A marginal increase in natural gas sales by BP plc and significant increases by Tenaska, Chevron and J.Aron & Co. were overshadowed by declines at ConocoPhillips, Shell Energy NA and Macquarie, resulting in a 5% (7.53 Bcf/d) overall decline in gas sales transactions in 1Q2013 compared with 1Q2012, according to NGI's 1Q2013 Top North American Gas Marketers Ranking.
Twenty-six leading gas marketers reported combined sales transactions of 131.66 Bcf for 1Q2013, with five of the survey's top 10 marketers and 17 companies overall reporting lower numbers than in 1Q2012.
The biggest decline came at ConocoPhillips, which reported 12.99 Bcf/d, enough to retain the super independent's No. 2 position in the survey, but down 3.21 Bcf/d (20%) compared with 16.20 Bcf/d in 1Q2012. The marked difference is primarily due to the implementation of business model restructuring in North America following the spin-off of the company's downstream operations last year (see Daily GPI, April 17, 2012) and ConocoPhillips' view of current market conditions, according to Tom Mathiasmeier, president of North America gas and power.
"The new ConocoPhillips is the world's largest independent E&P [exploration and production] company based on production and proved reserves, and has remained one of the largest natural gas producers in North America. As a result of a very thorough review, we re-focused our business around our strong customer relationships and our ability to move physical gas volumes as the foundation of our business model. We strive to be the company of choice for our key customers and counterparts in the industry, and we expect our customer focus and our ability to provide customer services and flow security will only increase in the future."
However, in implementing its plan, ConocoPhillips expects less volume associated with outright trading, and less volume in non-core areas, Mathiasmeier said. ConocoPhillips began 1Q2012 with the sale of its Midwest commercial and industrial (C&I) natural gas portfolio to EDF Trading (see Daily GPI, Jan. 11). The C&I business had sold nearly 50 Bcf per year to 200 customers, including industrial, commercial, healthcare, governmental and educational institutions in Indiana, Michigan, Illinois, Wisconsin, Ohio and Kentucky, EDF said.
Other top 10 companies reporting declines in 1Q2013 compared with 1Q2012 were Shell Energy NA (12.70 Bcf/d, down from 13.80 Bcf/d), Macquarie Energy (9.52 Bcf/d, down from 10.99 Bcf/d), EDF Trading (6.95 Bcf/d, down from 7.07 Bcf/d) and JP Morgan (6.21 Bcf/d, down from 6.70 Bcf/d).
BP reported 24.50 Bcf/d in 1Q2013, a 1% increase compared with 24.30 Bcf/d in 1Q2012. CEO Bob Dudley has lately been expressing optimism for the energy giant, which has faced an onslaught of legal bills and payouts over the past two years from the 2010 Macondo well blowout in the deepwater Gulf of Mexico (GOM). The company entered 2013 "as a more focused oil and gas company with a smaller, but stronger portfolio that provides our platform for growth, a set of distinct and capabilities, a disciplined financial framework and a clear strategic direction," Dudley said in February (see Daily GPI, Feb. 6).
Tenaska (7.40 Bcf/d compared with 6.50 Bcf/d in 1Q2012) Chevron (6.47 Bcf/d, compared with 6.11 Bcf/d ), Sequent (6.30 Bcf/d, compared with 6.00 Bcf/d) and J. Aron & Co. (4.51 Bcf/d, compared with 3.85 Bcf/d) were the other top 10 companies reporting increases in 1Q2013.
A U.S. natural gas storage surplus of 463 Bcf on Feb. 15 had tumbled to a 32 Bcf deficit by May 24, a 495 Bcf decline that "ranks among the strongest we have seen, and oddly, the timing was in the late winter and early spring," said analysts at Stephen Smith Energy Associates (see Daily GPI, June 7). At least 250 Bcf of the decline was due to much-stronger-than-normal gas-fired generation, said the analysts, who expect both natural gas production and prices to remain relatively flat through the end of the year.
Maryland-based energy consultant Ben Schlesinger also has little expectation of large swings in production or prices this year.
"I think that's what most people expect, because we lost the intensiveness of gas drilling a couple of years ago, really, against oil," Schlesinger told NGI. "We're still going to have plenty of drilling activity, plenty of production, but it depends on how markets swing. If markets swing up to $4.50, I think we're really going to get plenty of activity. If it stays the same -- high $3s, touching $4 -- I think we're likely to see production decline...it's a question of how convinced people are."
"I think this kind of volatility and negative space is not conducive to substantial, additional investment, specifically in dry gas. But there's still going to be substantial production of dry gas, just simply by virtue of the search for liquids. But looking at a rig count down a couple of hundred from last year, we're seeing kind of an outward migration away from North America, very slight, but I think there's some interest in seeking gas elsewhere...right now, this is clearly shoulder kind of pricing that we're getting. We're just not getting a lot of demand right now, from either side of the business, power or heating.
"We're still kind of meandering in the dark until we get a substantial increase in gas demand so that we can at least get more sales. Even at the same price, having more sales is going to be a strong signal to drill. Because, in economic terms, we're in such a long, flat portion of the supply curve that I think what people want to see is more sales."
Highlights of NGI's 1Q2013 Top North American Gas Marketers Ranking include a 2% increase for Chesapeake Energy Corp. (3.03 Bcf/d, compared with 2.98 Bcf/d in 1Q2012), an 11% increase for Anadarko. (2.69 Bcf/d, compared with 2.42 Bcf/d in 1Q2012), a 14% increase for Southwestern Energy Co. (1.99 Bcf/d, compared with 1.75 Bcf/d in 1Q2012), a 2% increase for CenterPoint Energy (1.80 Bcf/d, compared with 1.77 Bcf/d in 1Q2012) and an 8% increase for Gavilon (1.59 Bcf/d, compared with 1.47 Bcf/d in 1Q2012).
Castleton Commodities (formerly Louis Dreyfus Highbridge Energy LLC) reported a 30% decrease (4.15 Bcf/d, compared with 5.94 Bcf/d in 1Q2012). Significant declines were also reported by ExxonMobil (3.92 Bcf/d, compared with 4.31 Bcf/d in 1Q2012), Encana (2.88 Bcf/d, compared with 3.27 Bcf/d in 1Q2012) and Citigroup (2.00 Bcf/d, compared with 2.70 Bcf/d in 1Q2012).
Hess, which had reported 2.56 Bcf/d in 1Q2012 and 2.88 Bcf/d in 4Q2012, does not appear in the NGI survey for the first time since 4Q2011. Hess recently said it is becoming a pure-play E&P company, and is "fully exiting" the downstream, selling its retail, energy marketing and energy trading businesses (see Daily GPI, March 5).
It was the second consecutive NGI survey to find a decline in natural gas sales compared to the year-ago period (see Daily GPI, March 21).
The survey ranks marketers on sales transactions only. Total combined natural gas purchase and sales volumes were 123,868 TBtu (Bcf) in 2012, a 0.7% decline compared with 124,752 TBtu in 2011, according to an analysis by Natural Gas Intelligence (NGI) of 2012 Form 552 buyer and seller filings with FERC (see Daily GPI, June 4). Purchase and sales volumes cannot be compared with production because a single package of gas may be sold several times between the wellhead and the market.
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