Natural gas storage companies say they are not concerned that Pennsylvania will run out of underground capacity, despite last winter’s mild weather, higher-than-normal amounts of gas already in storage and increased production from the Marcellus Shale.
According to the U.S. Energy Information Administration (EIA), Pennsylvania’s underground natural gas storage facilities held 272.1 Bcf of working gas in April, the last month when figures were available. That’s a record amount for April — dating back to at least 1990 — and a 73.1% increase from the 157.2 Bcf of working gas stored in April 2011.
Pennsylvania has 40 underground natural gas storage fields — all depleted oil and gas fields — under FERC jurisdiction, which combined have a capacity of 771.2 Bcf, and a working gas capacity of 444.2 Bcf, as reported on Feb. 1, the last date where figures were available. The state is third, following Michigan and Illinois, in a ranking of storage capacity among the cold weather states.
The Pennsylvania storage volumes coincide with additional EIA calculations of the amount of working gas stored underground in the Lower 48. The EIA said working gas stocks totaled 3.1 Tcf on June 29, the last date when figures were available. That amount is 24.1% higher than the 2.5 Tcf in storage one year earlier and 22.7% higher than the five-year average.
According to the Federal Energy Regulatory Commission, National Fuel Gas Supply Corp. owns 15 of Pennsylvania’s 40 fields, followed by Dominion Transmission Inc. with 10. Two companies — Equitrans LP and Columbia Gas Transmission Corp. (CGT), a NiSource Inc. subsidiary — each own six fields. The remaining three fields are owned by Steckman Ridge LP, Tennessee Gas Pipeline Co. and UGI Storage Co.
NiSource spokesman Mike Banas told NGI’s Shale Daily the company does not expect the storage fill to be much different this year.
“Each year during the summer months, [CGT]’s storage customers typically transport gas to storage facilities which reach at or near capacity before the winter season,” Banas said Tuesday. “We anticipate that customers will fill storage on a similar trajectory this year, despite the fact that the storage injection season began with greater-than-average quantities in the ground.”
Banas added that since the spring, and especially in June, CGT’s customers have slowed their injections. He said inventories are now trending within a typical range for late June — 55-60% of total seasonal capacity — and expectations are that CGT will approach capacity on or near Nov. 1.
“Our customers always have two choices when delivering natural gas to their customers,” Banas said. “They can either use existing flowing gas in the pipeline system or draw from their storage volumes, or a combination thereof. The combination of warm weather, increased production and low gas prices may require customers to rethink how they historically balanced storage and flowing gas to meet existing and new demand based on their business needs.”
Karen Merkel, spokeswoman for National Fuel, announced very similar findings.
“National Fuel’s Pennsylvania storage is not at capacity right now as we manage our system to allow our clients to inject gas throughout the course of their contract year,” Merkel told NGI’s Shale Daily on Friday. “We will approach capacity by Nov. 1, which at that point the winter heating season will kick in. We have no concerns that we will not be able to meet the needs of our clients (utilities, interstate pipeline operators and producers).”
Dominion spokesman Dan Donovan told NGI’s Shale Daily that March, normally a withdrawal month, became an injection month due to the warm weather and put capacity about one month ahead. But he added that the weather could also wind up restoring some balance.
“We’ve had a very hot spell recently; it’s been in the 90s almost every day,” Donovan said Friday. “We were expecting this week not to have quite as much injection because of the hot weather. It’s possible that we could have a very warm July and August and not be a month ahead anymore.”
Donovan added that most of Dominion’s customers are utilities, and that they “usually leave themselves some [capacity] room when November comes around. I can’t speak for anybody else, but the utilities could find natural gas prices advantageous enough that they would fill to capacity, but it would probably not be until October.”
Asked what NiSource was doing to try to mitigate having high levels of gas in storage, Banas said the company would continue to operate its facilities “based on our customer requirements and we will continue to partner with them as the market dynamics evolve.
“However, as with any closed system like the pipeline and storage grid, you have to either increase usage or decrease the amount of gas coming into the system. Increased demand is already coming from industry, including natural gas-fired electric generation.”
The EIA said Pennsylvania’s natural gas underground storage capacity declined slightly, from 777.0 Bcf in 2009 to 776.8 Bcf in 2010, the last year figures were available. Pennsylvania was able to hold 805.4 Bcf in 1989, but that total fell 20.4%, to 640.9 Bcf, in 1990. The total has been trending upward for the next 20 years.
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