The 159 Bcf gas storage withdrawal for the week ending Dec. 13, announced Thursday by the Energy Information Administration (EIA), is “right smack in the middle of the range” for the same period over the past nine years, an energy expert said Thursday. However, the large withdrawals in recent weeks indicate that by next summer, supplies will be tight, ensuring that natural gas prices will be higher — already reflected in the futures market.

H.C. “Rusty” Cates, vice president of Houston-based International Gas Consulting, said that if only the withdrawal figures from last year are compared with this year’s figures, there is a significant discrepancy. However, there was a mild winter last year, and storage levels remained high. If the past nine seasons are compared, however, the withdrawal level is mid-range.

“Historically, we’ve always had some capacity left over,” Cates said. “The lowest we’ve ever drawn down was to 500 Bcf at the end of the season…and even if you look at the East region, the most sensitive, the lowest it ever ended in the winter of ’96-’97, was just under 200 Bcf.” He said there was “no reason whatsoever to believe we will not be okay” by the end of the withdrawal season.

Working gas in storage last week ended at 2,635 Bcf, “within the five-year historical range,” according to EIA’s latest weekly storage report, representing a net decline of 159 Bcf from the previous week. EIA said stocks were 560 Bcf less than last year at this time, and 151 Bcf below the five-year average following net withdrawals of 103 Bcf.

Stocks within the three producing regions were 37 Bcf below the five -year average of 747 Bcf following a net withdrawal of 41 Bcf. Stocks in the West region were 51 Bcf above the five-year average following a net withdrawal of 15 Bcf. The East was 9.7 Bcf below; and the producing region was 5 Bcf below, with the total Lower 48 stocks down 5.4 Bcf.

Reviewing data over the past nine years, Cates that all three regions are in the middle range for this time of year. “The pull has been steep, and if we continued to pull at this rate, there would be historic lows. We have had a cold and early winter, but we’re already a third of the way through it.”

If the rest of the winter is normal, Cates said that there will be a “fairly low inventory in the spring,” and the combination of spring and summer will create a tight gas market. “That’s already being reflected in the futures market,” he said. “I’ve been in this business 20 years and I’ve never seen $4 gas in August. The draw-down indicates we may see dramatic gas prices next summer, and that affects the consumers, the producers and the entire industry.”

With all of the competing uses for gas in the summer, the strong move to gas-fired power and an expected economic recovery, Cates said there will be a “strain on producing rates. This is a concern.” But in the coming months, “let’s just say no one is going to freeze in the dark.”

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