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Eastern Megapolis to See Mild December, Bitter January, WSI Says

Temperatures in the eastern United States will average warmer than normal in December, but the region, which includes some of the nation's most energy hungry population centers, is expected to be colder than normal in both January and February, according to forecasters at Weather Services International (WSI).

But WSI forecasters expect above-normal temperatures to dominate western and north-central states over the next three months, and think a recurrence of the kind of deep freeze that tested the nation's energy infrastructure last winter is unlikely (see Daily GPISept. 22Aug. 8May 2March 26March 13Feb. 6).

"The record cold in many areas in November has dredged up memories of the very cold winter last year," said WSI Chief Meteorologist Todd Crawford. "However, there are so many differences this year compared to last (e.g., El Nino, North Pacific ocean temperatures, changes in the stratosphere) that we would be surprised to get the same sort of magnitude of numbing cold persisting for the entire winter again.

"While there is still considerable uncertainty regarding when and if the current very cold pattern will break down, we do expect a pattern transition in December that would allow for milder temperatures in the eastern half of the U.S. However, there are many indicators that suggest to us that colder weather is on tap for the back half of winter, as we expect a collapse of the stratospheric polar vortex that would allow for Arctic air to make many more guest appearances in mid-latitudes again during January and February."

Warmer-than-normal temperatures are expected to dominate the East and Great Lakes areas in December, while colder-than-normal temperatures are likely in the West (except coastal California), South Central and northern Plains, WSI said.

"Aggregate weather-related energy demand is expected to run slightly below normal in December," said Energy Securities Analysis Inc. Senior Power and Gas Analyst Chris Kostas. "With slightly warmer-than-normal temperatures expected east of the Mississippi (and in much of California), major heating-demand centers could find relief from the cold temperatures of November.

"Despite the year-over-year inventory deficit [see Daily GPINov. 20], natural-gas prices in PJM should be subdued in December, benefiting from mild seasonal temperatures combined with increased year-over-year shale-gas supplies and pipeline upgrades (such as the TEAM 2014 project on the Texas Eastern pipeline). Natural gas prices in New England should remain firm, however, despite the milder-than-normal temperatures, as the region remains pipeline constrained and even more dependent on natural gas this year due to power-plant retirements in the region."

WSI expects colder-than-normal temperatures to move into the East in January, with warmer-than-normal weather moving to the West.

"With colder-than-normal temperatures expected to move into in the population-rich eastern half of the country, including Texas and the southern Plains, energy demand is likely to increase dramatically in January," Kostas said. "Natural gas prices would rise as a result of the colder-than-normal temperatures. Although colder-than-normal January temperatures are expected in many of the same regions that experienced frigid temperatures last January, production gains and pipeline expansions over the summer have improved supply availability and should prevent a recurrence of the volatile price behavior seen last winter. While natural gas inventories in January will most likely be below last year's levels, gains in shale-gas production should help offset the year-over-year inventory deficit."

WSI's temperature forecast map for February remains largely unchanged, with only the North Central area slipping into the colder-than-normal column. Lingering colder-than-normal temperatures in the East should have natural gas and power prices finishing the month "very firm" and gas inventories possibly ending the heating season again at very low levels, Kostas said.

"Inventories were left at very low levels last winter (at 822 Bcf, nearly 1,000 Bcf below the five-year average) and never fully recovered over the summer (261 Bcf below the five-year average to begin the heating season)," Kostas said. "Despite significant gains in year-over-year production levels (production is 4 Bcf/day higher), back-to-back years of very cold Jan./Feb. periods would leave inventories at very low levels again and boost regional delivered natural-gas prices."

Forecasters are expecting a relatively mild winter this year, and natural gas production continues to break records, but the industry will still face challenges in coming months, to FERC staff recently told the Commission (see Daily GPIOct. 16) "Natural gas storage is below average, and coal stockpiles are lower than usual. Although new pipeline capacity has been added since last winter, there are still restrictions in New England," according to a report by the Federal Energy Regulatory Commission's (FERC) Office of Enforcement (OE). "In some regions, there is an increased reliance on natural gas for electricity generation." As always, "weather is the key wildcard going into the winter and is the main driver of natural gas demand and prices," OE said.

Most forecasters aren't expecting conditions this winter to match the unusually cold stretches of 2013-2014. National Oceanic and Atmospheric Administration's (NOAA) forecasters have said a repeat of last year's extremely cold, snowy winter east of the Rockies isn't likely. They expect below-average temperatures to dominate parts of the South-Central and Southeast United States this winter, while above-average temperatures are most likely in New England, the West, Alaska and Hawaii.

But a recent AccuWeather.com winter forecast ran counter to WSI and NOAA prognostication, saying conditions are ripe for a winter similar to 2013-2014. "Cold air will surge into the Northeast in late November, but the brunt of the season will hold off until January and February," AccuWeather said. "The polar vortex, the culprit responsible for several days of below-zero temperatures last year, will slip down into the region from time to time, delivering blasts of arctic air." But the bitter cold spells aren't likely to be as persistent this winter as they were last year, the forecaster said.

The Energy Information Administration recently said U.S. households should expect lower heating bills this winter compared to last, thanks in large part to less-severe temperatures, but also due to lower natural gas spot prices and significantly higher winter gas production (see Daily GPIOct. 7). The Natural Gas Supply Association has also predicted lower prices for natural gas this winter, citing a return to normal temperatures; increased domestic production; and adequate storage (see Daily GPIOct. 1).

Even if the polar vortex returns this winter, many factors would likely keep prices in check and the increased demand for natural gas from outpacing supplies in the market, according to analysts at Genscape Inc. (see Daily GPI, Oct. 17). Genscape has forecast that total gas production in the Lower 48 during the 2014-2015 winter season will be about 5.1 Bcf/d greater than last winter.

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