Return to Blog

Amount of natural gas in storage reaches new record

Total amount of natural gas in storage in the US has now surpassed the previous record, which was set in November 2015.  With the storage level expected to rise and winter on its way, will natural gas prices continue to stay at record lows?

graph of weekly natural gas storage inventories, as explained in the article text
Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report

Working natural gas in storage reached a record high of 4,017 billion cubic feet (Bcf) as of November 4, according to EIA’s latest Weekly Natural Gas Storage Report. Inventories have been relatively high throughout the year, surpassing previous five-year highs in 48 of the past 52 weeks. Declining natural gas production and strong demand from the power sector were offset by a warmer-than-usual winter, which left natural gas inventories in April (the beginning of the 2016 injection season) above the previous five-year maximum.

The injection season for natural gas storage typically runs from April through October, although net natural gas injections sometimes continue for several weeks during November. In fact, the previous record for natural gas storage was set at 4,009 Bcf for the week ending November 20, 2015. This year, natural gas inventories have been relatively high in almost every natural gas storage region in EIA’s survey.

In the past month, the Midwest and Mountain regions exceeded and remained above the previous five-year maximum inventory levels. In the two weeks between October 21 and November 4, the South Central region added 59 Bcf to its inventories, but it still remains slightly below its one-year maximum of 1,352 Bcf. Additionally, the East region remains 14 Bcf below its five-year maximum capacity of 960 Bcf. With the other regions being near or at full capacity, any injections in the coming weeks will likely occur in the South Central and East regions.

In the Pacific region, which includes Southern California, storage levels at the end of the injection season were below the previous five-year average for that time of year. Despite a modest net increase in natural gas working stocks in the Pacific region, continuing storage limitations at the Aliso Canyon storage facility resulted in a decline in normal inventory levels at the end of October. Aliso Canyon’s 86 Bcf storage capacity accounts for about 20% of the overall storage capacity in the Pacific region. Overall, natural gas storage in the Pacific region is about 11% lower than the previous five-year average of 368 Bcf, and the current storage limitations mean that the region has reached its effective storage capacity.

graph of natural gas storage by region, as explained in the article text
Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report. Note: Regional maximums based on five-year maximums reported in Weekly Natural Gas Storage Report.

Domestic dry natural gas production during the first eight months of 2016 was about 1.3 Bcf/d lower than last year’s average of 74 Bcf/d for the same time period. Meanwhile, natural gas consumption has remained relatively flat in 2016, with increases in natural gas demand in the power sector offset by decreases in the residential and commercial sectors.

Based on the National Oceanic and Atmospheric Administration’s (NOAA) winter forecast, EIA expects U.S. average household natural gas consumption to increase 8% this winter, with the largest increases in the Northeast and Midwest census regions. Under this scenario, EIA expects inventories to end the winter at slightly below 1,900 Bcf. However, temperatures so far this winter have consistently been at or above weekly average normal levels, and NOAA’s latest three-month temperature outlook forecasts that December–February temperatures will be higher than normal. In a scenario with temperatures 10% warmer than forecast, U.S. average household natural gas consumption would be 1% lower this winter compared to last winter, with inventories at winter’s end near 2,300 Bcf.

Source: EIA.com

Disclaimer: Although the information contained herein is from sources believed to be reliable, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) makes no warranty or representation that such information is correct and is not responsible for errors, omissions or misstatements of any kind. All information is provided “AS IS” and on an “AS AVAILABLE” basis and TFS disclaims all express and implied warranties related to such information and does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of any of the information. The information contained herein, including any pricing, is for informational purposes only, can be changed at any time, should be independently evaluated, and is not a binding offer to provide electricity, natural gas and related services. The parties agree that TFS’s sole function with respect to any transaction is the introduction of the parties and that each party is responsible for evaluating the merits of the transaction and credit worthiness of the other. TFS assumes no responsibility for the performance of any transaction or the financial condition of any party. TFS accepts no liability for any direct, indirect or other consequential loss arising out of any use of the information contained herein or any inaccuracy, error or omission in any of its content. This document is the property of, and is proprietary to, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) and is identified as “Confidential.” Those parties to whom it is distributed shall exercise the same degree of custody and care afforded their own such information. TFS makes no claims concerning the validity of the information provided herein and will not be held liable for any use of this information. The information provided herein may be displayed and printed for your internal use only and may not reproduced, retransmitted, distributed, disseminated, sold, published, broadcast or circulated to anyone without the express written consent of TFS.