Storage companies in the Producing Region apparently starteddigging into base gas last week as their working storage levels randry, according to the American Gas Association’s report for theweek ending March 2. The report confirmed the predictions of theEnergy Information Administration, which said this week thatstorage levels will reach record lows this month and operators mayhave to dip into base gas to maintain deliveries (see Daily GPI,March 8).

The AGA reported a 4 Bcf withdrawal from base gas in theProducing Region and it separately reported that 6 Bcf of workinggas was withdrawn in the same region during the week. The totalwithdrawal for the entire country was 73 Bcf, and storage levelswere 24% full with 786 Bcf of working gas. That compared with 1,157Bcf at the same time last year and an average of 1,180 Bcf over thepast five years.

Some observers suggested operational problems might haveprompted a withdrawal of base gas, which historically wasconsidered sacred by engineers. “I thought base gas was semi-sacredand not to be touched. It’s certainly not like there was such hugedemand last week that operators were forced to use base,” said onemarketer.

Rusty Cates of International Gas Consulting said base is “notreally sacred.” Base gas has been taken out in Eastern Consumingregion in the past, he said. “CNG [removed some] during cold snaps.Base is amount needed to maintain pressure needed to maintaindesired withdrawals. In many cases you can continue to take moreout without damage to the reservoir. Aquifer reservoirs are moresusceptible to damage from base cuts. Salt caverns can take baseout for short periods with little risk other than creep (saltmoving at certain depths and pressures). I’d hate to speculate onwhere it happened.

One source speculated that “Koch or LRC in Louisiana” might beresponsible for the base gas withdrawal. “They’ve been puttingtheir fields out on the fringe lately,” the source said. “Bammelalso has been hitting it hard” because Enron is transferringownership to AEP and needs to clear the books on the facility, hesaid.

AGA would not comment on the rumors, but did say two companieswere responsible. “This happens periodically,” said AGA’s ChrisMcGill, referring to the base gas withdrawal. “I think the lasttime it happened was in 1997. It’s not uncommon for people to takegas out of base gas.

“Some facilities cycle down into base gas as a matter ofroutine. In this case we are obviously at a point where nationallywe have less in storage than we’ve had in previous years. Somecompanies are fuller than they were last year, some are less fulland some are at zero so they go into their base gas if they can orif they choose to do that.”

He said the reason the 4 Bcf withdrawal was put in a footnoterather than included into the total withdrawal for the week has todo with AGA’s methodology. “Remember that our report is for workinggas in storage. When a company — and in this case it was twocompanies — reports small withdrawals from base gas, it’sbasically reported to us as a negative working gas number. We needto remove that from our sample…. “If we left those numbers in ourspreadsheet, when we did our extrapolation we would gross thenumber up and it would have an impact that it really shouldn’t havegoing from our sample to the whole.”

McGill, who manages AGA’s storage report, said despite thecurrent low level of working gas in storage, he doesn’t expect anabove average number of companies to report withdrawals from basegas this year. “I don’t really anticipate seeing it in morecompanies than is normal or to any significant quantitativedegree,” he said. “We’re in March so we’re coming into the shoulderperiod anyway where within a few weeks we are going to startgetting some refills, and these things tend to get filled back infairly quickly. It just depends on the facility and what theirstrategy is, frankly.”

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