It was a week late, but the American Gas Association reportedlast week that the industry put more gas in storage this year thanin any of the previous four years in which it has been conductingits storage survey. In a revision prompted by a change in totalworking gas capacity in the U.S., the AGA said on Nov. 6 there was3,127 Bcf of gas in storage, which is 58 Bcf more than the previouspeak set on Nov. 8, 1994 (See survey this issue).

The report sent out a confusing market signal last week,however, by reporting 45 Bcf of withdrawals for the week endingNov. 13 but actually showing 12 Bcf more gas in storage than wasreported in the previous weekly survey. The association was forcedto correct the previous week’s working gas levels, moving them up57 Bcf to the 3,127 Bcf peak, to show an understandable comparisonbetween the last two weeks.

The peculiar alterations, the association said, were the endresult of a significant increase in working gas capacity reportedby 20 of the more than 40 companies included in the AGA survey. AGAshowed a 58 Bcf increase in total working gas capacity in thecountry. The new estimated full level is 3,248 Bcf, which includesa 29 Bcf increase in working gas capacity in the Producing Region,a 21 Bcf rise in the Consuming Region East and an 8 Bcf increase inthe Consuming Region West.

“The ceiling changes. The percent full of our sample stays thesame. And when you adjust the ceiling it adjusts the [working gas]numbers and creates a temporary discontinuity, but that’s a quirkof our methodology,” said AGA’s Chris McGill.

McGill downplayed the significance of the change. “As you knowwe periodically readjust our universe of what it is we extrapolateour sample to – how we define storage. People may add facilities,they may delete facilities, they may improve facilities and overtime we get to a point where we need to adjust how we view ouruniverse and this is our time to do it. [The changes have] beenbuilding over time but we don’t adjust our universe of storagefrivolously, and we don’t do it every week. We do it at one time.This may be the fourth or fifth time we’ve done this in the historyof our report.” It is the largest adjustment that has been made, heconceded.

“To me it’s no more significant than if a company added afacility.” A number of companies, including Columbia Gas, haveinvested in expanding their storage facilities this year to improvedeliverability. “That might be part of it,” McGill said. “Maybe thetraditional view of the line between working gas and base gas hasshifted a little bit for some of the companies. Maybe they’refinding that they can just get a little more in their facilitiesthan they have before.” As storage companies fill facilities tohigher levels they discover more about the capabilities of theirfields, he noted.

Some observers concluded the changes sent out a bearish signalbecause they establish a new five-year high for working gas andshow 332 Bcf more gas is in storage than there was at the samepoint last year. Many sources admitted confusion over the changes.Some ignored the revision of the prior week’s numbers and focusedon the relatively large withdrawal.

“The market seems to have looked past the bearish implicationsof the change in working gas capacity to focus solely on thewithdrawal figure,” said one gas trader. “And on a net-net basis,the 45 Bcf drawdown was a little larger-and therefore bullish-thanmost were expecting considering the mild weather and relatively lowprices prevalent in the cash market.”

Rocco Canonica

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