THE SOURCE - Winter 2015 - (Page 16)

feature Natural Gas Outlook for Winter 2015-2016 By Daphne Magnuson, Natural Gas Supply Association N atural gas follows the same basic principles of supply and demand as any other wholesale market. If demand is greater than supply, pressure on prices increases until more supply enters the market. Conversely, if supply is greater than demand, pressure on prices decreases. The use of horizontal drilling and the ability to drill multiple wells from a single site have resulted in declining rig counts even as production has climbed. The shale revolution has ushered in a remarkable era, as evidenced by dramatic growth in production over the last six years. Consumers have benefited from the growth in production and, for four of the last five winters, factors have combined to place flat or downward pressure on natural gas wholesale prices compared to the previous winter. The one winter of slight upward pressure occurred in 2013-2014, which was one of the two coldest winters in recent recorded history according to the National Climatic Data Center. Even during that winter's record cold, natural gas price increases were short-lived. Setting aside the positive impacts of the shale revolution, several key influences on supply and demand are shaping up for the winter of 2015-2016. 16 THE SOURCE | THE vOiCE and CHOiCE Of pUbliC gaS Supply: Production, Storage and Infrastructure The major components of U.S. natural gas supply are domestic gas production and storage inventories. Imports from Canada and liquefied natural gas (LNG) also play a role in winter supply, however we will focus now on the most significant components of supply, and evaluate winter production and storage based on the Energy Information Administration's (EIA) most recent data. EIA data shows domestic production exceeding last year's production at this time, but it also shows that the rate at which production has been increasing is slowing after several consecutive years of tremendous growth. It is notable that, prior to the shale revolution, one of the

Table of Contents for the Digital Edition of THE SOURCE - Winter 2015

UP-TO-DATE: APGA helps readers keep current on public natural gas industry issues
APGA Events
First Person
Where Do APGA’s Furnace Rule Comments Stand Today?
Natural Gas Heat Pumps: Is the Timing Right?
Natural Gas Outlook for Winter 2015-2016
Pipeline to New Markets
Remember to Move Over
Legislative Outlook
The Launch of the APGA Community
The Pipeline
Marketing Matters
Advertisers’ Index/ Advertiser.com
At Last

THE SOURCE - Winter 2015

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