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Natural Gas Market Update, June 2018

Natural gas prices remain low and below their declining 21-year trend.  See graph below.

The prices presented here are for delivery at the Henry Hub in Southern Louisiana.  Natural gas prices in other producing areas of the US, such as Northeastern Pennsylvania, the Permian Basin, and the Williston Basin, are significantly lower.  The prices here are also in nominal dollars.  If plotted in real dollars, the downward trend would be even more pronounced (see These are Days to Remember).

Despite the current low price environment, there are a number of factors putting upward pressure on natural gas prices, including:

  • Increasing liquified natural gas (LNG) exports
    • Cheniere Sabine Pass trains 1-4 online
    • Cove Point terminal on the Chesapeake Bay ramping up
    • 11 additional liquification trains along the Gulf Coast in the works to come online in the next five years
  • Increasing pipeline exports to Mexico
    • Up more than 300% since the Great Recession
  • Increased industrial demand
    • Particularly in the petrochemical industry
  • Increased demand for natural gas-fired electricity generation
    • As coal plants retire
  • Natural gas storage levels down
    • Currently 25% below five-year average at this time of year

Given these influences, how do natural gas prices look in the futures market?  Low and continuing their decline.  See the graph below.

After peaking at $3.16/mmBtu during the winter of 2018/2019, natural gas prices remain below $3/mmBtu for the remainder of the 60-month forward period.

What is driving this?

Supply.  More specifically, dramatically increasing supply.

Natural gas production is up 7 Bcf/day from this time last year to 79 Bcf/day.  The US Energy Information Administration (EIA) projects US natural gas production will reach 83 Bcf/day by December 2018.

To see how much things have changed, read these older natural gas market updates:

Natural Gas Market Update October 2014

Natural Gas Market Update November 2013

Natural Gas Prices – Time to Hit the Panic Button?

Natural Gas Price – Looking Ahead January 2012

Natural Gas Price Drivers (January 2012)

As a result, natural gas (and electricity prices) are currently attractive—making this a good time to consider locking in your supply needs.

Note:  Evelyn Teel contributed to this article.

The Avalon Advantage – Visit our website at www.avalonenergy.us, call us at 888-484-8096, or email us at info@avalonenergy.us.

Please feel free to share this article.  If you do, please email or post the web link.  Unauthorized copying, retransmission, or republication is prohibited.

Copyright 2018 by Avalon Energy® Services LLC

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In The News – Avalon Energy Services

Avalon Energy Services recently completed an electricity procurement project for KBS Capital Advisors’ One Washingtonian Center property in Gaithersburg, MD.  Marc Deluca, Regional President of KBS, noted that “Electricity markets have exhibited extreme volatility.  The folks at Avalon Energy Services have deep expertise and an unsurpassed understanding of the energy markets and how they work.  With their advice and counsel, we were able to successfully navigate our way to a very positive outcome. “

Click here for the full story.

Avalon Energy Services also recently became licensed by the Pennsylvania Public Utility Commission to assist commercial, industrial and governmental natural gas customers in all of the natural gas distribution company service territories in the Commonwealth of Pennsylvania.  These are:

  • Columbia Gas of Pennsylvania
  • National Fuel Gas Distribution Corporation
  • PECO Energy Company
  • Peoples TWP LLC
  • Peoples Natural Gas Company, LLC
  • Peoples Natural Gas, LLC – Equitable Division
  • Philadelphia Gas Works
  • UGI Utilities, Inc.
  • UGI-Central Penn Gas
  • UGI-Penn Natural Gas
  • Valley Energy, Inc.

Avalon Energy Services is now licensed for electricity and natural gas in Maryland, Pennsylvania, New Jersey and the District of Columbia.

Copyright 2014 by Avalon Energy® Services LLC

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Avalon Energy Services Completes New Energy Supply Contracts on behalf of Donohoe Real Estate Services

BETHESDA, Md., May 14, 2013 – Avalon Energy Services, the Mid-Atlantic’s leading energy consulting firm, announced today that they successfully completed an electricity procurement for 19 commercial real estate properties managed by Donohoe Real Estate Services. The properties are located in Maryland and the District of Columbia.  Under the new contracts, the properties will save more than $1.5 million per year on electricity supply costs.

“We are pleased to assist the premier firm of Donohoe Real Estate Services in obtaining such great savings,” said Jim McDonnell, Chief Operating Officer of Avalon Energy.

Tim Gallagher, President of Donohoe Real Estate Services, noted “At Donohoe, we have a more than century long tradition of creating value for our tenants and our property owners.  Working with Avalon Energy has allowed us to further build upon this tradition.”

Avalon Energy Services, LLC (Avalon Energy) provides a range of energy consulting services to commercial, industrial, institutional, and government customers.  Services include consulting related to energy procurement, energy audits, demand side management, and the implementation of distributed generation and combined heat and power (CHP) applications.  Avalon Energy’s website is www.avalonenergy.us.

Founded in 1884, The Donohoe Companies is the oldest full-service real estate organization in the Washington, DC region and also one of the largest — ranked in the top 50 private companies in the metropolitan area.

Donohoe has invested billions of dollars in Washington’s premier office, hotel, retail, industrial, and residential projects.  In addition, Donohoe provides a full range of building management, brokerage, and maintenance services to major institutions, corporations, and associations.

Today, guided by a fourth generation of the founding family, Donohoe remains committed to the basic values of excellence, integrity, and customer satisfaction. The philosophy and tradition that has brought Donohoe over a century of success continues to be the foundation of their business approach — hard work, fair play, and the willingness to take reasonable risks with prudent provision for the future.   For more information, please visit Donohoe’s website at www.donohoe.com.

Contact:

Jim McDonnell                                                Kevin Furnary

Chief Operating Officer                                 Senior Consultant

Avalon Energy Services, LLC                    Avalon Energy Services, LLC

888-484-8096, ext 202                               703-868-5677

jmcdonnell@avalonenergy.us                   kfurnary@avalonenergy.us

The Avalon Advantage – Visit our website at www.avalonenergy.us

Copyright 2012 by Avalon Energy® Services LLC