Thursday, March 29, 2012

Storage Situation Getting Ugly(er) Fast

Reuters reported yesterday that some owners of natural gas storage facilities are starting to turn away gas from interruptible customers to save room for customers with firm storage contracts.  While this is not an uncommon practice and it doesn't impact a large number of customers, it usually won't occur until much later in the summer injection season.  This likely is a sign of great ugliness later in the year as gas production remains high and committed storage is full.  This might be the nightmare scenario for the gas industry if gas prices crater and many wells have to be shut-in as pipelines effectively become storage venues of last resort.

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