Washington Gas Energy Services: A Washington Gas Affiliate Complany
Volume 11, Issue 8
We Know Energy
February 22, 2013 Energy Update
In this Issue
Editor's Note
Natural Gas Production is High, Even as the Vertical Rig Count Declines
News From WGES
WGES and Shell Energy Enter Into Strategic Supply Arrangement
Natural Gas Fundamentals
Natural Gas Storage: Inventories 17.7% above the Five-Year Average. Data Released February 21, 2013
Rig Count For Natural Gas
NYMEX Natural Gas Monthly Settlements For the Past 12 Months
NYMEX Values Per Month For the Forward 12 Months
NYMEX Graph For Natural Gas - 12 Month Average Price Per Therm at the Louisiana Well-Head
PJM Electricity
PJM Graph for Electricity - 12 Month Average Peak Power Price
Weather
Local Heating Degree Days*
Recent Features
Washington Gas Energy Services Receives Green-e Energy Certification of New WGES PA WindPower Renewable Energy Product (Feb. 8, 2013)


 



Ridgewells, the D.C. Area's Largest Catering Company, Purchases WGES Green Products (Feb. 1, 2013)


 


WGES Announces Pennsylvania Wind Power Product, Offers Southeastern Pa. Communities Incentives for Purchases (Nov. 30, 2012)


 
 

Our New Wind Power Partners
Green Power Leadership Award Winner - U.S. Department of Energy

Panera Bread of Maryland (Lemek LLC)
Calvary Baptist Church
Mountain View Community Church
Caser Chavez Public School
PB Dye Golf Club
Behnke Nurseries
Townes of North Creek
Victory Racing Plate Company
Village Management, Inc.
Mt. Airy Bicycles
College Park Bicycles
Donatelli Development
Blue Ocean Realty
Mandarin Oriental
Bank of Georgetown
Embassy of Bosnia Herzogovina
Baltimore International College Foundation
The Shakespeare Theatre Co.
Kaiser Foundation Health Plans of Mid-Atlantic States
Carbon

Visit wges.com/partners for full list of WGES Wind Power Partners.

 
To find out more about a green power purchase for your organization, call 703-793-7578, or visit wges.com/commercialwind.

For more information, contact your WGES Account Manager or wges_lgc@wges.com.
Editor's Note
Natural Gas Production is High, Even as the Vertical Rig Count Declines
Week in review for February 15-21, 2013

During the three-week period of January 18 to February 7, 2013, natural gas and electricity prices were trading in a tight range. Last week, prices made a small downward move but were unable move downward for a second week in a row. For this seven-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 1% and the 12-month average price for peak power on the PJM rose by 1%.

If you view the graphs elsewhere in this issue, you will notice that both natural gas and electricity prices have traded in a relatively tight range since October 1, 2012. However, at the end of this period, the Bears won as natural gas prices decreased by 6% and electricity prices dropped by 4.6%. Energy prices are trading near their second lowest level in ten years.

Natural gas and electricity prices continue to trade at these very attractive levels because natural gas production is surprisingly high. Since January 2010, the total U.S. average daily marketed natural gas production rose from 60 Bcf/day to 70 Bcf/day according to the U.S. Energy Information Administration (EIA).

We are surprised that production has increased because the vertical rig count for oil and natural gas has actually decreased in the lower 48 states. The vertical rig count for oil and natural gas dropped from 617 rigs at this time last year to 429 rigs today. How can natural gas production go up if the vertical rig count goes down? The answer to this question can be found by comparing the vertical rig count to the horizontal rig count. Although the vertical rig count for gas and oil is down 30%, the horizontal rig count remains steady at 1,139 rigs. The horizontal rigs which are used to pump natural gas and oil out of the shale formations, are much more productive than vertical wells because fewer wells are needed to contact the formations. These horizontal rig counts have not dropped like the vertical rig counts and are keeping natural supplies at robust levels.

For now, natural gas and electricity prices are trading at these low, attractive levels because supplies are high thanks to shale gas. As power plants and industrial users start switching over to low-priced natural gas, we may experience some upward pressure on pricing.

As we note every week, the weather is always a factor that can impact energy prices. The 14-day extended forecast from AccuWeather for the Washington, D.C. region is available here.

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