Market dynamics vary at key natural gas pricing hubs

<div class=\"default-font-wrapper\" style=\"line-height: 1;font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\"><span id=\"isPasted\" style=\"box-sizing: border-box; text-transform: uppercase; color: rgb(89, 89, 89); display: block; font-family: Verdana, Geneva, sans-serif; font-size: 12pt; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\">October 23, 2024</span><p data-type=\"inbrief\" style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><img src=\"https://download.qtmarketcenter.com/jay/1729685665453.png\" alt=\"range of natural gas spot prices at key pricing hubs\" style=\"box-sizing: border-box; border-style: none; max-width: 100%; width: 914.034px;\" class=\"fr-fic fr-dii fr-fil\" success=\"true\" filename=\"1729685665453.png\"></span></p><div style=\"box-sizing: border-box; padding: 0px; margin: 0.5em 0em; font-style: normal; font-size: 0.875rem; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"box-sizing: border-box; font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><strong style=\"box-sizing: border-box;\">Data source:&nbsp;</strong>U.S. Energy Information Administration<br style=\"box-sizing: border-box;\"><strong style=\"box-sizing: border-box;\">Note:&nbsp;</strong>$/MMBtu=dollars per million British thermal units</span></div><hr style=\"box-sizing: border-box; border-top: 1px dashed rgb(212, 212, 212); border-right: none; border-bottom: none; border-left: none; border-image: initial; margin: 1.5em 0em !important; overflow: visible; background: none; color: rgb(212, 212, 212); clear: both; float: none; width: 914.034px; height: 1px; font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">Pricing hubs provide transactional flexibility to buyers and sellers in the natural gas industry. The integrated North American market has close to 200 pricing hubs, which vary by size, location, type, liquidity, and age. Pricing hubs convey market information and make it easier for buyers and sellers to arrange natural gas deals in physical and financial markets across many time periods: intra-day, daily, weekly, balance-of-month, monthly, seasonally, and annually. Changes in prices at natural gas hubs tend to be reflected in movements in prices at nearby power market hubs or zones. A mix of private price reporting agencies and exchanges offer services and platforms to help buyers, sellers, and market observers obtain pricing information. Pricing hubs are dynamic; new ones are established or are retired based on market conditions and consumer preferences.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">Prices can vary substantially at hubs based on many factors: geographic location, unique or seasonal weather conditions, proximity to energy supplies, prevalence of constraints or bottlenecks, access to substitutes, and infrastructure availability.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">We examine several key pricing hubs below to better understand regional natural gas pricing.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><strong style=\"box-sizing: border-box; font-weight: bolder;\">A closer look at key pricing hubs around the United States</strong></span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><strong style=\"box-sizing: border-box; font-weight: bolder;\">South Central region</strong><br style=\"box-sizing: border-box;\">Henry Hub in Erath, Louisiana, has many features that make it an important pricing benchmark: pipeline interconnectivity, proximity to storage and production, access to diverse markets, and lots of buyers and sellers of natural gas, especially with growing export markets for natural gas. Henry Hub is the delivery location for natural gas&nbsp;<a href=\"https://www.cmegroup.com/markets/energy/natural-gas/natural-gas.contractSpecs.html\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">futures contracts</a> transacted on the New York Mercantile Exchange (NYMEX) that go to physical settlement. Most natural gas at U.S. trading hubs is priced relative to Henry Hub, which is also an increasingly relevant benchmark for global liquefied natural gas (LNG) purchases, as U.S. exports increase and as Henry Hub price indexation is used to price deliveries at U.S. export terminals.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">The Houston Ship Channel (HSC) is in southeastern Texas in the Port of Houston, surrounded by numerous natural gas and processing plants along the Gulf Coast. The HSC market is diverse, providing price transparency and liquidity for exports markets, industrial and process gas uses, and power generation. Production from the nearby Eagle Ford shale formation accounted for&nbsp;<a href=\"https://www.eia.gov/outlooks/steo/tables/pdf/5atab.pdf\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">about 6%</a> of total marketed natural gas in the United States last year. Growing LNG exports and related facilities that process the&nbsp;<a href=\"https://www.eia.gov/todayinenergy/index.php?tg=HGL%20(hydrocarbon%20gas%20liquid)\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">hydrocarbon gas liquids</a> present in natural gas in this region have also further increased the significance of this hub, as have increased natural gas exports via pipeline to Mexico.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">The Waha natural gas pricing hub is in West Texas near Permian Basin production activities and helps natural gas market participants get a sense of pricing in West Texas and southeastern New Mexico. The Permian Basin produced&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=61646\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">19% of total U.S. natural gas in 2023</a>, with most coming from associated gas from crude oil wells. Because natural gas production in the Permian Basin has increased more rapidly than natural gas pipeline takeaway capacity,&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=63044\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">Waha prices are typically lower</a> than those at other hubs, sometimes turning negative.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><strong style=\"box-sizing: border-box; font-weight: bolder;\">Pacific region</strong><br style=\"box-sizing: border-box;\">SoCal Citygate is the major natural gas pricing hub in Southern California in the Los Angeles Basin, with substantial natural gas consumption by the various local sectors, averaging about 2.5 billion cubic feet per day (Bcf/d) in 2023. SoCal&nbsp;<a href=\"https://www.eia.gov/tools/glossary/index.php?id=C#citygate\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">Citygate</a> prices reflect the price of moving natural gas from diverse nearby basins and Mexico into the Los Angeles metro area&rsquo;s distribution system. Prices also include the cost of transporting natural gas from the California border to the distribution system in the greater Los Angeles Basin. SoCal Citygate traded at prices that were&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=61644\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">historically low</a> for this hub through the first eight months of 2024, due to milder winter conditions,&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=61103\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">increased solar generation</a>,&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=60502\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">more natural gas in storage</a>, and increased hydroelectric power generation.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">Opal is a key natural gas pricing hub in southwestern Wyoming. The Kern River Gas Transmission pipeline, which is connected to the Opal Hub, is the only interstate pipeline that delivers natural gas directly from the Rocky Mountain region to Southern California. This pipeline receives about 25% of the Rocky Mountain&rsquo;s natural gas supply, and its deliveries account for approximately 25% of California&rsquo;s natural gas demand, according to pipeline owner&nbsp;<a href=\"https://www.brkenergy.com/our-businesses/kern-river-gas-transmission-company\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">BHE</a>. Operations at Opal&rsquo;s large nearby processing plant often influence price volatility.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\">Northwest Sumas is the key pricing hub along the British Columbia-Washington border for natural gas in the Pacific Northwest, providing customers in the Pacific Northwest with natural gas supply diversity. Sumas prices reflect market conditions in the Pacific Northwest, such as the state of the regional hydroelectric market, natural gas storage availability, space heating needs, upstream gas conditions in British Columbia, and increasing power burn.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><strong style=\"box-sizing: border-box; font-weight: bolder;\">Midwest region</strong><br style=\"box-sizing: border-box;\">At Chicago Citygate in Illinois, seven major interstate pipelines transporting natural gas from Canada, the Southwest, and the Gulf of Mexico converge. Chicago Citygate, the primary pricing hub for end users in Chicago and parts of the upper Midwest, is linked to three pipelines that transport natural gas from Henry Hub, increasing the linkage of prices between the two hubs. This market is also close to storage, and abundant infrastructure helps to moderate seasonal and daily price volatility at this hub.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span style=\"font-family: Verdana, Geneva, sans-serif; font-size: 12pt;\"><strong style=\"box-sizing: border-box; font-weight: bolder;\">Northeast region (defined as New York, New England, and Pennsylvania)</strong><br style=\"box-sizing: border-box;\">Algonquin Citygate is an important pricing hub in the northeastern United States, and prices at this hub reflect natural gas market dynamics in Boston, Massachusetts, and elsewhere in New England. New England relies heavily on natural gas for heating in the winter months, but supplies are constrained by the region&rsquo;s&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=55459\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">limited</a> natural gas pipeline capacity and changing fuel mix. Price volatility at Algonquin Citygate is&nbsp;<a href=\"https://www.eia.gov/todayinenergy/detail.php?id=51158\" style=\"box-sizing: border-box; background-color: transparent; color: rgb(0, 126, 181); text-decoration: none;\">typically</a> related to these periods of peak demand.</span></p><p style=\"box-sizing: border-box; margin: 0px 0px 1em; line-height: 1.6; color: rgb(0, 0, 0); font-family: Jost, sans-serif; font-size: 16px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;\"><span