In an effort to give analysts and industry more comprehensive information on the relationship between natural gas inventory changes and types of storage facilities, the Energy Information Administration (EIA) -- starting with the March 22 edition of the Weekly Natural Gas Storage Report -- is providing breakouts of inventory levels at salt cavern and nonsalt cavern facilities for the weekly estimates of working gas in underground natural gas storage inventories in the Producing Region, defined as Alabama, Arkansas, Kansas, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.
Nonsalt cavern facilities are more often used for seasonal storage, while salt cavern facilities lend themselves to frequent cycling. As of March 16, nonsalt cavern inventories were about 752 Bcf, or about three times higher than the 232 Bcf of inventories in salt cavern facilities in the Producing Region. Working gas stocks increased by 9 Bcf in each type since March 9. EIA is currently providing historical data for this breakout back to January 2011 and plans to provide more historical data in the future.
"Because salt cavern and nonsalt cavern facilities -- aquifer and depleted field reservoirs -- have different operational characteristics, reporting weekly information for both in the Producing Region will provide a more complete picture of natural gas trends," the EIA said. "For example, salt cavern facilities can usually provide high deliverability, which means the ability to quickly inject or withdraw significant quantities of natural gas multiple times a year. Therefore, they generally offer greater operational flexibility than aquifers and depleted fields."
According to the government agency's data, nonsalt facilities account for most of the capacity in the Producing Region. They typically provide seasonal service in which customers mostly inject natural gas from April through October and then withdraw stored natural gas during the winter (November through March).
Some nonsalt storage cavern operators require their customers to reduce the quantity of gas they have in storage to certain levels, or "ratchets," at the end of the storage withdrawal season to maintain integrity of the fields. The EIA pointed out that this requirement to reduce storage levels is generally not applicable to salt facilities, so reporting separately on each type of cavern storage "could shed light" on the Producing Region natural gas market as the winter of 2011-2012 winds down.
The distinction is of increasing importance this year as the mild winter and increased shale gas production teamed to create a natural gas supply glut, pushing gas prices to a 10-year low. The situation isn't getting any better, especially since the industry this year flipped from withdrawals to injections earlier than normal. An 11 Bcf injection was recorded for the week ending March 16, bringing working gas in storage to a whopping 2,380 Bcf, according to EIA estimates. Stocks are now 766 Bcf higher than last year at this time and 835 Bcf above the five-year average of 1,545 Bcf.
The breakout of salt and nonsalt facility totals for the Producing Region will not be noted in the actual weekly storage chart. Instead, it will be listed in the "summary" section of the Weekly Natural Gas Storage Report. A historical series of the salt/nonsalt subtotals of the Producing Region, dating to Jan. 7, 2011, is available to download at: wngsr_producing_region_salt.xls.
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