The current US Energy Information Administration (EIA) Short Term Energy Outlook (STEO) projects a record build of close to 2600 billion ft3 from the beginning of April through the end of October, which would put inventories at 3431 billion ft3 at the end of October. Nearly midway through the summer storage injection season, working natural gas storage is on pace to meet these expectations.
According to the EIA, following an extremely cold winter, storage inventories at the end of the heating season were only 857 billion ft3, the lowest level since 2003. Inventories were approximately 1000 billion ft3 less than the five year average. The refill season began slowly in April, however injections quickly ramped up in May and have substantially exceeded five year average levels each week since then.
For eight consecutive weeks, the weekly net injection was greater than 100 billion ft3. In the 10 weeks between the week ending 25 April and the week ending 4 July, net injections into storage inventories totaled 1.04 trillion ft3. This was the quickest trillion ft3 increase since 2003. As a result, the gap between current storage and the five year average narrowed substantially; currently, inventories are 683 billion ft3 below the five year average.
The EIA explains that abundant domestic production and moderate demand for natural gas to generate electricity because of a relatively cool summer have led to this year’s strong injections. Natural gas marketed production has continued to set records as new wells come online in the Marcellus and Eagle Ford shale formations, and EIA expects production growth will continue.
In the STEO, EIA expects that demand from the electric power sector from April through October will remain flat compared with last year, while natural gas production is approximately 3 million ft3/d greater this summer compared to last summer. EIA forecasts that the gap between current and five year average inventory levels will continue to narrow over the rest of the injection season. Continued high levels of production expected through next spring will also help to reduce the need for storage withdrawals over the upcoming winter.
Strength of supply is reflected in lower natural gas prices; as inventories have increased at a record pace, prices have fallen to six month lows.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/28072014/natural-gas-inventories-1017/