Intelligence brief: Natural gas hits number one in US as prices at 16-year low

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Natural gas was the top electricity source in the US in July-October (Image credit: Ron Thomas)

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Natural gas tops coal as prices at lowest since 1990s

Natural gas became the number one source of US electricity generation in the second half of 2015, as the benchmark spot price hit its lowest annual average since 1999, according to the Energy Information Administration.

Natural gas’s share of total generation surpassed that of coal for four consecutive months to October, the EIA announced in its final report for 2015. In April, it beat coal for the first time on record, but dipped back to second position for two months before beginning its current run.

The natural gas share of US electricity generation rose from about 25.2% in October 2010 to 35.1% in October 2015, while coal’s share dropped from 43.0% to 31.1% in the same period.

Spot prices at the benchmark Henry Hub in Louisiana averaged $2.61 per million British thermal units (MMBtu) in 2015, down from $4.39/MMBtu in 2014. Prices averaged $2.99/MMbtu in January 2015 and fell throughout the year to an average of $2.09/MMbtu by November. Record levels of production and storage inventory, and a warmer-than-average December quarter, all contributed to the falling prices, the EIA said.

At the northeastern trading hubs of Algonquin Citygate, serving Boston, and Transcontinental Pipeline’s Zone 6, serving New York City, prices began the year much higher than the Henry Hub on the back of colder-than-average weather, but then fell below the national benchmark for much of the rest of the year.

The benchmark natural gas price hit its lowest annual average in 16 years in 2015 (Source: Energy Information Administration)

New environmental reporting guidelines triple length of original

The US Federal Energy Regulatory Commission (FERC) has released a draft of its updated manual on how to prepare environmental reports for interstate and liquefied natural gas (LNG) projects – and it is three times longer than the original 150-page document from August 2002.

The revised “Guidance Manual for Environmental Report Preparation” contains new chapters on stakeholder outreach, pre-filing processes, and key principles of resource report preparation, and a supplemental volume containing compliance information specific to LNG facilities.

In the section on stakeholder interaction, FERC states that applications should not be filed until at least six months after FERC’s Direction of the Office of Energy Projects issues a notice commencing the pre-filing process.

Pre-filing is required for a LNG terminal facilities, but is also recommended for “certain other natural gas projects”, especially those anticipated to involve significant public interest. According to FERC, the process is meant to increase predictability and reduce risk by allowing “proactive interaction” between the prospective applicant, FERC staff, other agencies, landowners, and other stakeholders.

The “key principles” included in this revised manual have often been overlooked in past filings, causing delays in the processing of applications, according to FERC.

In future, it recommended, the details provided in each resource report should “be commensurate with the complexity of the action and the potential for environmental impact”. It recommended a number of key points of each report to address, including: existing conditions or resources that may be affected by the project; all proposed measures to avoid adverse effects on the environment; and all cumulative impacts that may result from the project.

Utica pipeline wins FERC approval

FERC has authorized Columbia Pipeline Group (CPG) to construct and operate the Utica Access Project in West Virginia.

The project will be placed in service in final quarter of 2016 and deliver up to 205 million cubic feet per day (Mcf/d) of Utica natural gas to the CPG-owned Columbia Gas Appalachia Pool.

Meanwhile, Columbia Gas has formally filed a certificate application with FERC for its WB Xpress Project in West Virginia and Virginia. The project will cost about $850 million and deliver up to 1.3Bcf/d of Appalachian supply to the expanding Mid-Atlantic market, and to Gulf Coast markets via a downstream, third-party interstate pipeline expansion from an existing interconnect in West Virginia, the company said.

Pending FERC authorization, Columbia expects to commence WB XPress construction in 2017 and place the project in service in the second half of 2018.