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EIA Projects Record Level of Storage This Year

The Energy Information Administration (EIA) Monday projected that the natural gas industry will enter the winter heating season this year with a record level of gas on hand.

It estimates that storage operators will have a little more than 3.9 Tcf in storage by the end of this injection season, which runs from April 1 through Oct. 31, as a result of the continuing strong production levels. This will place stocks at the end of the 2011 injection season at 61 Bcf above last year's record, according to the EIA.

Bentek Energy LLC was slightly more bullish on storage levels, projecting that 4 Tcf will be in working storage by the end of the refill season (see Daily GPI, Feb. 3). By this fall, storage will be at record levels and gas will cost less than three bucks at Henry Hub, the Evergreen, CO-based consulting firm said.

Despite robust withdrawals during the 2010-2011 winter heating season, the EIA said the end-of-season inventories were still strong. Working gas inventories at the close of the winter heating season (March 31) were 1.585 Tcf following the third strongest withdrawal season in the past 15 years, the agency said.

"Inventories in the Producing Region are at their highest level since the [EIA began keeping data]. Both the East Region and West Region's inventory levels are above average for this time of year. This is due to the record-high inventory level at the start of the withdrawal season [Nov. 1, 2010], as well as additional storage capacity that has been incrementally added over the years," the EIA said.

During the winter season, the West Region withdrew nearly 300 Bcf, which was the largest net withdrawal in that region since the EIA started keeping data in 1995, the agency said. "Although total heating degree days for the withdrawal season in that region were close to normal (averaging for the season less than 2% below normal), there were eight weeks of strong withdrawals when heating degree days were nearly 20% greater than normal.

"Largely influenced by cold weather, net withdrawals in the East Region, which [had] over 50% of the national total of working gas in storage at the start of the withdrawal season, were also strong -- the second highest in 15 years," the EIA noted.

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