Traded Natural Gas Volume Declines in 2013 According to New Report

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The volume of U.S. natural gas traded decreased during a time of increased natural gas production according to Cornerstone Research Report

Greg Leonard, Senior Advisor, Cornerstone Research

In 2013, we saw a decline in the amount of natural gas traded in the United States measured both by the Form 552 volume and by the volume on exchanges.

In 2013, the total volume of natural gas traded in the United States declined. This decrease was evident in company submissions to the Federal Energy Regulatory Commission (FERC) as well as in annual reports made by the exchanges, according to Characteristics of U.S. Natural Gas Transactions—Insights from FERC Form 552 Submissions as of May 16, 2014, published by Cornerstone Research. FERC submissions fell 3 percent while the number of natural gas contracts traded on IntercontinentalExchange Inc. (ICE) decreased 18 percent, and CME Group Inc.’s natural gas products volume declined approximately 13 percent from 2012. These decreases occurred during a time of increased natural gas production in the United States.

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 market activities and characteristics across the various types of participants.


Dr. Greg Leonard, Head of Cornerstone Research’s Energy and Commodities practice:

“In 2013, we saw a decline in the amount of natural gas traded in the United States measured both by the Form 552 volume and by the volume on exchanges.”

“Our research shows that in 2013 the trend has continued where a smaller and smaller portion of fixed-price natural gas transactions are setting prices for a larger proportion of index-price transactions.”

Key Findings

  • In 2013, there was a continuation of the shrinking of the base of transactions used to set the price indices relative to the transactions that used the indices. The volume of transactions dependent on the indices was almost six times larger in 2013 than the volume of transactions that formed the indices. Overall, this disparity has increased in the past five years.
  • The trading activity reported in the Form 552 submissions totaled 120,618 tBtu transacted by 660 companies.
  • The portion of reportable volume reported to price-index publishers decreased for the second consecutive year. From 2012 to 2013, volume reported decreased by over five percentage points.
  • Reporting to price-index publishers was inconsistent across industry segments in 2013. Integrated-upstream companies reported more than 90 percent of eligible volume to the price-index publishers, while industrial or commercial consumers and chemical consumers reported less than 10 percent of their eligible volume.
  • The U.S. natural gas industry remains unconcentrated, with a large number of diverse participants. In 2013 the top 20 transacting companies by volume accounted for almost 44 percent of the transaction volume in the Form 552 submissions.
  • Of the 660 Form 552 respondents in 2013, 128 (19 percent) reported transaction information to the price-index publishers for at least one affiliate. While the majority of the Form 552 respondents did not report, the reporting companies tended to be larger than average. Approximately half of the reporting-eligible volume was transacted by companies that report to the price-index publishers.

About Cornerstone Research

For more than twenty-five years, Cornerstone Research staff have provided economic and financial analysis of complex issues arising in commercial litigation and regulatory proceedings. The firm has four hundred fifty staff who work with a broad network of testifying experts to bring specialized knowledge and experience to each assignment.

Twitter at @Cornerstone_Res

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