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Introduction to the Natural Gas Industry,
Natural Gas Physical and Financial Markets

January 24-25, 2022 | Online

Sponsored by EUCI

Click Here to register ($895 for either course, $1695 for both)

Two program: Introduction to the Natural Gas Industry,
Natural Gas Physical and Financial Markets:

Introduction to the Natural Gas Industry, Infrastructure and Regulations

January 24, 2022 | Online

This course will present an overview of the natural gas industry and related natural gas liquids (NGLs) and shale oil infrastructure so attendees can gain a comprehensive understanding of the gas industry and markets. We will discuss natural gas terminology, measurements, and conversions and review the basics of natural gas production, gathering, operations, and markets. This program will provide an in-depth understanding of natural gas processing plants, pipelines, storage, LNG peak shaving plants, LNG Import and Export terminals, and local distribution companies (LDCs). It will also address important components of natural gas transportation, including regional costs of firm and interruptible pipeline transportation, nominations, balancing, and section 4 and 5 ratemaking proceedings on natural gas pipeline transportation.

The intent is that participants will be able to apply the information learned the first day they return to their jobs. Hands-on activities will be included throughout the day.

Learning Outcomes

  • Explain the natural gas value chain: upstream, midstream, and downstream
  • Discuss natural gas terminology, measurements, and conversions
  • Review the basics of natural gas production, gathering, operations, and markets
  • Describe the types of shale plays and address natural gas processing plants
  • Review elements of natural gas producer economics
  • Explain fungibility and gas interchangeability in U.S., Asia, and Europe
  • Describe natural gas pipelines, including their parts, how they operate, and their role in a changing market
  • Evaluate natural gas storage types, operations, and storage issues
  • Discuss liquefied natural gas (LNG) and Local Distribution Companies (LDCs)
  • State the process of natural gas infrastructure siting
  • Discuss that natural gas plays in integrating wind and solar energy into the electric grid and Clean Power Plan
  • Describe how FERC policy, major orders, and regulations have evolved into today’s “Open Access” environment
  • Relate an overview of regulated rate components and rate design and new rate policies on the horizon
  • Address important components of transportation, including: Pooling, nominations, confirmations, scheduling, receipt, and balancing
  • Explain PDAs, OBAs, OFOs, allocations, and curtailments

Agenda

MONDAY, JANUARY 24, 2022

9:00 a.m. – 5:00 p.m. Central Time

Fundamentals

  • Natural gas composition
  • Benefits
  • Methane
  • Industry standard
  • Terminology
  • Measurements
  • Conversions

Natural Gas Industry History & Overview

  • Regulation
  • Deregulation
  • What’s still regulated

Supply, Demand, and Prices

  • Primary sources and uses
  • Other demand sectors

The Natural Gas Value Chain Overview

  • Upstream
  • Midstream
  • Downstream
  • How the natural gas industry operates across the value chain

Upstream Activities

  • Major natural gas shale plays in U.S. and Canada
  • Kinds of shale plays
  • Dry, wet, and associated gas (from oil wells)
  • NGLs and their economic importance of NGLs
  • Conventional and Unconventional Drilling
  • Drilling and fracking shales
  • Hydraulic fracking
  • Costs of drilling and fracking

Midstream Activities

  • Gas gathering
  • Gas treatment
  • Gas processing
  • Frac spread and gas processing

Underground Natural Gas Storage

  • Different types
  • Operations
  • Storage development
  • Regulatory issues

Other Gas Storage Options

  • Liquefied natural gas (LNG) basics
  • Import/export terminals and Vessels
  • Peak shaving plants
  • Who uses them and why they are important
  • Locations
  • Compressed natural gas (CNG) 

Natural Gas Pipelines

  • Overview
  • Types of pipelines
  • Key parts
  • How pipelines operate
  • Who are the pipeline players?
  • How pipelines are planned
  • Role of shippers
  • Differences between gas pipeline companies & electric power companies
  • Construction costs
  • Environmental reviews of pipelines and the NEPA process
  • Federal and State regulators—who really determines if they are built

FERC Gas and Electric Coordination

  • FERC NAESB changes to nomination schedule
  • Ratable vs Non-ratable shaped flow hourly service

Re-plumbing the Pipelines—Challenges  

  • FERC’S 1999 Pipeline Policy Statement
  • Landowner opposition and eminent domain
  • Opposition by the States
  • Opposition by environmental groups
  • Recent court challenges

Local Distribution Companies (LDCs)—Gas Utilities

  • What an LDC does
  • City gates
  • What happens at an LDC’s city gate?
  • Distribution line characteristics and pressure
  • How they work
  • Safety and economic trends
  • Rates and regulatory oversight
  • Choosing your gas supplier

Pipeline Transportation

  • Overview of gas transportation
  • Nominations
  • Scheduling
  • Force Majeure
  • Balancing
  • Operational Balancing Agreement (OBA)
  • Operational Flow Order (OFO)
  • Penalties
  • Interruptions
  • Curtailments

FERC Rate Making on Pipeline Transportation

  • Section 4 ratemaking
  • Section 5 ratemaking

LDCs and Asset Managers

  • How pipeline transportation costs can be reduced
  • Procuring and managing gas supplies

Natural Gas Industry Challenges

  • Climate change
  • Presidential election and ban on fracking
  • Keep it in the ground and the new green deal
  • Environmental regulation and reforms
  • Decarbonization

____________________________________

Natural Gas Physical and Financial Markets

January 25, 2022 | Online

This course will present an overview of physical and financial natural gas markets. Attendees will review natural gas market basics, including terminology, concepts, and the mechanics of physical natural gas trading and go in-depth on the role of NYMEX Natural Gas Futures Contract in determining the value of physical natural gas. The agenda will also cover gas indices, fixed price, and physical basis deals, and we will address major trends on how sellers and purchasers price physical natural gas. Attendees will gain an understanding of where to find price information, what affects prices, and the role of the natural gas index publishers. They will leave the course with the ability to assess the importance of liquidity in physical natural gas markets and review considerations used to determine whether or not to hedge. The course will discuss the role of FERC, the Commodity Futures Trading Commission (CFTC), states, and other participants in regulating natural gas markets. The course will conclude with a discussion regarding where natural gas markets are headed.

The intent is for participants to be able to apply the information learned the first day they return to their jobs. Hands-on activities will be included throughout the day.

Learning Outcomes

  • Discuss an overview of physical and financial natural gas markets and their key differences
  • Explain the role of NYMEX Natural Gas Future Contract in determining the value of physical natural gas
  • Review natural gas market basics (terms, concepts, mechanics of physical natural gas trading)
  • Express where physical natural gas can be bought and sold
  • Discuss gas indices, fixed price, and physical basis deals
  • Address major trends on how sellers and purchasers price physical natural gas
  • Describe where to find price information and what affects prices
  • Explain the role of the natural gas index publishers
  • Assess the importance of liquidity in physical natural gas markets
  • List the major players of physical natural gas markets
  • Review considerations used to determine whether or not to hedge
  • Describe the role of FERC, the Commodity Futures Trading Commission (CFTC), states, and other participants in regulating natural gas markets
  • Discuss where natural gas markets are headed

Agenda

TUESDAY, JANUARY 25, 2021

9:00 a.m. – 5:00 p.m. Central Time

Introduction

Geopolitics and Social Media

Where are natural gas prices headed?

Crude oil, NGL, and gas production effects

Gas processing and pipeline constraints

U.S. exports to Mexico and global markets by LNG companies

Other Drivers of Natural Gas Prices

Weather

Storage

Infrastructure constraints

Physical & Financial Natural Gas Markets

Regional gas markets

NYMEX Natural Gas Futures Contract at the Henry Hub

Global natural gas benchmarks

Kinds of Transactions

Forwards

NYMEX and ICE look-alike futures

  • Contract specifications
  • Key differences

Clearing

Liquidity

Comparing forwards and futures

Physical Natural Gas Pricing and Indexes

Fixed price deals

Daily index prices

Monthly index prices

Price reporting agencies (Platts, NGI, Argus, ICE)

How indexes are calculated

Physical Natural Gas: Buying and Selling

Where can physical natural gas be bought and sold

How and when indexes are used to price gas

What is Bidweek?

  • What happens during Bidweek
  • Settlement of prompt month NYMEX Gas Futures contract

Daily gas (next day gas), Intraday (same day gas), and Weekend gas

Buying and selling physical gas using index, fixed price, and physical basis

Pricing long-term sale and purchase of gas

Firm and interruptible pipeline transportation nominations

Natural Gas Basis

What is basis?

Using basis when buying and selling gas

Natural Gas Market Basics & Terms

Bulls and Bears

Going Long and Shorting the Market

What buying and selling futures means

Open Interest & CFTC Commitments of Traders Report

Hedging with Physicals and Futures

What is hedging

Hedging and risk management

Financial hedges

To hedge or not to hedge- and how much?

Long Hedgers and Short Hedgers—determining your natural position

Hedging for natural gas producers and purchasers with examples

Hedging with Natural Gas Options

Definition of options and why they are popular

Anatomy of an option

Buying and selling options

Call options vs Put options

Hedging with gas options

Speculating with options

Example of how to hedge with options

Using Natural Gas Swaps to Hedging Basis

Why hedge basis?

Defining swaps

Basis swaps

Index swap

Swap dealers

Key differences between futures and swaps and related costs

Natural Gas Markets: Regulatory Perspectives

Who’s watching the natural gas markets for manipulation?

FERC, CFTC, States, and ISOs and RTOs

What gets FERC’s attention in the natural gas markets?

How FERC performs oversight and surveillance of the natural gas markets

FERC’s hotline and its role in preventing market manipulation

Fines and penalties