The daily publication of natural gas storage data would deter the “surreptitious disclosures” of storage-related information to market participants and would “aid in the enforcement” of the industry, an enforcement official with FERC’s Office of Market Oversight & Investigations (OMOI) said Tuesday.

The release of the Energy Information Administration’s (EIA) weekly storage report each Thursday is “regularly watched” by the industry, and the high level of volatility surrounding the report suggests how important storage inventories are to traders, said John Kroeger of OMOI’s Division of Enforcement, at a FERC technical conference exploring the issue of daily reporting of gas storage data. “Storage information can influence cash prices…Storage information provides a window into pipeline operations, supply and demand that’s difficult to capture elsewhere.”

FERC called for the technical conference in August after reaching settlements with three companies resolving charges that they provided preferential access to market-sensitive storage information in violation of the agency’s standards of conduct. Some at the Commission saw the “potential for more problems with storage data as long as the reporting practices continue as they are,” said OMOI Director William Hederman.

On Thursday, gas storage operators and customers were sharply divided over whether FERC should initiate a generic rulemaking to consider requiring interstate gas pipelines and other owners and operators of storage to post their previous day’s aggregate storage data.

“Any incremental changes to the amount of storage information that’s provided, in our view, would have a limited effect on the market,” said Anne Bomar, managing director of rates for Dominion Transmission Inc. (DTI).

DTI believes the weekly release of EIA’s storage numbers “strikes the right balance” between the need for timely data and the importance of accurate information, she noted. If companies were to get into the business of releasing daily storage data, the figures would be “less reliable,” and would involve prior period adjustments.

“We engage in a lot of no-notice activity. The no-notice swings against those nominated numbers often reverse themselves in subsequent days and that fluctuation in the daily figures…could introduce volatility rather than smooth out the market’s reaction to storage data,” Bomar said.

While she supports the “weekly cycle” for storage releases, Bomar said there was room for improvement. For one, the EIA could reduce the six-day lag time between when the information is gathered and made available to the public, she noted. In addition, she stressed the need for a standard approach to the storage data that is provided.

If the Commission should adopt daily storage reporting, Bomar said the storage data should be aggregated in some fashion. Moreover, she believes FERC’s approach should be consistent with that of the EIA’s. Specifically, she recommended that the Commission adopt the EIA’s approach for revising errors in storage data. The EIA only revises storage figures when an error exceeds a 7 Bcf threshold.

Jeff Keck, manager of operations control for ANR Pipeline, said the pipeline already posts daily storage numbers to its electronic bulletin board site as a “benefit” for its customers. The figures cover all of ANR’s storage fields in Michigan, as well as the storage fields of its affiliates ANR Storage and Blue Lake. “We felt it was just a customer service thing to do…We had the data available.”

The EIA’s weekly storage report contributes to “unwarranted volatility” on Thursday because the industry has an absence of other “relevant and timely” market data, said Laura Schepis, vice president of regulatory affairs for the American Public Gas Association (APGA). “This has many unfortunate side effects,” one of which is it tempts market participants to “leak market information or use it for undue economic advantage.”

FERC should aggregate storage information in the same way the EIA collects information from the East, West and Producing Regions and makes it available to the public, Schepis noted. This would take the “mystery” and “volatility” out of the weekly storage report.

She noted that critics claim that daily storage reports would contain so many errors that they would be almost worthless. Schepis recalled that when the EIA assumed the weekly storage report responsibility from the American Gas Association, it took it “a while to work out the kinks.”

Critics also contend that the “market will oscillate around the daily [storage] number,” just as it does the weekly number now. Schepis said the market “will never be rid of all volatility,” but daily posting of gas storage volumes will help.

“We would really like to know more about the [cost] numbers” for implementing daily storage reporting, she noted. “We don’t suggest the industry should spend a $1 to save a dime.” Moreover, the APGA does not support FERC requiring storage owners or operators to report storage data that could damage their competitive position.

The Industrial Energy Consumers of America (IECA) supported daily posting of storage data, backed a more comprehensive storage report, but opposed making storage information too transparent, said Gary Chapman, senior commercial representative for Dow Chemical Co . He warned FERC of the “significant risk” associated with being too transparent in storage data. “Inventory data for individual fields must not be made available to the marketplace on anything other than a voluntary basis.”

Chapman said he was concerned that storage owners, when purchasing gas, could be subject to the market power of gas sellers if the sellers were aware of the inventory of gas in their storage facilities.

Like some others, Chapman believes daily storage reporting would reduce the volatility surrounding the release of the EIA weekly report on Thursday. One measure of volatility is the difference between the high price and low price of the Nymex prompt month date contract, he noted. In a review of the past year, the least volatile days were Friday and Tuesday (high/low spread of 20 cents), next was Monday and Wednesday (high/low spread of 23 cents), and Thursday was the most volatile day with a high/low spread of 28 cents.

The Nymex high/low price prompt month differential on Thursday morning during the one-hour period surrounding the release of the EIA storage data has been 14 cents over the last 10 weeks, or one half of the daily spread of 28 cents for Thursday, Chapman said. This represents $50 million in uncertainty in the market, he told FERC staff members. This is “indicative of a marketplace whose price is significantly influenced by the Thursday data release.”

Asked why there was such a huge market reaction to storage data that’s a week old when it’s released, Chapman said, “Because it’s the only data that’s available.” But DTI’s Bomar begged to differ, noting that the weekly storage report “[was] not the only peek behind the curtain.” There was gas production and weather data to consider, she said.

Chapman recommended that the EIA compile and publish the daily storage report, and that the current methods for making revisions to the weekly storage report also be employed in the daily storage reporting.

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