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Natural gas consumption drives withdrawal of storage inventories

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Hydrocarbon Engineering,

Working natural gas storage inventories posted a rare summer net withdrawal of 6 billion ft3 for the week ending 29 July 2016, according to EIA's Weekly Natural Gas Storage Report. Record high consumption of natural gas for electric power generation drove this withdrawal. Although withdrawals in the summer are not unprecedented, and happen regularly in the South Central storage region, the last time a net withdrawal in July occurred on a national basis was in summer 2006. This net withdrawal brings total inventories to 3288 billion ft3, or about 16% higher than the previous five year average (2011 - 2015).

During the current injection season, net injections had already been much lower than the previous five-year average for almost every week. This trend reflects an unusually high inventory level at the start of the injection season, high power burn, and slightly lower natural gas production, which has recently fallen below year-ago levels. Following a warm 2015 - 2016 winter, inventories headed into the injection season were at record high levels. Despite lower injections, and a net withdrawal this week, inventories are still substantially higher than the five-year average and year-ago levels.

For the week ending 29 July, two of the five storage regions (South Central and Pacific) posted overall withdrawals, which more than offset slight injections in the other three regions. In natural gas markets, analysts generally refer to the injection season as running from 1 April through 31 October of each year, but those dates are not strict cutoff points.

The South Central region, in particular, has several salt-dome facilities where natural gas can be drawn down and refilled up to a dozen times a year. These salt-dome facilities allow more flexibility than traditional storage facilities using depleted natural gas fields. Withdrawals in the South Central region, an area that has increasingly relied on natural gas-fired generation, are common in the summer but are usually offset by injections in the other regions.

Adapted from press release by Rosalie Starling

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