The market may not be convinced that natural gas storage is adequate to sustain demand through another severely cold winter, but sustained output from Appalachia should convince the skeptics soon enough, according to BNP Paribas.

Polar vortex redux or not, U.S. gas supply should overwhelm demand through 2015, BNP’s Teri Viswanath, senior U.S. natural gas strategist, said Friday. She and staff meteorologist Anneliese Alexander provided the firm’s gas winter outlook during a teleconference.

Just one month ago, most forecasters had predicted that November would be mild across the country, Alexander said. The pictures from Buffalo, NY, have convinced many that winter once again is going to be a frigid slog.

Yes, it will be a colder than normal winter, according to BNP. But another polar vortex? Alexander isn’t convinced.

The country now appears to be about a month into a “weak” El Nino, she said, which likely continues through winter. Even a weak El Nino would mean colder temperatures, as noted last month by Weather Services International (see Daily GPI, Oct. 20).

Other signals of a below-normal winter are warm waters along the West Coast and Alaska, which would push colder temperatures into the Lower 48 states, said Alexander.

In addition, October Siberian snow coverage was above normal, pointing to the odds of a negative Arctic oscillation (AO). Negative AOs on average indicate colder U.S. temperatures.

“I think there’s still a concern here for the next month at least” on the winter forecast, Alexander said. “There’s a lot of volatility, and we are struggling to figure out what’s going on here.”

Based on what the updated global maps are indicating now, the Midwest region is “unlikely” to be as cold as a year ago, but still colder than normal. That is a change — many initial forecasts had called for the Midwest to miss out on the cold, Alexander said.

In addition, cold weather “probably becomes more sustained east of the Rockies by the end of December through February, with less volatility from week to week.”

If patterns of blocking or ridging occur over Alaska and become more dominant in December, “January-February forecasts likely shift even colder and move colder in the Midwest and Plains especially.”

The cold winter ahead is unlikely to have a big impact on domestic gas supply, however.

Onshore production is so strong it likely can shrug off Old Man Winter, Viswanath said. Pent-up supplies in Appalachia should see a “deluge of midstream transport projects” that “accelerate production growth over the winter,” enabling output to increase by 4 Bcf/d from year-ago levels.

“The likelihood that the fundamental balance in the industry will slip back into a surplus in 2015 heightens the importance of the role of core heating demand for price recovery,” Viswanath said.

BNP in October revised down its delivered gas price in 2015 to average $3.75/MMBtu, 15 cents lower than it had forecast in August (see Daily GPI,Oct. 30). The revised gas price anticipated that the front of the futures curve would post new lows in the spring, fluctuating below the $3.50 floor.

“The fact that our lowest scenario still envisions the persistence of a year-on-year storage surplus only reinforces our base view that an imbalance is unavoidable in 2015,” Viswanath said Friday.

“While the current amount of working gas in storage exceeds our earlier estimate of the lowest tolerable level for the start of winter stocks, the market appears much less convinced of supply adequacy. And it’s this uncertainty that is triggering an incredible volatile start to the winter. In fact, this is the most volatile we’ve ever experienced.”

The coming year otherwise would be a strong one for the bulls, with more than 20 GW of power plant capacity, coal and nuclear, slated for retirement. The decommissioning surpasses the cumulative retirements that took place in the prior 10 years, according to Viswanath.

However, the plant closures coincide with the unconventional gas revolution, which should enable consumers to access up to 2 Bcf/d in the next few months with new takeaway capacity coming online.