EIA anticipates record storage in 2014

LNG Industry, Friday, 14 March 2014 16:45

A bitter winter in the US led to a record-breaking natural gas withdrawal season in 2014, bringing inventories of natural gas to a 11-year low. The US Energy Information Agency’s (EIA) Short-Term Energy Outlook (STEO) forecasts a robust injection season (April – October) with nearly 2500 billion ft3 extra storage as operators seek to rebuild inventory levels.

Source: U.S. Energy Information Administration, Natural Gas Monthly and Short-Term Energy Outlook, March 2014.

The projected inventory level at the end of the current withdrawal season at the end of March results from a record winter withdrawal of 2851 billion ft3. Demand driven by cold weather has played a major role in driving this winter's high withdrawals. From 1 November, 2013 through to 10 March, 2014, US consumption of natural gas averaged 91.2 billion ft3/d, an increase of 10% over the same days last winter and 13% over the average for these days during the past five winters. Residential/commercial consumption increased by 17% over the same days in the 2012-13 winter season, while population-weighted heating degree days (indicating cold weather) increased by 16%, according to data from Bentek Energy LLC.

Source: U.S. Energy Information Administration, Natural Gas Monthly and Short-Term Energy Outlook, March 2014

Record storage build

STEO projects saw relatively high natural gas production growth and moderate demand growth starting in April that will allow for a record storage build through to October. The forecasted April-to-October storage build of nearly 2500 billion ft3 would surpass the previous record injection season net inventory build (April - October, 2001) by more than 90 billion ft3, to end the injection season at 3459 billion ft3. While the projected storage build for the upcoming injection season would be a record, total Lower 48 end-October inventories in 2014 would still be at their lowest level since 2008. High injections would not fully erase the deficit in storage volumes caused by this winter's heavy withdrawals.

The STEO expects spot prices will be in the low US$ 4 per million Btu range over the summer, a level high enough to limit the growth of natural gas use in the electric power sector. As a result, and assuming close-to-normal weather this summer, EIA projects that electric power consumption of gas from April to October will be 23.9 billion ft3/d, essentially flat compared to levels one year ago. Expected dry natural gas production during this period reaches 68.1 billion ft3/d, a 2% increase over last year.

The tab below provides additional detail on storage dynamics during this winter's natural gas withdrawal season.