A reclassification of “base” gas to “working” and a cooler-than-expected August make for an end-of-injection season storage forecast that is 20 Bcf higher than the one issued last month in the Energy Information Administration’s (EIA) Short Term Energy Outlook (STEO), the agency said last week.

Working gas in storage is expected to total 3,820 Bcf at the end of next month, the nominal end of the 2013 injection season. This month’s STEO increases the projection by about 20 Bcf. In addition to the reclassification of 14 Bcf to working gas during August, cooler-than-expected August weather has moderated demand for air conditioning, allowing for more gas to go into storage, EIA said.

The new projection is still about 100 Bcf short of the all-time high of 3,929 Bcf, reached in October 2012. EIA expects the sum of injections from April through October to total 2,100 Bcf, “which is relatively normal compared with recent years, and much higher than last year’s unusually low cumulative injection of 1,451 Bcf, which began the injection season on April 1 with higher stock levels,” EIA said.

In a recent note, EIA pointed out that the storage capacity utilization of the American Gas Association’s original three storage regions of the United States all behave differently due to differences in weather patterns, types of facilities, pipeline constraints, proximity to supplies and regulations.

Despite the uptick in the storage projection in the latest STEO, EIA also said natural gas prices will firm somewhat this month.

Spot prices averaged $3.43/MMBtu at the Henry Hub in August, down 20 cents from the previous month. While prices have been declining since April, EIA expects this pattern will reverse in September as the weather becomes cooler and gas demand for space heating begins to become a factor. EIA expects the Henry Hub price will increase from an average of $2.75/MMBtu in 2012 to $3.68/MMBtu in 2013 and $3.91/MMBtu in 2014. These projections are down slightly from those in last month’s STEO.

Gas futures prices for December 2013 delivery (for the five-day period ending Sept. 5) averaged $3.87/MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for December 2013 contracts at $2.98/MMBtu and $5.04/MMBtu, respectively. At this time one year ago, the gas futures contract for December 2012 averaged $3.20/MMBtu and the corresponding lower and upper limits of the 95% confidence interval were $2.20/MMBtu and $4.65/MMBtu, EIA said.

Gas consumption, which averaged 69.7 Bcf/d in 2012, will average 69.9 Bcf/d and 69.3 Bcf/d in 2013 and 2014, respectively, EIA said. Colder winters in 2013 and 2014 (compared with the record-warm temperatures in 2012) are expected to increase the amount of gas used for residential and commercial space heating. However, the projected year-over-year increases in natural gas prices contribute to declines in natural gas used for power generation from 25.0 Bcf/d in 2012 to 22.1 Bcf/d in 2013 and 21.6 Bcf/d in 2014, EIA said.

EIA expects total U.S. electricity generation will grow by 0.2% in 2013 and by 0.4% in 2014. Higher prices for gas delivered to generators push down natural gas-fired generation by 9.6% during 2013, EIA said. Much of this generation is picked up by coal generation, which EIA expects will grow by 7.1% this year. Nuclear generation during 2013 is expected to be 0.4% lower than last year, primarily as a result of unplanned outages this year.

Natural gas marketed production is projected to increase from 69.2 Bcf/d in 2012 to 69.9 Bcf/d in 2013 and to 70.4 Bcf/d in 2014. Onshore production increases over the forecast period, while federal Gulf of Mexico production from existing fields declines as the economics of onshore drilling remain more favorable, EIA said.

Natural gas pipeline gross imports, which have fallen over the past five years, are projected to fall by 0.2 Bcf/d in 2013 and then remain near 2013 levels in 2014. Liquefied natural gas imports are expected to remain at minimal levels of around 0.4 Bcf/d in both 2013 and 2014.

Bucking the trend of rising energy prices for manufacturers, a surge in domestic natural gas production from shale formations resulted in a 36% decrease in the average gas price paid by manufacturers between 2006 and 2010, according to a separate EIA report.

Manufacturers saw the average price they had to pay for natural gas fall from $7.59/Btu to $4.83/Btu over that five-year period, a large enough decrease that the total cost of energy from all sources fell from $9.19/million Btu to $8.22/million Btu in 2005 dollars, EIA said. And, since that data was compiled for the agency’s 2010 Manufacturing Energy Consumption Survey, natural gas prices have fallen further.

Electricity, fuel oil and liquid propane gas remain significantly more expensive on average than natural gas; coal is less expensive but increased in cost by 21% during the five-year survey period, EIA said.

“There is anecdotal evidence that manufacturers are starting to react to lower natural gas prices by planning to open new facilities in the United States,” EIA said. “There are other influential factors, including rising employment costs overseas, but those industries for which natural gas is an important input are anticipating an advantage of locating their operations here.”

For example, one IHS Chemical executive said earlier this year that the North American natural gas revolution has made the continent one of the most attractive places on earth for petrochemical investment dollars. Most of the dollars are flowing to the United States, and specifically, the Gulf Coast region.

More recently, IHS said that domestic unconventional natural gas and oil production is increasing household incomes, boosting trade and contributing to an increase in U.S. competitiveness in the world economy. And previous IHS studies found that upstream unconventional activity supports more than 1.7 million jobs and will grow to nearly three million jobs by the end of the decade.

By 2010, manufacturers were buying about 68% of their natural gas from non-utilities, which on average was lower than the utility price in all regions, EIA said.