Monday, August 31, 2009

EIA Gas Storage Report

As I noted last week, the EIA released its annual survey of gas storage capacity (report).  As of April 2009, aggregate peak capacity for U.S. underground natural gas storage had increased 2.6% year over year to 3,889 Bcf through the opening of new facilities and the expansion of exisitng facilities.  This is a conservative measure.  The less conservative measure, called "working gas design capacity" increased 4.6% to 4,313 Bcf.  It's probably better to look at the more conservative number, as the EIA downplays the higher number.

Last week's gas in storage figure of 3,258 Bcf implies that we are at 84% of capacity (of the conservative number).  This, however, is not a precise calculation because much of the gas is stored in old salt domes and tapped out wells as opposed to easily measurable tanks, so it's difficult to know the exact storage capacity. 

While 84% of capacity doesn't sound bad, early fall is a low consumption period and is the storage "injection season" for winter, so the market typically expects lots of gas to go into storage at this time of year.  It's going to be a bumpy ride for gas prices until the end of October.

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