Following the release of its natural gas storage report for the week ended July 22, the Energy Information Administration (EIA) announced last Thursday that it will revise the estimation system used to produce the storage estimates published in the Weekly Natural Gas Storage Report.
The new system expands the sample of companies used for estimation from 56 to 63 and revises the approach used to estimate the volume of working gas in storage from the weekly sample data.
The effective date for the new system is Aug. 4, when working gas estimates as of July 29 will be released. At the same time, the EIA also will release revised storage estimates based on the new methodology for all weeks from June 17, to July 22.
"While the existing system has worked well, we are confident that the changes to the weekly natural gas storage system will provide even higher quality estimates for data users," said EIA Administrator Guy Caruso. "These changes reflect EIA's continuing efforts to monitor and improve performance of our information products."
EIA examined a number of options to enhance the current estimation procedure to determine if modifications might improve estimates. The selected method of estimation uses both recent data from the EIA-191, "Monthly and Annual Underground Storage Report," and the latest data collected on the weekly EIA-912 survey.
The EIA said the new method is based on analysis of data trends on an individual company basis. Company-specific estimates are summed to produce regional and national totals, which is a distinct departure in approach from the current method, which estimates the total volume for non-sample companies as a group based on the aggregate volume of a set of sample companies.
The companies are organized into four groups for estimation: the East region, the West region, Producing-Salt, and Producing-Nonsalt. The EIA noted that there are three types of underground storage facilities: (1) depleted reservoirs in oil and/or gas fields, (2) aquifers, and (3) salt cavern formations.
"A rigorous statistical analysis of monthly storage data from the EIA-191 examined the hypothesis that working gas stock patterns differ for salt and non-salt companies," the EIA found. "Given the relatively small number of salt fields in the East and West Regions and that salt cavern operators constitute a significant proportion of working gas volumes in the Producing region, the analysis focused on the Producing region only."
Companies that operated at least one salt cavern field were designated salt companies if salt cavern operations constituted the majority of working gas storage volumes. In its study, the EIA found that the results verified that the salt companies have different patterns of working gas in storage than the non-salt companies.
"The finding of dissimilar behavior between salt cavern and non-salt cavern operators suggested that a method that differentiated among the companies on this basis might improve estimation quality," the EIA said. "This stratification by these two company types was applied only to those companies in the Producing region. Hence the revised estimation method is based on four groups: East, West, Producing-Salt, and Producing-Nonsalt. The weekly estimates will continue to be reported on a three-region basis."
In addition to the revision to its estimation method, the EIA said it will continue to investigate certain approaches to enhance future estimation including:
For more information on the EIA's method revisions, visit http://tonto.eia.doe.gov/oog/info/ngs/methchange-2005.html.
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