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Weekly Storage Withdrawal Record May Be Within Reach

Gas storage withdrawals last week may have broken the weekly record set Jan. 17, 1997 at more than 260 Bcf, according to a number of forecasters. Not only did the severe cold early in the week send gas demand to peak levels on some northeastern local distribution systems, but the extended cold also sustained high withdrawals for multiple days.

"We didn't get to [a record] peak, but we were taking out pretty substantial volumes over an extended seven- to 10-day period and that's what will really show up in the [EIA's storage report]," said Gary Bartlett, vice president of gas supply for Chicago-based Nicor Gas. "That was true for our area as well as for the East Coast and most everywhere else."

He said Nicor's highest sendout during the week was about 4.1 Bcf/d on Feb. 4, but the company, which serves two million customers in northern Illinois, had at least three days in which demand on its system exceeded the 4 Bcf/d level. Peak demand would be more than 4.6 Bcf/d. Nicor's highest storage withdrawal last week was about 2 Bcf/d, compared to a potential peak for this time of year of about 2.2 Bcf/d.

Record gas demand also was reported on KeySpan's system in New York City and on Long Island. Demand rose to 1.1 Bcf/d on KeySpan New York's system and 751,000 Dth/d on KeySpan Long Island, excluding demand from power generation, said Melissa Mairn, manager of supply planning for KeySpan. KeySpan New England also had strong demand with sendout exceeding 1 Bcf/d, but it didn't set a new record, she said. The company's previous record was 1.4 Bcf/d.

Exelon's two utility subsidiaries, Commonwealth Edison in Chicago and Philadelphia-based PECO, reported record winter peak power demand on Feb. 5 because of the extremely cold temperatures and customer growth. PECO also reported that gas sendout on its system was about the fourth highest it has ever seen.

Heating degree days (HDD) were well above normal last week in all regions of the country except the West. For the country as a whole HDDs averaged 27% above normal, according to data from the National Oceanic and Atmospheric Administration (NOAA). NOAA said there were 243 HDDs, four colder than the prior week, 49 colder than normal and 63 colder than the same week last year.

However, NOAA HDD data, which run from Sunday to Saturday, don't exactly match the Energy Information Administration's (EIA) storage week (working gas levels as of Friday at 9 a.m. EST). Tulsa-based Frontier Weather said its HDD data does track the EIA storage week and for the week that ended Feb. 9 Frontier said there were 236 HDDs compared to 218 HDDs a week earlier when EIA reported a 224 Bcf weekly withdrawal, and 209 HDDs during the week that ended Jan. 26 when EIA reported a 186 Bcf withdrawal. This week Frontier is forecasting 216 HDDs, and next week's forecast calls for 175 HDDs.

Looking at either of the HDD numbers, NOAA's or Frontier Weather's, last week still comes out on top. The severe cold likely sent working gas down 230-271 Bcf, according to a Reuters survey of 24 withdrawal estimates. Reuters said the average expectation was 252 Bcf. For the same week last year, working gas levels fell 92 Bcf and the five-year average of withdrawals for the week is 149 Bcf.

Jim Osten at Global Insight said he's expecting a 255 Bcf withdrawal. Consultant Ron Denhardt of Winchester, MA-based Strategic Energy & Economic Research said he's predicting a 264 Bcf draw. And Denver-based consulting firm Bentek Energy said it is expecting a 261 Bcf withdrawal based on a model that extrapolates total U.S. withdrawals based on gas flows from many of the country's storage fields to interstate pipelines.

Bentek said its survey samples in both the Producing and East regions last week showed record high withdrawals. "In the East, nine out of the 10 largest storage facilities experienced the maximum level of withdrawals" since Bentek has been collecting data for its storage outlook. Withdrawals at seven out of 17 fields in the Producing region were maxed out.

Bentek reported that Dominion Transmission withdrew 25 Bcf, Columbia removed 23 Bcf, ANR withdrew 17 Bcf and NGPL took out 15.6 Bcf. The total East number in Bentek's sample was 14% higher than the previous week. Bentek predicts that the East withdrew a total of 162 Bcf, with the Producing and West regions drawing 85 Bcf and 14 Bcf, respectively.

If working gas levels fall by a record 261 Bcf, that would bring stocks down to 2,086 Bcf, or about 195 Bcf less than levels at the same time last year and 266 Bcf more than the five-year average.

Tim Evans, futures analyst with Citigroup, said next week's report should show a withdrawal of about 210-220 Bcf. A 210 Bcf withdrawal for the week ending Feb. 16 would put working gas levels only 193 Bcf above the five-year average and 285 Bcf below levels at the same time last year.

Nicor's Bartlett said so far this month the utility has taken about 50% more gas out of storage than normal. "We were definitely behind before we got this colder-than-normal weather and that kind of caught us back up. We are pretty much planning to be on schedule [with normal storage levels on April 1]," he said.

"With the type of storage fields we have, which are aquifer storage fields, we pretty much have to fill them up and draw them down each year..." He said the performance of aquifer storage fields will deteriorate if not kept in withdrawal or injection mode. "You lose some of the energy, deliverability declines and the longer-term performance characteristics are harmed if we don't cycle. It's a lot different than the salt domes down south or even some of the reef storage in Michigan, where you can hold the gas in the ground and not take it out and it doesn't hurt anything.

"From a storage standpoint, we are in very good shape" right now, he said. "We were behind on withdrawals because of the warmer-than-normal weather in January and the earlier part of the heating season. But we've been able catch up..."

He noted that HDDs are still running much above normal in Chicago, about 57 on Wednesday compared to a normal of about 40 HDDs. However, a slight warm-up is expected by the middle of next week. That should put Nicor is a good position entering the last month of the heating season.

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