EIA Calls for Comments on Timing for Storage Revision Announcements
The Energy Information Administration, as promised, has called for comments on its policy for announcing revisions to its weekly storage report, and has offered two alternatives to current practice: (1) setting an alternate time for announcing revisions on Mondays, or (2) announcing revisions at any time after first sending out two-hour advance warnings. Both of these would apply only for large revisions -- 15 Bcf or more.
In the notice published in the Federal Register Jan. 7, EIA has asked for comments on the two alternatives and on specific features of each. The first alternative would have EIA announcing any revision of 15 Bcf or more at 10:30 a.m. EST on the first federal government workday of the week, which normally would be Mondays, or Tuesday if Monday is a holiday.
In the second alternative EIA could post a warning and send out e-mails to its notification list two hours before announcing a major revision. This would occur "irrespective of whether any specific markets are in operation at the time of the revision release."
In both cases any revisions between 7-14 Bcf, or revisions greater than 7 Bcf resulting from a new estimation methodology or sample used in the estimation process, would be announced at the regular time for storage and revision announcements on Thursdays at 10:30 a.m. EST.
The government agency wants comments on whether the 15 Bcf is a good cut-off number for special announcements, whether announcements of revised storage information should be restricted to specific business hours or days because of the operating hours of various trading markets and whether a two-hour notification by web and e-mail is adequate and equitable. It asks for the pros and cons of both suggested alternatives.
The agency noted that revisions may occur because survey respondents realize after submitting data that they had made an error or they have received new information that should have been included, or because a respondent did not get its survey form into EIA on time. There also could be a reclassification of working and base gas or a change in field operating status.
EIA said there have been revisions in 10 of the 136 reports released during the time it has been doing the survey, starting May 9, 2002 through Dec. 9, 2004. Only two were above 15 Bcf, a revision of 26 Bcf of the total announced on July 3, 2002 and a 32 Bcf revision of the total announced on Nov. 24, 2004. It was the latest incident that triggered the current review of revision announcement policy.
The unexpectedly high storage withdrawal on Nov. 24 that caused prices to jump more than a dollar, was announced just hours before the December futures contract expired. The correction was not made until the following Thursday, well past the point where all December baseload gas had been negotiated and priced. In that case, however, damage would have been only partially mitigated by a faster revision, since many monthly contracts are pegged to the expiring prompt month futures contract and there would have been little time for a correction before it went off the board.
Suggestions also have been made that EIA not make any storage announcements on the day the monthly futures contract expires, which is the third-to-last business day of the month.
The EIA announcement made no mention of the circumstances behind the incorrect Nov. 24 report. The American Public Gas Association had asked two weeks ago that EIA publish a full account of what went wrong with the Nov. 24 storage report along with its call for comments on storage policy revisions.
This "would be a great time to have a full discussion" of the events of Nov. 24, APGA spokeswoman Laura Schepis told NGI. Although the Federal Energy Regulatory Commission carried out its own investigation of the incident and reported the results earlier this month, Schepis said "all the facts are not in" yet.
"I'm not sure what more we're able to say at this point," said EIA spokesman Jonathan Cogan. "There still is an issue of what we can disclose about individual [company] submissions" to the storage report.
FERC staff said that an incorrect e-mail attachment sent by a clerk at Dominion Transmission Inc. (DTI) to weekly storage surveyors at the EIA led to the erroneous storage report in late November and the subsequent spurt in gas futures prices. The agency staff estimated that the error and price run-up cost U.S. consumers $200 million to $1 billion in their December cost of gas (see NGI, Dec. 20). Dominion said the clerk sent an old September report instead of the one for the correct week in November. However, the company noted the report was clearly dated with the wrong date and Dominion had posted the correct numbers on its website.
The EIA notice is available at http://www.eia.doe.gov/oss/WNGSR-Revision-Policy-for-Comments-Jan7-2005.pdf. Comments are to be directed to William Trapmann by Feb. 7. Fax at 202-586-4220 or e-mail to William.Trapmann@eia.doe.gov is recommended.