Anemic Prices Flatten Natural Gas Marketers' 2011 Sales Volumes, NGI Reports

DULLES, VA  (PRBuzz.com) March 22, 2012 -- Despite an overall production gain for natural gas, companies participating in the Natural Gas Intelligence (NGI) North American natural gas marketer survey reported a 2 Bcf/d decline in sales volumes in 2011, compared with 2010, according to NGI's 2011 Top North American Gas Marketers Ranking.

The die was set earlier in the year and the fourth quarter had almost no impact, with 4Q2011 just a fraction off results in 4Q2010, as reported in NGI's 4Q2011 Top North American Gas Marketers Ranking. Market analysts blamed warm winter weather and low prices, which left little room for arbitrage through multiple trades.

Twenty-six of the leading companies participating in NGI's survey had total sales transactions of 135.29 Bcf/d in 4Q2011, compared with 135.86 Bcf/d that they transacted in 4Q2010. But there was a 1% or 2 Bcf/d decline in the total sales transactions for the 12-month period, according to the survey. Three of the top five marketers for both the quarter and the year posted a decline in sales.

The lower trading numbers came even as 2011 saw an increase in domestic gas production of 4.3 Bcf/d, or 7.5%, over 2010, marking the largest year-over-year production jump in the last 25 years, according to Bentek Energy LLC. Production growth has stalled or declined in the last six months everywhere except in the Marcellus Shale as producers scale back dry gas activity due to low prices.

Surveyed sales volumes are always higher than production since the same package of gas may be bought and sold several times over on the way from the wellhead to the burnertip. The fact that sales volumes declined while production increased could be ascribed to lower prices dampening trading and spawning fewer multiple trades. It also could be that more production went into storage to be sold later.

BP plc continued to hold the top spot in the survey, despite reporting decreases in both quarterly and annual physical sales of natural gas. The energy giant reported physical sales of 23.90 Bcf/d in 4Q2011, a 5% decline from 25.10 Bcf/d in 4Q2010, and it reported average sales of 23.00 Bcf/d for 2011, a 12% decline from 26.10 Bcf/d in 2010.

Second-ranked ConocoPhillips reported a 10% increase in sales to 16.10 Bcf/d in 4Q2011, up from 14.70 Bcf/d in 4Q2010, and a 5% increase in NGI's Full-Year 2011 survey, reporting an average 15.45 Bcf/d, up from 14.65 Bcf/d in 2010.

No. 3, Shell Energy, didn't fare as well, reporting 13.80 Bcf/d in 4Q2011, a 9% decline from 15.10 Bcf/d in 4Q2010, and 13.20 Bcf/d for 2011, a 15% decline from 15.60 Bcf/d in 2010.

The biggest percentage gainers were CitiGroup (No. 12) which had sales up 68% to 3.57 Bcf/d in 2011 over 2010, and JP Morgan (No. 6) with sales at 6.68 Bcf/d and ExxonMobil (No. 11) with sales at 4.33Bcf/d, both of which marked 37% gains.

Stubbornly low prices are behind a growing number of decisions in the industry and, according to Houston Energy Partners co-manager John Olson and other analysts, there is no quick fix in sight.

"The industry seems to be stuck in a 'value trap,' to use a Wall Street phrase, where a lot of producers have to sell their gas for whatever reason -- maybe just to pay their note at the bank -- while some others are selling their gas because they're hedged at $4 or $5 or $6, and the misery index is accordingly high," Olson told NGI.

The survey ranks marketers on sales transactions only. In a separate analysis of federal filings of gas sales, purchases and production last year, NGI found that BP was the only one of the top five U.S. producers of natural gas that also showed up among the top five gas marketers in 2010. BP led the marketers in combined sales and purchase volumes, followed by Shell, ConocoPhillips, Macquarie and JP Morgan, according to the in-depth NGI report, based on 2010 Form 552 filings with the Federal Energy Regulatory Commission.

On the natural gas production side ExxonMobil led the top five, followed by Chesapeake Energy, BP, Anadarko Petroleum and Devon Energy, based on data from producer filings with the Securities and Exchange Commission.

To read a more in-depth analysis of fourth quarter and full year 2011 marketer performance and to see the full rankings, visit http://intelligencepress.com  and sign up for a free trial.

About Intelligence Press

Intelligence Press Inc., is an independent publishing company serving the energy industry since 1981 with real-time news and prices for the natural gas market in its publications: Natural Gas Intelligence, NGI's Daily Gas Price Index, and NGI's Weekly Gas Price Index. NGI natural gas price indices have been utilized for price discovery by energy producers, marketer, traders, utilities and end-users for more than 20 years. Also, NGI's new publication, NGI's Shale Daily -- http://shaledaily.com/ -- is the first daily publication devoted exclusively to the unfolding shale revolution that is rewriting the energy outlook in North America.

The publisher offers real-time news on natural gas and power market developments at http://intelligencepress.com. Additionally, Intelligence Press provides historical price data, publishes natural gas infrastructure, storage maps and glossaries.

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