February 2022 —
As we approach the one-year anniversary of one of the most volatile events in energy history, Winter Storm Uri, we wanted to inform you of the continued changes that we’re seeing in the natural gas market and how global issues are going to bring new challenges ahead
RECAP OF WINTER STORM URI
Nearly 800 record low temperatures were set across the nation on President’s Day weekend 2021. This drove up demand, choked production, and sent the natural gas market to unprecedented levels, from an average of $2 per MMBtu to as high as $600 per MMBtu in some areas.
We continue to take the position that the volatility that we experienced last year was not an isolated event. In fact, last month we saw a dramatic increase on January 27th where the February NYMEX contract shot up 50 percent in the last 30 minutes of trading. That’s why over the last few years, we’ve worked with our customers to move 95 percent of them to natural gas programs that protect them from this kind of volatility.
GLOBAL TENSIONS BRING FOCUS ON U.S. LNG EXPORTS
With Europe heavily dependent on Russia for natural gas, the growing tensions between Russia and the West have brought focus to U.S. LNG exports to provide energy security to the area. In fact, last month, the U.S. provided Europe more natural gas than Russia’s pipeline deliveries for the first time in history.
The growing LNG exports combined with an ever-improving domestic economy are pushing U.S. producers to increase production to meet demand. According to the U.S. Energy Information Administration, natural gas rigs were up 26 percent compared to last year at this time.
As always, if you have any questions regarding this information, please reach out to your local WoodRiver Energy consultant.