Answer:
1) "Bid week" is the period when buyers and sellers of natural gas come together to negotiate prices for future delivery of gas. Bid week typically lasts for five business days.
2) The demand sectors for natural gas use include residential, commercial, industrial, and electric power generation. The electric power generation sector is the fastest growing sector of natural gas use.
3) The shale revolution has led to a significant increase in natural gas production in the United States. The use of horizontal drilling and hydraulic fracturing has made it possible to access previously unreachable natural gas reserves. As a result, the physical landscape of natural gas production and distribution has been altered, with the development of new pipelines, processing facilities, and export terminals.
4) It is necessary to process gas as one of the first steps post wellhead to remove impurities and ensure that the gas meets the specifications required for transportation and use.
5) LNG stands for liquefied natural gas, which is natural gas that has been cooled to a liquid state for transport by sea. LNG is significant to US natural gas markets because it has opened up new export markets for US natural gas producers.
6) "Cross overs" refer to the practice of trading between different delivery points on a pipeline system. This can allow traders to take advantage of price differentials between different locations.
7) The "Polar Vortex" caused the prices on Transco Zone 6 to spike upwards to $100 because of increased demand for natural gas for heating purposes, combined with a limited supply due to pipeline constraints.
8) To convert a fixed price for next month's delivery of natural gas at Henry Hub to daily pricing, you would divide the fixed price by the number of days in the month.
9) If you are long natural gas and convert a fixed price to daily pricing, you would expect prices to increase if the daily market price is higher than the fixed price. If you are short, you would expect prices to decrease.
10) The economic incentive that has caused the world price of natural gas to evolve from crude oil indexed is the increasing availability of natural gas and the development of new technologies for extracting and transporting natural gas.
11) It is expected that the world price of natural gas will be Henry Hub related because of the increasing role of the United States as a global natural gas supplier, and the growing importance of Henry Hub as a global pricing benchmark.
Step-by-step explanation: