Natural gas in storage reaches new record

Declining natural gas production and strong demand from the power sector were offset by a warmer than usual winter, which left natural gas inventories in April (the beginning of the 2016 injection season) above the previous five year maximum.

The injection season for natural gas storage typically runs from April through October, although net natural gas injections sometimes continue for several weeks during November. In fact, the previous record for natural gas storage was set at 4009 billion ft³ for the week ending 20 November 2015. This year, natural gas inventories have been relatively high in almost every natural gas storage region in EIA’s survey.

In the past month, the Midwest and Mountain regions exceeded and remained above the previous five year maximum inventory levels. In the two weeks between 21 October and 4 November, the South Central region added 59 billion ft³ to its inventories, but it still remains slightly below its one year maximum of 1352 billion ft³. Additionally, the East region remains 14 billion ft³ below its five year maximum capacity of 960 billion ft³. With the other regions being near or at full capacity, any injections in the coming weeks will likely occur in the South Central and East regions.

In the Pacific region, which includes Southern California, storage levels at the end of the injection season were below the previous five year average for that time of year. Despite a modest net increase in natural gas working stocks in the Pacific region, continuing storage limitations at the Aliso Canyon storage facility resulted in a decline in normal inventory levels at the end of October. Aliso Canyon’s 86 billion ft³ storage capacity accounts for about 20% of the overall storage capacity in the Pacific region. Overall, natural gas storage in the Pacific region is about 11% lower than the previous five year average of 368 billion ft³, and the current storage limitations mean that the region has reached its effective storage capacity.

Domestic dry natural gas production during the first eight months of 2016 was about 1.3 billion ft³/d lower than last year’s average of 74 billion ft³/d for the same time period. Meanwhile, natural gas consumption has remained relatively flat in 2016, with increases in natural gas demand in the power sector offset by decreases in the residential and commercial sectors.

Based on the National Oceanic and Atmospheric Administration's (NOAA) winter forecast, EIA expects US average household natural gas consumption to increase 8% this winter, with the largest increases in the Northeast and Midwest census regions. Under this scenario, EIA expects inventories to end the winter at slightly below 1900 billion ft³. However, temperatures so far this winter have consistently been at or above weekly average normal levels, and NOAA’s latest three month temperature outlook forecasts that December – February temperatures will be higher than normal. In a scenario with temperatures 10% warmer than forecast, US average household natural gas consumption would be 1% lower this winter compared to last winter, with inventories at winter’s end near 2300 billion ft³.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/17112016/natural-gas-in-storage-reaches-new-record/