As we continue into the winter season, Vicinity’s team has been evaluating weather patterns and predictions for the natural gas market to prepare our customers for potential price fluctuations.
After peaking in December 2023, the El Niño pattern continues, and February 2024 weather forecasts indicate above-average temperatures in the Northeast and Midwest, induced cooling in the South, and higher precipitation in the Pacific, which experts predict may continue into the remainder of the winter season.
The natural gas markets have reset to similar levels as 2021, before the geopolitical events in 2022 drove prices above average.
By the numbers: what we know and what we can expect
Prior to January 2024’s well freeze-offs, the U.S. lower 48 saw strong natural gas production, primarily due to efficiencies in the Permian Basin of the U.S. that have provided ample supply to the market, mitigating demand risk. However, due to colder weather in the Permian basin in recent weeks, natural gas production has fallen.
Currently, natural gas storage levels are 4% above 2023 levels and 5% above the 5-year average. Europe’s storage facilities were 80% full through the first half of January 2024, slowing European demand for LNG and suppressing pricing.
Colder weather conditions in January 2024 have contributed to well freeze-offs in the Permian natural gas basin, impacting output and potentially providing more upside risk to pricing. However, the January 2024 futures contract settlement was less than levels at this time last year.
Key electrification progress
The adverse effects of natural gas far outweigh the benefits of continuing to invest in this unsustainable fuel source.
In 2023, the U.S. saw an estimated 1.9% decrease in carbon emissions, as measured in research done by the Rhodium Group. Throughout the year, emissions remained below pre-pandemic levels and dropped to 17.2% below 2005 levels.
While this decrease is substantial, an even greater emissions reduction is necessary to limit climate change. In 2023, Earth’s average land and ocean surface temperature was 2.12 degrees F above the 20th century, making it the highest global temperature among all years recorded since 1850, according to the U.S. National Oceanic and Atmospheric Administration.
The undeniable climate crisis drives Vicinity’s progress towards transitioning away from fossil fuels and eliminating carbon emissions from our operations. By electrifying our operations nationwide, we will be able to offer an affordable, carbon-free path for building owners to meet sustainability goals and join us in limiting climate change.
Our first electric boiler has been delivered to our Kendall facility in Cambridge, Massachusetts, and it will enter service in 2024, immediately allowing our customers to harness carbon-free energy and decarbonize their buildings.
The industrial-scale heat pump we are developing in partnership with MAN Energy Solutions is undergoing engineering and will enter service in 2026. These milestones demonstrate our commitment and progress towards a net zero carbon future.