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Storage Filling Up Fast in Michigan, Elsewhere

June 26, 2006
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The Michigan market may provide the first serious test of the presumption that prices will drop big-time when storage injection capacity starts running out. Bentek Energy's analysis of flows at 14 natural gas hubs (http://intelligencepress.com/features/bentek/) shows that Michigan Consolidated Gas citygate volumes continue to shrink drastically.

Nominations for Friday's gas day dropped another 80,000 MMBtu/d from Thursday to 224,000 MMBtu/d. That's well under a third of the month-to-date average of 738,000 MMBtu/d that MichCon was running in June of last year. Milder weather in the current month was one factor, but a marketer recently told NGI that MichCon had informed customers about its storage facilities getting close to full.

A MichCon spokesman said Friday he was unable to ascertain specific figures, but it was safe to say that "we're pretty near peak storage." He agreed that both the milder weather this year and a relative lack of injection capacity have been factors in the company's greatly reduced throughput.

Michigan has the most storage capacity in the nation with nearly 600 Bcf of working gas capacity, according to NGI's storage map and statistics. MichCon holds about one-third of the total with 177 Bcf. Consumers Energy and ANR Pipeline are two other big storage operators in the state. Currently ANR is not allowing any interruptible injections.

In its "Operationally Available Capacity" posting for Friday, ANR Storage Co. said it had only 7,152,451 dekatherms of space remaining at three facilities. Total operating capacity was 57,138,640 dekatherms, the company said.

SoCalGas indicated that its storage is also constrained by issuing a high-linepack OFO. "When injection capacity falls below 850 MMcf/d, confirmations of firm storage injection nominations will be reduced as outlined" in a July 1, 2005 posting on its Envoy bulletin board, the giant LDC said in its OFO notice.

Bentek's Hub Flows report also show Pacific Gas & Electric is relying considerably more on Canadian supplies now than it was a year ago. While month-to-date citygate volumes, averaging 2,181,000 MMBtu/d, are running only 57,000 MMBtu/d, or 3%, above comparable flows for June 2005, Malin nominations of 1,655,000 MMBtu/d are a whopping 330,000 MMBtu/d higher than year-ago figures.

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