EIA Reports Large Storage Revision with New Survey Methodology
The net result of the Energy Information Administration (EIA) revising 16 weeks of previously released gas storage data using its new storage methodology last week was a net 93 Bcf increase in working gas levels from what was reported a week earlier. The EIA said storage now stands at 3,121 Bcf, or 82 Bcf more than the five-year average and only 51 Bcf less than last year.
December natural gas futures dropped sharply on the news last Thursday, reaching a new 10-month low of $4.64, but futures quickly rebounded on Friday as producers continued to show slightly lower domestic gas production results for the third quarter. The 55 Bcf injection EIA reported last week for the week ending Oct. 24 also is a reminder that the injection season will come to an end soon.
EIA released sweeping changes to its storage survey methodology and made revisions to previous data because of significant differences it noticed between its prior weekly storage estimates, which are based on a sampling of companies, and the actual monthly data EIA received this year from all of the nation's underground storage operators.
Over the first six months of 2003, there was an average monthly difference of 50 Bcf between the storage data collected from all underground storage operators through EIA Form 191 and the weekly estimates that were based on the storage data collected from the sample of storage operators through Form 912. The difference was greatest in April and May at 83 Bcf/month and smallest in January at 13 Bcf/month.
By making changes in the way it estimates total regional and national volumes and by using data from more companies, EIA intends to ensure a closer match between its weekly storage estimates and the actual monthly storage data that it collects from Form 191.
EIA now is including data from 55 storage operators rather than the previous 44 companies. It surveys 118 operators for its full monthly storage data.
The new weekly survey sample will cover the equivalent of 91.4% of the working gas storage capacity in the Consuming Region East, 95.5% of the Consuming Region West and 93.2% of the Producing region, EIA said. Because the sample percentages will not change, it has removed the survey sample coverage column of data as well as the estimated standard error column from its weekly storage report.
Another major change is the way EIA is grouping the storage companies in the survey for the estimation process that it uses to come up with national and regional totals for working gas. Operators will be put into two groups: those whose data can be used to more reliably predict the working gas levels of non-sampled companies and those whose data do not correlate as well with the data from non-sampled companies. The EIA will use the first group to estimate the working gas volumes of non-sampled operators for each region, while the data from the latter group simply will be included in the survey estimates. These changes are expected to lead to more accurate volume predictions.
The new methodology led to a net change of 32.3 Bcf/month to weekly working gas estimates over the first six months of the year. There was a net increase in weekly working gas estimates in five of the first six months of the year. While there was a 10 Bcf/month drop in January estimates, there were 40 Bcf, 16 Bcf, 40 Bcf, 51 Bcf and 37 Bcf increases for each of the following months through June, respectively.
The new data EIA released last week for the July 4-Oct.17 period, shows an average weekly increase of 33.8 Bcf. The new methodology led to an upward revision in each of the previous 16 weeks of data going back to the week ending July 4.
EIA intends to continue an investigation of its estimation approaches, and said it could make additional changes. It also will continue an examination of its survey sampling and may further enlarge the sample size or make other sample modifications.
A detailed discussion of the current changes to the weekly survey methodology is available at http://tonto.eia.doe.gov/oog/info/ngs/methodology.html.
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