lng prices, page-34

Jake, please don't take this a "shot" at you. It is today's story in Energy News Premium which provides more details on the reasons behind the plummeting price of gas in the U.S. Finding more than they are using and nowhere to store the surplus.
Again, MY OPINION only, is that none of those factors would bother what we find, up to 3.2TCF, as all of that is SOLD. Please, this is not personal, readers can draw whatever conclusion they wish.
I can see the U.S. govt doing what China has done and make it mandatory to substantially increase the use of LNG instead of coal and diesel in power generation.
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On Tuesday, natural gas futures settled at $US2.03 per million British thermal unit, the lowest price since January 2002.
Industry analysts say that underground salt caverns, aquifers that store natural gas and other storage facilities are fast getting filled up as the mild winter depressed demand for home heating.

And even though the surfeit in gas production has helped consumers (heating bills are down by over 35%), the glut is so severe that unless production is cut back drastically, there will be no place left to accommodate the swelling surplus.

North American gas production has boomed in recent years, thanks to increased shale gas production. In 2011, the US produced about 63 billion cubic feet of natural gas per day, which is a 24% increase from 2006, while consumption has grown only half as fast.

While the country’s 400-odd storage facilities are well equipped to handle the excess production, mostly due to winter heating and summer cooling demand, the past winter was the warmest in 117 years, which depressed the usual demand. Industry data shows that while demand was down by 5% between last November and March, production was up 8%.

The traditional US gas storage injection season began on the first of this month but capacity was already 850Bcf higher than last year at 2.46 trillion cubic feet, mostly due to lack of utility demand.

And perhaps more significant was the fact that storage was already 60% full and injections into the storage were recorded in March for the first time since 1977.

The early start to injection into storage is likely to have serious implications for US working capacity, which will be tested in the coming months, analysts say.

In a recent report energy consultants Bentek Energy said that if injections volumes into storage were similar to last years, it would exceed the total US design capacity.

“Assuming natural gas injections mimic last summer, the trajectory would imply inventories of 4.70Tcf by November, which is 220Bcf higher than total US design capacity,” Bentek said.

The company also added that such “high storage levels will intensify downward pressure throughout the US this fall and likely force additional production shut-ins if stronger demand does not materialize this summer.”

The situation is not that much better in Canada, where production was backing up due to slow US demand. Storage inventories there rose to about 544 Bcf, more than 70% higher than a year ago.

Industry analysts say that at some point producers will have to undertake well shut-ins and reserve write-downs are likely.

They point to Canada’s MGM Energy, which recently cited weak energy prices in declaring a $C150-million writedown in the book value of its Arctic gas assets.

With producers having to pay higher fees to store gas in pipelines and write-downs already underway, producers will have to rely on weather for some mercy. The prospects for that don’t look good, if weather forecasts are to be believed.