US Natural Gas Market Research Articles

FERC Winter Outlook Shows Increased Pipeline Build‐Out, Is Weather‐Related

Conditions going into the winter are mixed for natural gas and electricity markets. The US natural gas market is amply supplied, with production continuing to break records. Following last winter's polar vortex, natural gas pipelines, electric utilities, regional transmission organizations (RTOs), and independent system operators (ISOs), as well as the Federal Energy Regulatory Commission (FERC), have taken a number of measures to improve system reliability.

Elasticities of Supply for the US Natural Gas Market

In this paper we investigate natural gas producer's reactions to changes in market prices. We estimate price elasticities of aggregated supply in the most competitive market for natural gas: the United States. Using monthly time series data form 1987 to 2012 our analysis is based on an Autoregressive Distributed Lag (ARDL) Bound Cointegration approach to obtain short and long-run elasticities of natural gas supply. Results suggest that natural gas producers in a competitive market are not able to react to prices in the very short-run but respond inelastic in the long-run. These findings are not only of great value for policy makers but also for gas market modelers.

US Natural Gas Market Classification Using Pooled Regression

Natural gas marketing has considerably evolved since the early 1990s, when a set of liberalizing rules were passed in both the United States and the European Union that eliminated state-driven regulations in favor of open energy markets. These new rules changed many things in the business of energetics, and therefore new research opportunities arose. Econometric studies about natural gas emerged as an important area of study since natural gas may now be sold and traded in a number of stock markets, each one responding to potentially different behavioral drives. In this work, we present a method to differentiate sets of time series based on a regression model relating price, consumption, supply, and other factors. Our objective is to develop a method to classify different areas, regions, or states into groups or classes that share similar regression parameters. Once obtained, these groups may be used to make assumptions about corresponding natural gas prices in further studies.

Testing for unit roots, causality, cointegration, and efficiency: The case of the northwest US natural gas market

The present study examined unit roots, causality, cointegration, and efficiency of the natural gas market using the Northwest US natural gas markets as a case study. The results indicate that the natural gas market prices are stationary after the first differencing, and that spot and futures natural gas prices move in a similar direction. Spot prices tend to exert significant influence on future prices for contracts with less than one year to maturity, but futures prices influence spot prices for contracts greater than one year to maturity. There are no arbitrages opportunities for daily market prices compared with weekly and monthly market price. Differences in regional market price are integrated of order one and characterized by long-run occurrence of the law of one price. Market prices in all market hubs move in similar direction with variance between spot and futures prices declining over time. Markets exhibit high risk premium for contracts with less than one year to maturity. The efficient market hypothesis holds true only for contracts with only about a month to maturity.

Value chain analysis of the natural gas industry: Lessons from the US regulatory success and opportunities for Europe

The aim of any value chain & network analysis is to understand the systemic factors and conditions through which a value framework and its firms can achieve higher levels of performance. The upstream oil & gas business is increasingly stimulated for growth by federal legislation (e.g. tax credits unconventional gas plays), while the corporate earnings in the US midstream and downstream energy segments remain strictly regulated and constrained by FERC and state regulators. This study concisely describes the physical and the financial value chains of the US natural gas business in a systemic fashion. The value chains of the natural gas industry are governed and interconnected by a regulatory decision-making framework. Legislation and regulation by the US Congress for the upstream energy value chain traditionally aim to facilitate the development of domestic natural gas fields. Likewise, FERC regulation maximizes access to the midstream gas transmission segment and provisions for fair tariffs for all shippers. State regulators protect the end-consumers in the downstream value chain by providing guidelines and rulings in rate cases. Corporate energy development decisions are critically impacted by such energy policies and regulations. Long-term, mid-term and short-term measures are distinguished based upon the duration of their impact on the performance of the US natural gas market. The present analysis of the physical and financial value chains and the regulatory framework that governs the US natural gas market provides new insights on appropriate policies and regulatory strategies that could improve both the liquidity and security of supply in the European gas market. Strategic and tactical instruments for maximizing returns on investment for regulated energy utilities are also formulated.

Ethanol Policy Effects on US Natural Gas Prices and Quantities

Debate has raged about the consequences of US corn-based ethanol. Studies sought to identify how much it affected world commodity markets (Josef Schmidhuber 2006; Dileep Birur, Thomas Hertel, and Wallace Tyner 2008; Seth D. Meyer, Pat Westhoff, and Wyatt W. Thompson 2009). The popular press speculated on the potential for growing US ethanol production to drive up world prices, with unintended consequences for world food supplies and changes in land use outside the United States, possibly leading to increased greenhouse gas emissions (Angelo Gurgel, John M. Reilly, and Sergey Paltsev 2007; Martin Banse, Hans van Meijl, and Geert Woltjer 2008). But these discussions focus narrowly on one set of related markets, namely those for agricultural commodities. Other studies have estimated that greater ethanol availability reduces gasoline prices to the benefit of US motor fuel consumers (Xiaoyang Wang 2008; Xiaodong Du and Dermot J. Hayes 2009). We focus on the direct effects on the US natural gas market of US biofuel policies, specifically tax credits, ethanol tariff, and mandates. Increased ethanol production based on current technologies and policies is likely to lead to greater corn demand and indirectly to more land allocated to growing corn. Both these activities use natural gas either directly for firing an ethanol plant or indirectly through the fertilizers and other chemical inputs used to grow corn. Ethanol Policy Effects on US Natural Gas Prices and Quantities

Guidelines for clockspeed acceleration in the US natural gas transmission industry

This study presents the clockspeed analysis of a peer group comprising six major integrated US energy companies with substantial US interstate natural gas pipeline business activities: El Paso, Williams, NiSource, Kinder Morgan, MidAmerican and CMS Energy. For this peer group, the three clockspeed accelerators have been benchmarked at both corporate level and gas transmission business level, using time-series analysis and cross-sectional analysis over a 6-year period (2002–2007). The results are visualized in so-called clockspeed radargraphs. Overall corporate clockspeed winners – over the performance period studied – are: Williams, El Paso and Kinder Morgan; MidAmerican is a close follower. Corporate clockspeed laggards are: CMS Energy and NiSource. The peer group ranking for the natural gas transmission business segment shows similar clockspeed winners, but with different ranking in the following order: Kinder Morgan, MidAmerican and El Paso; Williams is a close follower. Clockspeed laggards for the natural gas transmission segments coincide with the corporate clockspeed laggards of the peer group: CMS Energy and NiSource (over the performance period studied); laggards of the past may become clockspeed leaders of the future if adjustments are made. Practical recommendations are formulated for achieving competitive clockspeed optimization in the US gas transmission industry as a whole. Recommendations for clockspeed acceleration at individual companies are also given. Although the US natural gas market is subject to specific regulations and its own geographical dynamics, this study also provides hints for improving the competitive clockspeed performance of gas transmission companies elsewhere, in other world regions.

Infrastructure, regulation, investment and security of supply: A case study of the restructured US natural gas market

In this paper, we discuss the relationship between infrastructure regulation and investment in light of the emerging “security of supply” debate. We approach the subject by surveying the literature of the past two decades, especially examining the interactions among restructuring, regulation, and investment. The empirical section of this paper relies on case studies of the relationship between the regulatory framework for the US natural gas sector and the development of investment in LNG terminals, interstate pipelines, and storage facilities in the US. I find that there is little reason for concern about infrastructure investments, resource adequacy, and supply security.

Price interactions and discovery among natural gas spot markets in North America

Recent advances in modeling causal flows with time series analysis are used to study relationships among eight North American natural gas spot market prices. Results indicate that the Canadian and US natural gas market is a single highly integrated market. Further results indicate that price discovery tends to reflect both regions of excess demand and supply. Across North America, Malin Hub in Oregon, Chicago Hub, Illinois, Waha, Texas, and Henry Hub, Louisiana region, are the most important markets for price discovery. Opal Hub in Wyoming is an information sink in contemporaneous time, receiving price information but passing on no price information. AECO Hub in Alberta, Canada, receives price signals from several markets and passes on information to Opal and the Oklahoma region.

The condition of market formation on Alaska's natural gas frontier

This article examines the practices through which Cambridge Energy Research Associates disseminates natural gas market analysis among senior-level decision makers in the Alaska state government. Cambridge Energy is a global consulting firm that provides knowledge on the future of energy markets. The US natural gas market has recently undergone a revolutionary transformation as a consequence of changing regulation. This has led to expansion in the services of consulting firms such as Cambridge Energy, who produce analysis on the uncertainties affecting the future. In fall 2000, with a rise in energy prices and renewed interest in commercializing Arctic natural gas, Alaska Governor Tony Knowles awarded a contract to Cambridge Energy to assist with market analysis slated to lead to construction of Alaska's natural gas pipeline. Drawing on ethnographic research at key sites of decision making, I show how domestication of analyses in state and news media discourses serves to govern Arctic gas development.

Qatar LNG plant to serve US market

Qatar Petroleum and ConocoPhillips are to develop Qatargas 3, a large-scale liquefied natural gas (LNG) project in Qatar servicing the US natural gas market. This is a short news story only. Visit www.filtsep.com for the latest filtration industry news

Qatar LNG plant to serve US market

Qatar Petroleum and ConocoPhillips are to develop Qatargas 3, a large-scale liquefied natural gas (LNG) project in Qatar servicing the US natural gas market. This is a short news story only. Visit www.worldpumps.com for the latest pump industry news

Inter-Energy Competition and Natural Gas Prices in the United States

This paper provides an analysis of the process within which spot prices in the US natural gas market are determined. While some have argued that the gas "bubble" is the primary explanation of recent movements in gas prices, it is argued here that inter-energy competition is still the driving force behind the formation of us gas prices. In order to see that, it is necessary to ,calculate prices for each fuel that are comparable in relation to their final uses and to take account carefully of seasonal variation in demand and the relation between regional gas markets. The analysis has implications for, among other matters, the likely effects of growing gas demand in the northeastern US. It is also relevant for the European gas industry in relation to the current debate over the introduction of more competition into a largely monopolistic market.