December Natural Gas Futures Stumble Amid Higher Temperatures

Reporting on the Natural Gas marketplace since 1981 WEDNESDAY, NOVEMBER 4, 2020 - VOL. 28, NO. 84

MARKETS REPORT LIQUEFIED NATURAL GAS December Natural Gas Futures Berkshire Hathaway Taking Over Stumble Amid Higher Temperatures, Cove Point LNG from Dominion Election Uncertainty An affiliate of Warren Buffett’s Berkshire Hathaway Inc. on Natural gas futures tumbled a second consecutive day as weather Monday became the operator of the Cove Point liquefied natural models leaned increasingly bearish for much of November, offsetting gas (LNG) export terminal in Lusby, MD, as part of a $9.7 billion continued liquefied natural gas (LNG) strength and anticipation for acquisition from Dominion Energy Inc. the first withdrawal from storage of the The sale of the majority of the season. Election Day uncertainty may assets in the transaction announced in also have sidelined some traders. July were completed Monday, Rich- The December Nymex contract mond, VA-based Dominion manage- fell 18.5 cents day/day and settled ment said. at $3.059/MMBtu on Tuesday. The Berkshire Hathaway Energy prompt month lost 11.0 cents a day ear- acquired 5,500 miles of interstate gas lier. January shed 18.0 cents to $3.195. transmission pipelines and about 775 Spot gas prices also declined as Bcf of storage, as well as a 25% stake comfortable temperatures settled in and operating interest in Cove Point. across most of the country. NGI’s Spot The transaction value currently is esti- Gas National Avg. declined 20.0 cents mated at $8 billion, comprising about to $2.625. $2.7 billion in cash and about $5.3 bil- In fact, the already …cont' pg. 3 lion in debt transfer. …cont' pg. 10

LIQUEFIED NATURAL GAS LIQUEFIED NATURAL GAS France’s Engie Low Commodity Prices Scraps Proposed Rio Again Weigh on Total’s Grande LNG Deal LNG Operations Amid Environmental Total SE returned to profitabil- Concerns ity in the third quarter as the global economy recovered from lows brought French energy company Engie SA on by the Covid-19 pandemic, but the has decided to end negotiations to buy company continues to face low global liquefied natural gas (LNG) from the commodity prices and uncertainty as proposed Rio Grande LNG facility in Previous 5 Oct Oct Oct Nov Nov Days Table 28 29 30 02 03 the year comes to a close. Texas because of French government December Futures 3.291 3.301 3.354 3.244 3.059 The French supermajor took an concerns over hydraulic fracturing Henry Hub 3.060 3.000 3.040 2.995 2.835 $8.1 billion impairment in the second (fracking). quarter when commodity prices de- Chicago 3.035 2.920 2.950 2.845 2.640 Bloomberg reported Tuesday clined precipitously as the company that a spokeswoman at Houston-based AGT Citygate 4.835 6.535 3.610 3.870 2.150 confronted what CEO Patrick Pouy- NextDecade Corp., which owns the Opal 3.320 3.135 2.955 3.180 3.355 anne called “exceptional …cont' pg. 11 Rio Grande LNG project, said Engie SoCal Bdr. Avg. 3.350 3.175 3.005 3.670 4.350 decided to no longer pursue commer- NOVA 3.150 3.185 3.185 3.200 2.965 cial discussions. NextDecade declined to comment More Detailed Market Prices on Pages 2-4. to NGI about the matter. Engie’s board last month decided INSIDE THIS ISSUE to further investigate the environmental Range Remaining Disciplined Equinor Sets Net-Zero Pinnacle West’s Arizona Despite Improving implications of the potential $7 bil- Emissions Goal, Sees Utility Dodges Summer Heat Natural Gas Outlook lion, 20-year contract before deciding Writedowns in E&P on Low Issues with Mix of Fuels, Commodity Prices ...... 6 Conservation ...... 9 whether to fund it. The …cont' pg. 10 Visit: natgasintel.com

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CASH MARKET PRICES Trade Date: Nov 03; Flow Date(s): Nov 04 Trade Date: Nov 03; Flow Date(s): Nov 04 RANGE AVG CHG VOL DEALS RANGE AVG CHG VOL DEALS South Texas REX into Trunk - Douglas 2.600-2.600 2.600 -0.200 2 2 Agua Dulce 2.885-2.885 2.885 -0.015 18 1 St. Clair ------Florida Gas Zone 1 ------Midwest Regional Avg. 2.500-2.870 2.620 -0.200 5,732 1,000 NGPL S. TX ------Midcontinent Tennessee Zone 0 South 2.765-2.820 2.795 -0.165 133 20 ANR SW 2.610-2.650 2.620 -0.185 257 34 Texas Eastern S. TX 2.810-2.840 2.825 -0.155 212 28 El Paso Anadarko 2.470-2.525 2.485 0.025 54 9 Transco Zone 1 2.800-2.850 2.820 -0.155 20 6 Enable East 2.500-2.590 2.535 -0.140 99 22 Tres Palacios 2.800-2.930 2.885 -0.170 391 59 NGPL Midcontinent 2.540-2.590 2.565 -0.205 382 58 S. TX Regional Avg. 2.765-2.930 2.840 -0.135 773 114 Northern Border Ventura 2.565-2.610 2.595 -0.155 249 38 East Texas Northern Natural Demarc 2.550-2.635 2.620 -0.140 253 44 Atmos Zone 3 2.480-2.550 2.505 -0.135 34 12 Northern Natural Gas 8-12 ------Carthage 2.585-2.690 2.625 -0.140 287 39 Northern Natural Gas 13-16A ------Golden Triangle Storage 2.850-2.850 2.850 -- 30 4 Northern Natural Ventura 2.555-2.620 2.595 -0.125 580 65 Houston Ship Channel 2.760-2.830 2.805 -0.165 44 10 OGT 2.500-2.600 2.545 -0.170 102 28 HPL - East Texas Pool ------Panhandle Eastern 2.330-2.500 2.445 -0.200 383 67 Katy 2.720-2.830 2.780 -0.180 282 66 Southern Star 2.540-2.570 2.555 -0.225 55 8 Maypearl ------Transwestern Panhandle Pool ------Moss Bluff 2.880-2.940 2.905 -0.145 223 21 Midcontinent Regional Avg. 2.330-2.650 2.555 -0.155 2,410 373 NGPL TexOk 2.500-2.660 2.585 -0.200 945 157 North Louisiana/Arkansas Tennessee Zone 0 North 2.540-2.650 2.635 -0.135 129 20 Enable South ------Texas Eastern E. TX 2.550-2.600 2.575 -0.115 20 6 NGPL Gulf Coast Mainline ------Tolar Hub 2.490-2.560 2.505 -0.155 185 22 Perryville 2.575-2.575 2.575 -0.195 10 1 Transco Zone 2 2.700-2.700 2.700 -- 10 4 Texas Eastern, M1, 24 2.550-2.550 2.550 -0.200 13 4 E. TX Regional Avg. 2.480-2.940 2.680 -0.130 2,187 361 Texas Gas Zone 1 2.570-2.680 2.610 -0.165 283 52 West Texas/SE New Mexico Trunkline Zone 1A 2.580-2.635 2.590 -0.215 178 26 El Paso Permian 2.250-2.550 2.385 0.800 450 112 N. LA Regional Avg. 2.550-2.680 2.580 -0.195 483 83 El Paso - Keystone Pool 2.250-2.450 2.370 0.760 270 68 South Louisiana El Paso - Plains Pool 2.500-2.550 2.505 0.105 31 8 ANR SE 2.750-2.755 2.750 -0.220 65 12 El Paso - Waha Pool 2.250-2.480 2.385 0.985 150 36 Bobcat Storage ------Northern Natural Gas 1-7 ------Columbia Gulf Mainline 2.500-2.640 2.575 -0.215 200 32 Oneok WesTex 2.300-2.450 2.390 0.545 82 16 Columbia Gulf onshore 2.670-2.740 2.740 -0.175 217 39 Transwestern 2.300-2.460 2.405 0.255 27 10 Egan Hub 2.780-2.790 2.785 -- 21 2 Transwestern - Central ------Florida Gas Zone 2 ------Transwestern - W. TX 2.300-2.460 2.405 0.255 27 10 Henry Hub 2.790-2.860 2.835 -0.160 198 36 Waha 2.250-2.500 2.415 0.485 459 101 Pine Prairie 2.770-2.790 2.785 -0.150 293 36 W. TX/SE NM Regional Avg. 2.250-2.550 2.410 0.525 786 187 Southern Natural 2.700-2.760 2.740 -0.180 427 96 Midwest Tennessee Line 500 2.700-2.745 2.730 -0.175 181 36 Alliance 2.610-2.645 2.635 -0.200 617 102 Tennessee Line 800 2.730-2.750 2.740 -0.140 195 34 ANR ML7 ------Texas Eastern E. LA 2.735-2.770 2.760 -0.165 219 30 Bluewater Hub ------Texas Eastern W. LA 2.770-2.805 2.785 -0.175 448 54 Chicago Citygate 2.610-2.660 2.640 -0.205 371 73 Texas Gas Zone SL ------Chicago - Nicor Gas 2.610-2.650 2.635 -0.205 127 25 Transco Zone 3 2.720-2.765 2.755 -0.150 164 44 Chicago - NIPSCO 2.620-2.655 2.640 -0.205 179 32 Trunkline E. LA 2.730-2.760 2.760 -0.160 21 3 Chicago - North Shore ------Trunkline W. LA ------Chicago - Peoples 2.610-2.660 2.640 -0.210 66 16 S. LA Regional Avg. 2.500-2.860 2.750 -0.170 2,646 454 Consumers Energy 2.620-2.690 2.660 -0.210 248 45 Southeast Dawn 2.560-2.850 2.670 -0.190 1,933 321 Dominion Energy Cove Point 1.700-1.750 1.745 -0.555 229 14 Defiance 2.540-2.595 2.570 -0.215 168 40 FGT Citygate 2.885-3.050 2.970* ------Rover-ANR 2.540-2.595 2.565 -0.215 128 30 Florida Gas Zone 3 2.780-2.920 2.840 -0.110 209 32 Rover-Panhandle 2.550-2.585 2.575 -0.215 40 10 Southern Pines ------Emerson 2.615-2.650 2.630 -0.195 291 64 Tenn Zone 1 100L 2.570-2.650 2.595 -0.205 225 44 Joliet 2.610-2.645 2.635 -0.200 647 106 Tenn Zone 1 non-St. 87 2.600-2.650 2.635 -0.160 28 6 Lebanon 2.500-2.620 2.585 -0.175 95 22 Tenn Zone 1 St. 87 2.570-2.620 2.590 -0.215 197 38 Michigan Consolidated 2.590-2.700 2.675 -0.190 827 117 Texas Eastern M-1, 30 2.650-2.680 2.670 -0.230 32 8 NGPL Amarillo Mainline 2.550-2.595 2.585 -0.200 170 36 Transco Zone 4 2.735-2.775 2.750 -0.175 1,438 220 NGPL Iowa-Illinois 2.600-2.600 2.600 -0.240 20 2 Transco Zone 5 2.700-2.885 2.805 -0.160 297 64 NGPL MidAmerican 2.630-2.630 2.630 -0.170 23 4 Transco Zone 5 North 2.700-2.885 2.790 -0.190 28 10 Parkway/Union 2.655-2.870 2.785 -0.130 123 36 Transco Zone 5 South 2.750-2.840 2.805 -0.160 269 54 REX Zone 3 Delivered 2.520-2.620 2.605 -0.195 821 134 Southeast Regional Avg. 1.700-3.050 2.655 -0.205 2,428 382 REX into ANR - Shelby 2.520-2.600 2.570 -0.200 95 20 Appalachia REX into MGT - Edgar 2.560-2.620 2.610 -0.205 140 20 Columbia Gas 1.450-1.700 1.545 -0.610 994 179 REX into NGPL - Moultrie 2.550-2.620 2.610 -0.190 575 90 Dominion North 0.450-0.700 0.535 -0.815 73 23 REX into PEPL - Putnam 2.560-2.565 2.565 -- 10 2 Dominion South 0.340-1.010 0.620 -0.740 803 142 …cont' pg. 3 2 NATGASINTEL.COM | @NGINEWS | © COPYRIGHT INTELLIGENCE PRESS 2020 | FOR A FREE TRIAL VISIT NATGASINTEL.COM NGI’s Daily Gas Price Index Wednesday, November 4, 2020

CASH MARKET PRICES Trade Date: Nov 03; Flow Date(s): Nov 04 Trade Date: Nov 03; Flow Date(s): Nov 04 RANGE AVG CHG VOL DEALS RANGE AVG CHG VOL DEALS Leidy Hub 0.650-0.650 0.650 -0.845 1 1 CIG 2.570-2.650 2.595 -0.155 120 24 Millennium Delivered ------CIG DJ Basin 2.550-2.550 2.550 -- 19 4 Millennium East Pool 0.550-0.610 0.590 -0.560 45 10 El Paso Bondad 2.610-2.630 2.625 -0.175 72 12 Tenn Zone 4 200L 1.675-2.000 1.780 -0.925 161 33 El Paso San Juan 2.600-2.870 2.665 -0.165 199 49 Tennessee Zn 4 313 Pool 0.790-1.000 0.860 -0.565 68 18 Kern River 3.155-3.380 3.325 0.140 615 105 Tennessee Zn 4 Marcellus 0.420-0.700 0.585 -0.320 189 41 Kingsgate ------Texas Eastern M-2, 30 Delivery ------Northwest S. of Green River 2.520-2.545 2.530 -0.230 28 6 Texas Eastern M-2, 30 Receipt 0.400-1.120 0.720 -0.640 895 120 Northwest Sumas 3.250-3.750 3.505 0.110 272 64 Texas Eastern M-3, Delivery 0.950-1.100 1.010 -0.650 117 25 Northwest Wyoming Pool 3.225-3.350 3.295 0.170 67 20 Texas Eastern M-3, Receipt ------Opal 3.310-3.390 3.355 0.175 188 29 Transco-Leidy Line 0.300-0.660 0.530 -0.735 162 52 Questar 3.200-3.250 3.245 0.145 16 6 Appalachia Regional Avg. 0.300-2.000 0.855 -0.655 3,504 644 Ruby - Receipts 3.250-3.330 3.300 0.130 45 8 Northeast Stanfield 3.150-3.280 3.195 0.025 143 22 Algonquin Citygate 1.900-2.500 2.150 -1.720 203 44 Transwestern San Juan 2.650-2.850 2.740 -0.090 45 6 Algonquin Citygate (non-G) 1.900-2.500 2.165 -1.705 193 43 White River Hub 2.480-2.690 2.585 -0.195 340 48 Algonquin Receipts 0.700-1.050 0.905 -0.415 295 58 Rocky Mtns. Regional Avg. 2.480-3.750 2.935 -0.035 2,582 485 Dracut ------Arizona/Nevada Iroquois Zone 1 2.660-2.660 2.660 -0.505 1 2 El Paso S. Mainline/N. Baja 4.050-4.200 4.115 0.315 83 14 Iroquois Zone 2 2.500-2.700 2.610 -0.970 88 23 Kern Delivery 4.450-5.350 4.845 0.965 507 112 Iroquois, Waddington 2.300-2.700 2.645 -0.450 614 121 California Maritimes & Northeast 4.650-5.000 4.785 -0.965 6 2 Malin 3.220-3.350 3.275 0.050 551 95 Niagara 1.300-2.250 1.760 -0.780 48 13 PG&E Citygate 4.020-4.130 4.105 0.040 647 123 PNGTS 4.000-4.000 4.000 -0.905 98 17 SoCal Citygate 5.750-5.950 5.850 0.755 159 24 E Hereford/Pittsburg 4.000-4.000 4.000 0.000 1 2 Southern Border, PG&E 2.700-2.820 2.800 -0.055 45 8 PNGTS Non-Border 4.000-4.000 4.000 -0.915 97 15 SoCal Border Avg. 2.800-5.360 4.350 0.680 401 75 Tenn Zone 5 200L 1.150-2.500 1.605 -1.230 190 9 SoCal Border - Blythe ------Tenn Zone 5 200L East 2.450-2.500 2.495 -0.690 64 7 SoCal Border - Ehrenberg 4.000-4.200 4.135 0.380 181 35 Tenn Zone 5 200L West 1.150-1.150 1.150 -1.510 126 2 SoCal Border - Kern River Station ------Tenn Zone 5 300L ------SoCal Border - Kramer 4.700-4.850 4.735 0.905 108 13 Tenn Zone 6 200L 2.050-3.500 2.720 -1.460 144 54 SoCal Border - Needles 3.050-3.050 3.050 0.050 1 2 Tenn Zone 6 200L North 2.750-3.500 3.180 -1.795 59 24 SoCal Border - Topock 2.800-2.820 2.815 -0.120 35 10 Tenn Zone 6 200L South 2.050-2.500 2.400 -1.585 86 30 SoCal Border - Wheeler Ridge 4.800-5.360 5.020 1.050 78 15 Tenn Zone 6 300L ------California Regional Avg. 2.700-5.950 4.015 0.340 1,801 325 Transco Zone 6 non-NY 0.890-1.250 1.085 -0.745 172 53 National Avg. 0.300-5.950 2.625 -0.200 27,878 4,960 Transco Zone 6 non-NY North 0.890-1.250 1.085 -0.745 172 53 Canada Transco Zone 6 non-NY South ------Alliance (APC) - ATP 3.070-3.150 3.115 -0.275 228 46 Transco Zone 6 NY 0.800-1.240 1.090 -0.780 106 30 Empress 2.910-3.270 3.000 -0.245 315 48 Northeast Regional Avg. 0.700-5.000 2.425 -0.890 1,961 426 NOVA/AECO C 2.920-3.270 2.965 -0.235 2,537 363 Rocky Mountains Westcoast Station 2 2.750-2.850 2.775 -0.185 418 115 Cheyenne Hub 2.530-2.600 2.550 -0.240 456 88

Prices are in U.S.$/MMBtu except locations in the Canada section which are in Cdn$/GJ. The deals column represents the number of transactions used by NGI in the calculation of the price. The volume column is the sum of the volume of those deals, in thousand MMBtus/day. Volumes may not total because of rounding. The data upon which we derive our indexes include both data provided to NGI from the ICE trading platform as well as submitted directly from companies who are principals to the trade. For more information, please see NGI's Price Methodology. *Assessed based on trades that were conducted at a basis differential to the day-ahead Florida GasTransmission Zn 3 index that appears in this table.

…from MARKETS REPORT - December Natural Gas Futures Stumble, pg., 1 the eastern half of the country sees much colder air, with the next challenging weather outlook grew increasingly discouraging for gas opportunity not until the latter part of November.” prices, forecasters said Tuesday. Weather data early Tuesday trended further warmer with both “Warmer-than-normal temperatures will spread across most of the domestic and European models losing about 10 heating degree the country for the rest of the week with comfortable highs of 50s to days (HDD), the forecaster said. Both models now predict national 80s,” NatGasWeather said. “Conditions will be locally cooler across HDDs will be more than 60 warmer than normal for the coming the Northwest and hotter across the Southwest, but overall a rather 15-day period. light demand pattern for early November.” Analysts also said the presidential election inevitably cast some While colder air is expected to return to the Plains and parts of the shadow over natural gas markets Tuesday, given Democrat of the Mountain West this weekend and early next week, the shift is Joseph R. Biden Jr. led in most national polls and presented the po- expected to be far less harsh than forecasted only a few days earlier. tential for substantial change to the sector. “The overnight data yet again showed less cold air into” the President Trump’s energy policy has been defined by deregula- central United States “as upper high pressure over the East effectively tion and a corporate tax cut. Biden has vowed to bump up the corpo- blocks it to keep highs of 60s to 80s going over much of the southern rate tax rate and introduce policies aimed at gradually transitioning and eastern United States for light demand,” NatGasWeather said. domestic energy production away from fossil fuels and toward “We continue to expect bearish weather headwinds will continue until renewable sources. …cont' pg. 4

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“I do not think the pivot would be something that would happen HENRY HUB FUTURES PRICES quickly, but Biden would put his people in key positions that would tend to hinder expansion of fossil fuel production and infrastructure Trade Date: Nov 03 development,” said energy futures director Robert Yawger of Mizuho CONTRACT OPEN HIGH LOW SETTLE CHANGE Dec-20 3.2360 3.2410 3.0410 3.0590 -0.1850 Securities USA LLC. “He would tend to scale back drilling on public Jan-21 3.3640 3.3670 3.1750 3.1950 -0.1800 land, and he would be less inclined to approve new pipelines.” Feb-21 3.3270 3.3270 3.1410 3.1590 -0.1730 LNG feed gas volumes, meanwhile, remained strong as they Mar-21 3.2040 3.2110 3.0430 3.0630 -0.1560 have for several days following Hurricane Zeta last week. LNG levels Apr-21 3.0000 3.0000 2.8950 2.9070 -0.0950 hovered near 10 Bcf Tuesday, indicating mounting export demand May-21 2.9540 2.9540 2.8680 2.8810 -0.0860 Jun-21 2.9850 2.9860 2.9090 2.9210 -0.0800 and pointing to tighter balances this winter. Jul-21 3.0290 3.0310 2.9570 2.9710 -0.0740 During a third quarter earnings call Tuesday, Williams execu- Aug-21 3.0450 3.0450 2.9700 2.9830 -0.0740 tives said they were optimistic about continued strong LNG demand. Sep-21 3.0320 3.0350 2.9580 2.9690 -0.0760 “We have confidence that producers see this as an attractive market Oct-21 3.0690 3.0690 2.9890 3.0060 -0.0740 and will be able to respond very effectively to the increasing call on Nov-21 3.1220 3.1290 3.0610 3.0760 -0.0640 gas supplies, particularly in the very best of the Marcellus, Utica and Dec-21 3.2630 3.2660 3.2030 3.2200 -0.0560 Jan-22 3.3690 3.3700 3.3090 3.3240 -0.0550 Haynesville shales…which we are so fortunate to serve,” CEO Alan Feb-22 3.2910 3.2910 3.2370 3.2500 -0.0540 Armstrong told analysts. Mar-22 3.0550 3.0550 3.0110 3.0310 -0.0500 Three consecutive Energy Information Administration (EIA) Apr-22 2.6130 2.6130 2.5900 2.6010 -0.0200 storage reports in October produced smaller-than-expected injec- May-22 2.5700 2.5700 2.5200 2.5310 -0.0160 tions, the last of which was largely attributed to the bump in LNG Jun-22 2.5520 2.5670 2.5500 2.5590 -0.0150 Jul-22 2.6010 2.6020 2.5870 2.5960 -0.0140 feed gas deliveries. Observers increasingly expect a withdrawal with Aug-22 2.6120 2.6130 2.5970 2.6040 -0.0130 the agency’s Thursday report for the week ended Oct. 30. EIA last Sep-22 2.6010 2.6020 2.5860 2.5930 -0.0120 week reported a 29 Bcf injection. Total working gas in storage as Oct-22 2.6280 2.6300 2.6130 2.6190 -0.0140 of Oct. 23 rose to 3,955 Bcf, 289 Bcf above the five-year average, Nov-22 2.7240 2.7360 2.7060 2.7090 -0.0130 according to EIA. Dec-22 2.9260 2.9260 2.9030 2.9030 -0.0080 Jan-23 3.0170 3.0170 3.0170 3.0170 -0.0110 Bespoke Weather Services and Tudor, Pickering, Holt & Co. Feb-23 2.9540 2.9540 2.9540 2.9540 -0.0120 analysts have projected withdrawals for the latest week. If that proves Mar-23 2.7730 2.7730 2.7730 2.7730 -0.0130 to be the case, withdrawals would have started two weeks ahead of Apr-23 2.3770 2.3770 2.3770 2.3770 -0.0140 normal and could help to burn through the current inventory surplus. May-23 2.3200 2.3200 2.3200 2.3200 -0.0140 Production, meanwhile, held steady Tuesday following shut-ins Jun-23 2.3440 2.3440 2.3440 2.3440 -0.0140 a week earlier in anticipation of Zeta. The hurricane blew into the Jul-23 2.3850 2.3850 2.3850 2.3850 -0.0160 Aug-23 2.3940 2.3940 2.3940 2.3940 -0.0200 Gulf of Mexico (GOM) but exited without causing widespread issues Sep-23 2.3850 2.3850 2.3850 2.3850 -0.0160 for oil and gas producers. Roughly 45% of the gas produced in the Oct-23 2.4050 2.4050 2.4050 2.4050 -0.0150 GOM was taken offline ahead of the Category 2 storm. As of midday Nov-23 2.5160 2.5160 2.5160 2.5160 -0.0140 Tuesday, that figure had declined to 10.3%, the Bureau of Safety and Dec-23 2.7310 2.7310 2.7310 2.7310 -0.0100 Environmental Enforcement said. Source: CME Group, Inc. Updates provided by CSI. New waves of the coronavirus in the Lower 48 and overseas Full CME Natural Gas Futures settlements out 12+ years are available here. could impact production of associated gas in coming months and, by extension, further tighten the U.S. gas market this winter. Govern- ments in France, Germany, the UK and elsewhere in Europe have recently announced new restrictions to slow the spread of the virus. These limitations could crimp gasoline and jet fuel demand, hamper- ing oil prices and keeping already low oil and associated production in check. “As the onshore industry grapples with low prices and an uncertain demand picture…total Lower 48 volumes are anticipated to hold flat” the rest of 2020, Rystad Energy analysts said.

Cash Prices Spot gas prices declined Tuesday alongside rising temperatures. Despite longer-term supply/demand fundamentals that could support gas prices, “so far this week, weather patterns trending further warmer have gained the upper hand,” NatGasWeather said. Across the nation’s midsection and parts of the East, where temperatures were mild and expected to remain so for several days, prices dropped. Heat, however, has persisted in parts of the southwestern United Chicago Citygate prices fell 20.5 cents day/day to an average States and into areas of California, supporting ongoing cooling de- $2.640, while OGT lost 17.0 cents to $2.545. mand into the fall season. In the Northeast, Algonquin Citygate plunged $1.720 to $2.150. Out West, SoCal Citygate prices jumped 75.5 …cont' pg. 6

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The current assessments are estimated US-to-Mexico natural gas cost plus transport prices; please refer to the Mexico Gas Price Index Methodology for pipeline-specific costs and for any additional information. Moving forward, NGI believes the best price transparency are price indexes based on actual transactions, and is asking all buyers and sellers of natural gas in Mexico to support this effort by providing those transactions to NGI on a confidential basis. NGI was at the forefront of this market price deregulation in the United States in the 1980s and has the experience to help the Mexico market do the same in 2020 and beyond. For more information, please contact Dexter Steis or Pat Rau at +1 (703) 318-8848 or [email protected]. Want NGI's Mexico Natural Gas Price Index in a spreadsheet? Download a sample in Excel-friendly format.

Want more on Mexico? Start a trial to NGI's Mexico Gas Price Index and get a comprehensive picture of daily news, prices, and analytics that impact this growing marketplace. Request your trial. [email protected]

1) Transport rates for U.S. interstates, SISTRANGAS, and other Mexico pipelines taken from electronic bulletin boards (EBBs). However, Texas intrastate pipelines do not have EBBs, so our transportation costs for these are an estimates. For more information on which charges we include in these fees, please see the below note. 2) Calculated Monterrey price would be the same as Los Ramones, and calculated El Encino would be the same as Torreon, if we had used the SISTRANGAS tariff, since SISTRANGAS is a zone based system. 3) U.S. gas is not likely to be delivered to Cactus or Salina Cruz, but these represent a theoretical delivered price in Zonas Sur and Istmo.

NATGASINTEL.COM | @NGINEWS | © COPYRIGHT INTELLIGENCE PRESS 2020 | FOR A FREE TRIAL VISIT NATGASINTEL.COM 5 NGI’s Daily Gas Price Index Wednesday, November 4, 2020 cents to $5.850, and Kern Delivery spiked 96.5 cents to $4.845.In said CEO Anders Opedal, who took over running the global opera- West Texas, prices broadly rebounded after day-earlier declines. El tor on Monday. “It is a sound business strategy to ensure long-term Paso Permian climbed 80.0 cents to $2.385. competitiveness during a period of profound changes in the energy systems as society moves toward net zero. Over the coming months, we will update our strategy to continue to create value for our share- OUTLOOK holders and to realize this ambition.” Equinor Sets Net-Zero Emissions London-based BP plc in September laid out its ambitious net- Goal, Sees Writedowns in E&P zero emissions plan to 2050. BP and Equinor are partnering to build on Low Commodity Prices a U.S. wind business, which includes developing offshore leases on the East Coast. Europe’s Royal Dutch Shell plc and Total SE also are Equinor SA on Monday set a goal to become a net-zero energy working toward carbon-neutral goals. operator in 30 years, joining goals set out by fellow European-based Longer term, Equinor plans to produce less oil and natural gas oil and natural gas majors. than it does today. The ambition overall is to reduce its direct, indirect The Norway-based energy major still expects to deliver produc- and customer emissions, referred to as Scope 1, 2 and 3 greenhouse tion growth of around 3% on average from 2019 to 2026 through gas (GHG) emissions. “competitive and resilient projects.” The net-zero ambition is designed to strengthen future competitiveness and value creation for major ‘Boundaries’ And ‘Assumptions’ projects on the Norwegian continental shelf. Equinor has set “boundaries and assumptions” for the net-zero “Equinor is committed to being a leader in the energy transition,” goals. …cont' pg. 7

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“Success will depend on society moving toward net zero in strengthen our climate ambitions, aiming to reach net zero by 2050.” 2050,” it said. “We assume a well functioning market for carbon To develop into a “broad energy company, renewables will be a capture and storage and natural sinks, and that these mechanisms can significant growth area.” Equinor previously set a strategy to profit- be accounted for as negative scope 3 emissions.” ably grow its alternative energies business with production capacity Equinor also assumes that a hydrogen market will be developed. of 4-6 GW by 2026 and 12-16 GW by 2035. In addition, it assumes that “an increasing share of oil and gas will “Equinor now plans to expand its acquisition of wind acreage, be used for petrochemicals toward 2050.” with the aim of accelerating profitable growth and will continue to Equinor launched a strategy earlier this year to achieve carbon leverage its leading position in offshore wind,” management said. neutral global operations by 2030 and reduce absolute GHG emis- Renewables are to become a separate reporting segment beginning sions in Norway to near zero by 2050. with results in 1Q2021. “Equinor has for years demonstrated an ability to deliver on “Climate change is a shared challenge,” Opedal said. “The com- climate ambitions and has a strong track record on lowering emis- bined efforts of governments, industries, investors and consumers are sions from oil and gas,” Opedal said. “Now, we are ready to further crucial to reaching net-zero emissions, for Equinor and for society. Together, we can overcome technological and commercial challenges, cut emissions, and develop CCS and zero-emission value chains for a net-zero future.”

‘Significant Uncertainty’ Last week Equinor also issued its third quarter results, which were “impacted by weak prices as regions across the world” are “still severely affected by the pandemic,” said former CEO Eldar Sætre. “Significant uncertainty remains around the future commodity price development underlining the importance of increased competitiveness and financial resilience.” CFO Lars Christian Bacher said Equinor has reduced short- and long-term oil price assumptions. “Our focus has been, as always, on long-term, fundamen- tal trends, volatility and market reactions,” he said. Based on our analysis, including supply as well as demand …cont' pg. 9

Source: Tallgrass Energy LP, NGI calculations. For more info and daily 10am ET updates of this chart, go to natgasintel.com/rextracker.

NatGasIntel.com/MX-Price

8 NATGASINTEL.COM | @NGINEWS | © COPYRIGHT INTELLIGENCE PRESS 2020 | FOR A FREE TRIAL VISIT NATGASINTEL.COM NGI’s Daily Gas Price Index Wednesday, November 4, 2020 impacts, we expect average oil prices to gradually increase to $65/ In other news, the recent fire at the Melkøya liquefied natural bbl in 2025, with a continued modest uptick toward 2030. After 2030, gas (LNG) processing plant in Norway could require the plant to we expect a gradual decline to $64 in 2040 and below $60 in 2050. be shut-in for a year for repairs, Bacher said. An undersea pipeline “Clearly, oil price estimates that far out in time are associated transports gas from the Barents Sea to the processing station, where with great uncertainty. But remember, we require sanctioned projects it is converted into LNG and then exported. to be robust at much lower prices than these long term levels.” Equinor delivered total equity production of nearly 2 million In February the executive team presented a project portfolio for boe/d in 3Q2020, versus 1.9 million boe/d a year ago. Adjusting for new deals to be put online by 2026 representing around 6 billion boe portfolio transactions and government-imposed curtailments, underly- at an average breakeven oil price of below $35/bbl. ing production growth was around 9%. Global natural gas sales volumes amounted to 14.1 billion “For 2020, we expect a production growth between 1.5% and standard cubic meters (bcm) in the quarter, an increase of 1.6 bcm 2%,” Sætre said. “This outlook depends on how the European gas from 3Q2019. Entitlement gas was 12.6 bcm, up 1.4 bcm year/year, market develops where we use our gas production flexibility to boost mainly from higher volumes on the Norwegian continental shelf. value creation.” The average invoiced European natural gas sales price was 48% Expected capital expenditures (capex) this year is around $1.1 lower from a year ago, management said. Average invoiced North billion. The guided organic capex levels for 2020 and 2021 “are American piped gas sales price decreased by 23% because of lower unchanged at around $8.5 billion and $10 billion respectively,” said Henry Hub gas prices. the former CEO. Equinor lost $2.1 billion in 3Q2020, versus a year-ago loss of $1.1 billion. Results in the Exploration and Production (E&P) International segment were impacted by low prices, par- tially offset by a reduction in costs. The E&P USA segment was also impacted by weak prices, while continuing efforts to reduce activity and costs. Net impairments to 3Q2020 earnings included $1.38 billion in the E&P USA segment, with $1.21 billion related to reducing the value of its U.S. onshore portfolio, mostly for impairments to the Bakken Shale portfolio.

POWER GENERATION Pinnacle West’s Arizona Utility Dodges Summer Heat Issues with Mix of Fuels, Conservation During the hottest July and Au- gust temperatures ever recorded, Phoenix-based Arizona Public Ser- vice (APS) relied on its fossil fuel generation fleet, along with nuclear and customer conservation, to avoid a power emergency, the CEO of parent company Pinnacle West Capital Corp. said last week. “Our fossil fleets equivalent avail- ability factor, or the percentage of time a plant is available, was 95.3% from June through September,” said CEO Jeff Guldner. The Palo Verde Nuclear Generating Plant’s factor was 100.2% during the same four-month time frame. “We relied heavily on our basel- oad and fast-ramping assets, including the Four Corners,” …cont' pg. 10

NATGASINTEL.COM | @NGINEWS | © COPYRIGHT INTELLIGENCE PRESS 2020 | FOR A FREE TRIAL VISIT NATGASINTEL.COM 9 NGI’s Daily Gas Price Index Wednesday, November 4, 2020 a coal-fired unit, along with the natural gas-fired Ocotillo plant and have started in 2026. Palo Verde. “Those plants were all available when we needed them.” “The rejection of this contract by the government and Engie is Guldner said on Aug. 18-19, APS asked for voluntary conserva- a new explicit recognition of the climatic, environmental and social tion and customers collectively came up with 240 MW of savings. ravages of shale gas,” Lorette Philippot, private finance campaign At the same time, personnel worked with firefighters during a season manager of French environmental group Les Amis de la Terre (Friends in which more than 900,000 acres burned, compared to the yearly of the Earth), told NGI. average of 250,000 acres. “Whatever the outcome of tonight’s (U.S. presidential) election, APS experienced “minimal impacts” to utility infrastructure we expect France to pursue a consistent policy of zero tolerance for despite the record wildfire season, Guldner said. unconventional hydrocarbons,” said Phillipot, whose group urged the “We are still making lasting impacts on our service area despite government to reject the proposed Rio Grande deal. “This requires a pandemic, record-breaking hot summer, regional capacity shortages, refusing to import and consume shale oil and gas, just as we refused and wildfires,” he said. to produce it nearly a decade ago.” Longer term, APS is working with the Arizona Corporation The group also called on French bank Societe Generale SA to Commission (ACC) on plans to be carbon free by 2050. Guldner stop working on the project. In May 2017, NextDecade appointed said reaching that goal will require “strong regulatory partnership, an Societe Generale and Macquarie Capital Inc. as financial advisors. organized transition away from coal and fossil fuels, and support for an expansion of renewables, battery storage and energy efficiency.” U.S. Legislators Weigh In The ACC last Thursday took action that should result in a pro- A group of 20 U.S. House of Representatives members on ceeding next year to establish statewide rules with phased-in goals Monday sent a letter to French President Emmanuel Macron saying for achieving the transition toward electrIfication by 2050. the government had “unfortunately intervened” to nix the Engie deal For 3Q2020, Pinnacle West reported net income of $346.4 “on a misinformed assumption that U.S. shipments are supposedly million ($3.07/share), compared with $312.3 million ($2.77) for the more greenhouse gas (GHG) intensive from a life-cycle perspective same period a year ago. than other foreign gas supply.” The legislators asked the French government to reconsider the “ill-informed decision, which we believe is detrimental to our joint …from LIQUEFIED NATURAL GAS - Berkshire Hathaway Taking Over, pg., 1 energy security goals and efforts to reduce GHG emissions.” The planned sale of Dominion’s interests in the Questar Pipe- The letter said that “our official government analysis” shows that lines is expected to be completed in early 2021 after regulatory clear- U.S. LNG exports to the European Union, including France, “result ance. Dominion received about $1.3 billion in cash in anticipation in fewer emissions than some of the largest exporters of natural gas of selling the interests and would transfer about $430 million in debt to France, including Russia and Algeria.” once completed. The House members thanked Macron for his “thoughtful res- Cove Point LNG, as it is now formally known, has export ca- ervations” about completion of the controversial $11.2 billion, 5.3 pacity of 5.25 million metric tons/year, equivalent to 670 MMcf/d of Bcf/d Nord Stream 2 pipeline that would traverse the Baltic Sea from gas, and storage capacity equivalent to 14.6 Bcf. The facility, which Russia, to Greifswald, Germany. started exporting in April 2018, initially was built in the 1970s to The representatives added that they have “deep concerns” that import LNG. It still has regasification capacity of 1.8 Bcf/d. Russia is using non-governmental organizations “to influence the Cove Point’s export capacity is fully subscribed under 20-year decision-making process in Paris” to block initiatives designed to take-or-pay deals with Pacific Summit Energy LLC, a U.S. affiliate reduce European reliance on Russian energy exports. of Japan’s Sumitomo Corp., and Gail (In- dia) affiliate Gail Global (USA) LNG LLC. Sumitomo has agreements to serve Tokyo Gas Co. and Kansai Electric Power Co. Inc. Dominion CEO Thomas F. Farrell said in July the sale would allow Dominion to focus on its state-regulated utilities. Energy consultancy Genscape Inc. said the acquired assets would be part of a new company called Berkshire Hathaway Energy Gas Transmission and Storage, a standalone subsidiary of Berkshire Hatha- way Energy’s Pipeline Group.

…from LIQUEFIED NATURAL GAS - France’s Engie Scraps Proposed, pg., 1 government owns a 23.63% share in the company. The proposed deal was slated to run until 2045, meaning that exports would

…from LIQUEFIED NATURAL GAS - Low Commodity Prices, pg., 1 circumstances” amid the coronavirus outbreak. The third quarter was an improvement as oil prices were above $40.00/bbl and fuel demand returned for transportation, Pouyanne said. However, the environment was still mixed as crude, natural gas and liquefied natural gas (LNG) prices remained challenged. Third quarter oil prices were 31% lower year/year. European natural gas prices were 26% lower, while those in Asia were down 23% over the same period. Henry Hub prices were 9% lower in the third quarter compared with a year ago. Low commodity prices dragged down average LNG prices by 40% year/year in the third quarter to $3.57/MMBtu. Average LNG prices also fell by 19% from the second quarter “due to the delayed impact of lower oil prices in the first half of 2020 on long-term contracts,” the company said. LNG buyers with contracts linked to oil typically pay the average price of crude over the previous three to six months. While management cautioned that the oil market environment The company produced 2.7 million boe/d in the third quarter, remains uncertain, average LNG prices should improve in 4Q2020 down 11% year/year. The decline resulted mainly from Total’s com- given the increase in crude prices. Total is among the world’s largest pliance with production quotas implemented by the Organization of LNG companies. the Petroleum Exporting Countries and its allies. Total reported another increase in LNG sales, which were up Total reported third quarter net income of $202 million (4 cents/ by 9% year/year to 8.1 million tons, primarily from an increase in share), compared with net income of $2.8 billion ($1.05) in 3Q2019. trading activities.

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