on imported gas.
• Higher demand expected for U.S. gas fired electric generation and industrial demand.
• Natural gas prices much lower than oil prices.
• Natural Gas basis differences at various hubs diminished, driven by shale production increase in the east and new pipelines added.
• Natural gas price projections are significantly lower than past years due to an expanded shale gas resource base.
North American Natural Gas Market
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What Can You Do to Manage Energy Costs?
• Take advantage of energy efficiency programs. Call your Account Executive for technical support.
• Go to socalgas.com/business for support tools.
• If you transport your own gas, talk to your gas supplier to discuss supply and pricing strategies.
• Look for ways to conserve and be more energy efficient.
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Thank you