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FERC Form 552 and EIA NatGas Data Move in Opposite Directions

Natural gas production is increasing while natural gas trading activity is declining, according to recent reports from the Energy Information Administration (EIA) and the Federal Energy Regulatory Commission, respectively.

Natural gas production reached a record 30.17 Tcf in 2013, EIA said, topping a steady climb from 25.64 Tcf in 2008 (see Daily GPI, May 28).

However, according to NGI's analysis of recent company submissions of FERC 552 Annual Report of Natural Gas Transactions data, total transacted natural gas volumes in the U.S came in at 118,099 TBtu in 2013, down 4.7% from the prior year. That comes on the heels of a 0.7% year-over-year decline in those data in 2012 (see Daily GPIJune 4, 2013).

BP plc remained the most active company in 2013, even though its volumes declined 3.3% year-over-year to 7,772 TBtu. In fact, eight of the top 10 companies experienced volume declines last year according to FERC data. Only EDF Trading (up 0.5%) and Tenaska (up 6.1%) saw increased volumes among the top 10 companies.

Shell swapped places with ConocoPhillips to take over the No. 2 position on the chart. No company fell out of the top 10 in 2013.

Texla Energy Management (up 24 spots to No. 28), South Jersey Industries (up 15 to No. 34), and Hess (up 11 to No. 31) were the biggest risers among the Top 50 companies, while Enbridge (down 20 to No. 45), WPX Energy (down 16 to No. 42), and Dominion (down 14 to No. 35) were the largest decliners.

Texla Energy Management (28), Citigroup (38), DTE Energy (44), Marubeni (46), and QEP Resources (50) were all newcomers to the Top 50 in 2013. Dropping out were Deutsche Bank, Cargill, EOG Resources, Bank of America/Merrill Lynch, and Southern Company.

“The fall-off in trading is not surprising,” said Pat Rau, NGI director of strategy and research. “Both a decrease in volatility which translates to a decrease in trading profitability and the number of marketers and banks getting out of the commodity trading business have contributed to the lower trading volumes.”

Barclays was the most recent bank to drop out of physical commodities trading (see Daily GPI, April 23).

Boardwalk Pipeline Partners LP cited the negative impacts that the lack of price volatility has had on its business as a major culprit behind its decision to slash its distribution (dividend) by 81% earlier this year (see Daily GPIFeb. 10).

The FERC 552 survey is not an attempt to measure production since a single parcel of gas may go through multiple transactions from wellhead to burner tip. Nor does FERC attempt to capture 100% of all market deals. Buyers and sellers are only asked to report spot price transactions that either use an index or are qualified to contribute to an index.

On fixed-price trades participants only are to report their fixed-price spot market transactions for physical gas that meet the restrictive criteria set out by index publishers in their day-ahead and monthly price surveys.

Separately, almost all indexed transactions are to be reported with the exception of affiliate or futures-based transactions or sales to retail consumers under a state-approved bundled tariff. In Order 704B, FERC clarified that cash-out, balancing and in-kind transactions are reportable on Form No. 552 if they rely on, contribute to or could contribute to a price index.

FERC documents reveal that only 1,219 companies submitted page 3 of the form, which is the Schedule of Reporting Companies and Price Index Reporting section of the form. That is far fewer than the number of U.S. companies that either buy or sell natural gas. According to U.S. Census data, there are currently nearly 7,000 oil and gas producers in the United States alone.

Companies did not have to fill out Form 552 volume information if their 2013 reportable natural gas purchases and sales added up to less than 2.2 million MMBtu, or 2 TBtu. However, they would have to file the Form 552 if their sales or purchase came under a blanket certificate, but they could leave out volume information if they were under the de minimis limit.

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