Wednesday, September 12, 2012

U.S. Storage Adds 136 Bcf of NatGas Storage Capacity in 2012

The EIA announced today that the U.S. added 137 Bcf of net natural gas storage capacity in the Lower 48 between April 2011 and April 2012, when it conducts its annual survey.  This brings the demonstrated peak capacity of the national system to 4.239 Tcf.  The "demonstrated peak" capacity (shaded on table below) represents the highest observed levels in each storage location and is viewed as more dependable than the "design capacity," which more of a theoretical measure based on how each facility is built.  The demonstrated peak is the "hang your hat on" number.

The biggest addition by percentage occurred in the West Region, with an the addition of 46 Bcf, which represents an 8.2% increase, while the biggest addition in terms of actual capacity occurred in the Producing Region with a 77 Bcf gain (+5.7%).

As we chug towards the end of the storage season, including tomorrow's report I estimate that we have about ten weeks left of reporting injections (the average reporting peak date for the past four years is around Nov. 15) and we are 837 Bcf below the demonstrated peak capacity.  Because of logistics (storage location vs. production location, etc.), you can't assume we can neatly pack in 837 Bcf of gas into storage over that time, but it gives us a general understanding of remaining capacity, offering some assurance that we do have some storage headroom going into the stretch run.

Looking at last week's numbers, we have about 19.7% of the storage demonstrated peak capacity remaining, ranging from 18.5% to 21.2% by region.  That gives me a level of comfort I never would have imagined three or four months ago.

To hit the peak level, weekly injections for the next ten weeks would have to average around 83 Bcf, and that is unlikely given that for the past five years the average injection over that same period has been closer to 54 Bcf.  If we maintain that average this year, we would peak at 3.942 Tcf, which is 297 below demonstrated peak capacity, or 93% of capacity.  

But this is unlikely given that since April 9, 2012 the current weekly injections have been on average 40% lower than the five year average.  Assuming the average injection for the next two weeks is closer to 43 Bcf (approximately 20% below the five year average), the storage level at the end of the season would be around 3.835, 90% of capacity), and almost exactly the average peak storage level for the past three years.  Here are the numbers in a table:

As I always say, I don't like to prognosticate, but I throw out these scenarios for conversational purposes.  In a rare moment of optimism, I acknowledge that I do not include a scenario where the weekly injection for the next ten weeks is higher than the five year average.  Hopefully that won't come to pass.

No comments: