Wednesday, August 1, 2018

New Cornerstone Research Report: 2017 U.S. Natural Gas Trading Volume Increases for Third Consecutive Year

The amount of U.S. natural gas traded in 2017 increased for the third year in a row to a level not seen since 2011, according to a new report from Cornerstone Research, Characteristics of U.S. Natural Gas Transactions: Insights from FERC Form 552 Submissions.

The report also shows that, for the seventh consecutive year, the ratio between index-priced transactions and reporting-eligible, fixed-price transactions widened. The growth in this ratio was the result of a 2 percent rise in index-priced transactions and a 13 percent decline in fixed-price transactions potentially reportable to the indices.

"We have been seeing a shift from fixed-price natural gas to index-priced natural gas at reporting companies for a while," said Greg Leonard, a Cornerstone Research senior advisor and co-author of the report. "In 2017, however, we had the largest volume of index-priced transactions and the lowest volume potentially reported to indices since the inception of Form 552 reporting."

Total reported trading volume on Form 552 submissions rose slightly to 131,296 tBtu, transacted by 678 respondents, 33 fewer than in 2016. The 20 companies with the largest transaction volumes (purchases and sales) accounted for 44 percent of total reported volume.

"As a percentage of Form 552 volume, next-day transactions have been steadily replacing next-month transactions," noted co-author Nicole Moran, a senior manager at Cornerstone Research. "The growing popularity of next-day transactions seems to reflect a change in industry contracting and risk management practices." Read related news here.

The United States became a net exporter of natural gas for the first time in nearly 60 years as liquefied natural gas (LNG) exports jumped from 8 percent to 22 percent of total U.S. natural gas exports in 2017. Also, while only increasing by about 1 percent, natural gas marketed production set a record high.

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Key Findings

About FERC Form 552 Submissions

The Federal Energy Regulatory Commission (FERC) receives and compiles the most comprehensive information on trading activity and pricing methods in the U.S. natural gas trading markets. By supplementing the data from FERC's Form 552 with proprietary classifications of market participants, Cornerstone Research adds deeper insight into the market activities and characteristics across the various types of participants.

About Cornerstone Research

Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex litigation and regulatory proceedings. The firm works with an extensive network of prominent faculty and industry practitioners to identify the best-qualified expert for each assignment. Cornerstone Research has earned a reputation for consistent high quality and effectiveness by delivering rigorous, state-of-the-art analysis for over twenty-five years. Named one of the Best Workplaces by Inc. Magazine, the firm has 700 staff and offices in Boston, Chicago, London, Los Angeles, New York, San Francisco, Silicon Valley, and Washington.

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Please visit Cornerstone Research's website for more information about the firm's capabilities in economic and financial consulting and expert testimony.

http://www.cornerstone.com
Twitter: @Cornerstone_Res

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