Natural gas storage near capacity as winter begins

The country’s natural gas storage entered the winter heating season at levels down slightly from previous years but still near capacity, according to a report this week from the U.S. Energy Information Administration.

Storage finished last winter at above-average levels, but increased summer demand limited refilling during the summer season.

“From May 2015 through mid-September 2017, working gas levels were higher than the five-year average for 118 out of 122 weeks,” the report stated. “However, since late September 2017, working natural gas levels have been lower than the previous five-year average for seven consecutive weeks, based on data through November 10.”

Storage entered the winter filling Nov. 1 at 3.78 trillion cubic feet, which is down 2 percent from the five-year average and 5 percent less than last year’s record of almost 3.98 trillion cubic feet.

“If we get a normal winter or a little bit colder than normal winter, I’d expect prices to rise,” said Tony Say, president of Oklahoma City-based Clearwater Enterprises. “If we don’t have a winter, we’re going to see the opposite. That’s been the story the last couple of years.”

So far, temperatures have been below normal in the population centers of the Northeast, and many forecasts indicate the pattern will continue in December.

If we get a normal winter or a little bit colder than normal winter, I’d expect prices to rise.” TONY SAY PRESIDENT OF OKLAHOMA CITY-BASED CLEARWATER ENTERPRISES

“If that materializes, I think you’ll see prices move up as a result,” Say said.

Increases in both natural gas production and demand over the past few years have altered storage and pricing patterns.

Seasonal prices

Natural gas prices historically have been strongly seasonal and linked to weather patterns. Primarily used for home heating and for manufacturing, demand surged in the winter and tumbled in the summer.

While that general demand pattern still leads storage levels, demand increasingly has become more stable in recent years as natural gas has become a dominant fuel for electric generation and as natural gas exports have begun shipping some excess supply to Mexico and overseas.

Midstream companies in

recent years have built thousands of miles of new pipeline projects to transport natural gas to market from growing fields in Oklahoma, Texas, Louisiana, Pennsylvania and Ohio.

New export terminals

Companies also are building new liquefied natural gas export terminals designed to export U.S. natural gas to markets in Asia and Europe. Project developers say exports could further stabilize prices by creating a new source of steady, year-round demand.

Houston-based Cheniere Energy is developing a pipeline project designed to transport natural gas from Oklahoma’s STACK and SCOOP fields to the Louisiana Gulf Coast, where the company has the country’s only operational LNG export facility. Other export terminals are in development.

“Any time you have new takeaway capacity, especially for LNG purposes, it’s a good thing,” Say said. “That’s going to help Oklahoma prices in particular.”