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Natural Gas Marketers 2% Decline in 4Q2016 Can't Stop 2016's Upward Swing

Sales of natural gas by 23 leading marketers were down 1.93 Bcf/d (2%) in 4Q2016, but upward swings in the two previous quarters were enough to push the year-end total higher compared with 2015, according to NGI's 4Q2016 and Full-Year 2016 Top North American Natural Gas Marketers rankings.

Participating gas marketers reported combined sales transactions of 107.99 Bcf/d in 4Q2016, compared with 109.92 in 4Q2015. Four of the survey's top 10 marketers and eight companies overall reported higher numbers in 4Q2016 than in the year-ago period.

Following a lengthy stretch of overall sales decreases dating back to 1Q2014, NGI's survey of North American marketers reported combined sales transactions of 111.95 Bcf/d in 2Q2016, a 7% increase compared with 2Q2015. That rebound continued in 3Q2016 with gas marketers reporting combined sales transactions of 113.90 Bcf/d, a 7% increase compared with 106.29 Bcf/d in 3Q2015.

That six-month surge helped push the Full-Year 2016 total to 111.19 Bcf/d, up 1% compared with 110.50 Bcf/d in 2015.

Perennial No.1 BP plc kept a firm grip on the top spot, reporting 22.51 Bcf/d in 4Q2016, a slight decline compared with 22.70 Bcf/d in 4Q2015. The supermajor recently said it expects to see its upstream production climb on average by 5% every year to 2021 as seven projects come online this year and nine ramp up between 2018 and 2021.

Securely in the second slot, Shell Energy NA reported 10.70 Bcf/d in 4Q2016, a 5% increase compared with 10.20 Bcf/d in 4Q2015.

At No. 3, ConocoPhillips reported 8.92 Bcf/d, a second consecutive quarter of marginal change after being plagued by significant declines since implementing business model restructuring in North America following the spin-off of downstream operations more than four years ago. ConocoPhillips reported a net loss of $3.6 billion in 2016, but the company continued its shift toward unconventional production by dispatching additional rigs to the Permian Basin, Bakken and Eagle Ford shales.

Macquarie Energy, at No. 4, reported 8.88 Bcf/d sales in 4Q2016, a 7% decline compared with 9.51 Bcf/d in the same period in 2015. At No. 5, Tenaska reported 8.80 Bcf/d in 4Q2016, a 9% increase from 8.10 Bcf/d in 4Q2015.

Other Top 10 companies reporting increases were Direct Energy (5.05 Bcf/d, up 13% from 4.46 Bcf/d) and EDF Trading (4.90 Bcf/d, up 3% from 4.78 Bcf/d). Sequent (6.90 Bcf/d), J. Aron & Co. (5.30 Bcf/d) and ExxonMobil (3.22 Bcf/d) all reported lesser amounts than in 4Q2015.

Other highlights of the 4Q2016 survey include a 9% increase for Castleton Commodities (2.44 Bcf/d, compared with 2.23 Bcf/d in 4Q2015), an 11% increase for Cabot Oil & Gas Corp. (1.72 Bcf/d, compared with 1.55 Bcf/d in 4Q2015), a 4% increase for CenterPoint Energy (1.23 Bcf/d, compared with 1.18 Bcf/d in 4Q2015), and a 15% increase for ARM Energy Management (0.97 Bcf/d, compared with 0.84 Bcf/d in 4Q2015).

CenterPoint's number could move higher in coming surveys, with its acquisition in January of Atmos Energy's nonregulated natural gas marketing business, which had appeared in NGI's rankings since 3Q2008, reporting 0.91 Bcf/d in the most recent survey. Last October, CenterPoint said it would pay $40 million plus working capital for Atmos Energy Marketing LLC.

Outside of the traditional definition of a marketer, but becoming a leading buyer of U.S. natural gas and recently a buyer of gas from Western Canada too, Cheniere Energy Inc. said recently that its business model includes natural gas supply procurement and transportation, as well as liquefaction. During the fourth quarter the company emerged as one of the largest physical buyers of natural gas in the U.S. market, acquiring more than 1.5 Bcf/d.

By the end of 4Q2016, Cheniere's marketing group had sold and delivered 28 cargoes from its Sabine Pass liquefied natural gas (LNG) terminal in Louisiana. The group also manages an LNG shipping portfolio needed to handle the volume coming from Sabine Pass and has chartered more than 20 tankers. Cheniere is one of the top five holders of LNG shipping capacity.

"Cheniere noted that it holds more than 5 Bcf/d of natural gas pipeline capacity on eight pipeline systems to feed both Sabine Pass and its emerging Corpus Christi liquefaction facilities. To put that potential into perspective, consider that ExxonMobil, the leading natural gas producer in the United States, produces roughly 3.1 Bcf/d, net of royalties," said NGI's Pat Rau, director of strategy and research.

"If the other LNG liquefaction facilities also end up purchasing gas on behalf of their customers, then that group as a whole could wield quite a bit of purchasing power on the open market."

In NGI's Full-Year 2016 Top North American Gas Marketers Ranking, BP reported a marginal increase compared with 2014 (22.81 Bcf/d, compared with 22.73), and nine other marketers reported increases compared with 2014. Shell reported 10.38 Bcf/d, up 1% compared with the previous year; Macquarie 9.48 Bcf/d, up 1%, Tenaska 9.01 Bcf/d, up 14%; Sequent 7.40 Bcf/d, up 9%; EDF Trading 5.11 Bcf/d, up 4%; and Direct Energy 4.72 Bcf/d, up 6%.

Highlights of the full-year survey include a 2% increase for Castleton Commodities (2.43 Bcf/d, compared with 2.38 Bcf/d in 2015), an 11% increase for Cabot (1.72 Bcf/d, compared with 1.55 Bcf/d in 2015), and a 60% increase for ARM Energy Management (1.09 Bcf/d, compared with 0.68 Bcf/d in 2015).

The NGI survey ranks marketers on sales transactions only. FERC in its Form 552 tallies both purchases and sales. Natural gas trading volumes soared 9.4% in 2015 compared with 2014, likely because of continued increased production, the retirement of coal-fired electricity generators, and a probable increase in consumption because of lower prices, according to an analysis by Natural Gas Intelligence (NGI) of 2015 Form 552 filings with the Federal Energy Regulatory Commission.

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