Thursday, October 21, 2010

Deja Vu All Over Again

It's not the first time I've quoted Yogi Berra, but since history has a tendency to repeat itself, therefore so do I. Natural gas storage levels are becoming a problem again.  Last year, the story was that gas in storage started hitting record levels several months before the end of the end of the gas injection season (i.e. the beginning of cold weather).   The story dominated the news.  This year, an abnormally hot summer kept storage injections down, but the end of the heat led to a sudden spike in storage levels, as shown on the chart below:

The smooth lines on the chart above belie the fact that 2010 has been an up and down year relative to the five year average:

  • Jan. 8 to March 5: 2010 injections were 292 Bcf lower than the five year average.  Everyone bundles up and cheers!
  • March 12 to June 11: 2010 gave it all back - 2010 injections were 294 Bcf higher than the five year average.  Inevitable, right?
  • June 18 to Sept. 3: 2010's winning streak starts again. 2010 injections 147 Bcf lower than the five year average.  Sweating, but feeling strangely better.
  • Sept 10 to October 15: 2010 gives most of it back - 2010 injections were 120 Bcf higher than the five year average.  Another week like this and there will be nothing to show for the unusual summer. (But it sure is nice outside.)
Get the picture?  The big question is when will the injection season end?  In 2009, injections dragged into December.  The good news is that there is 4.1% more natural gas storage available than last year.  The bad news is that if injections continue at this pace we are going to test those maximum storage levels and set a new record.

I wish I could tell you where it is going.  The next month and a half will be a tense one for those in the natural gas industry.  A couple of big cold fronts might bring storage injections down, but you never know.  Unfortunately the only advice I can offer is to fasten your seatbelt and keep your motion sickness bag handy.

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