EIA chief says frigid winter lowered natural gas storage levels

This winter of prolonged, widespread frigid weather throughout much of the United States led to a record-breaking natural gas withdrawal season, bringing inventories of natural gas to an 11-year low at the end of the current winter, Energy Information Administration (EIA) Administrator Adam Sieminski told a Senate panel March 25.

Sieminski testified before a Senate Energy and Natural Resources Committee hearing on energy imports and exports.

EIA’s weekly natural gas storage report issued on March 20 shows that stocks as of March 14 were 953 Billion cubic feet (Bcf). However, EIA forecasts for production and consumption indicate that operators will make record-high storage injections between April and October in order to substantially rebuild inventory levels, Sieminski said.

The electric power sector is particularly sensitive to natural gas prices, the EIA chief said.

EIA expects total natural gas consumption will average 71.3 Bcf per day (Bcf/d) in 2014, a drop of 0.1 Bcf/d from 2013. The projected year-over-year increases in natural gas prices contribute to declines in natural gas used for electric power generation from 24.9 Bcf/d in 2012 to 22.3 Bcf/d in 2013 and 22.0 Bcf/d in 2014, Sieminski said.

U.S. natural gas production has increased significantly since 2005 mainly because of growth in production of shale gas resources.

“The recent rapid natural gas production growth in the Marcellus formation, centered in Pennsylvania, but also evident in West Virginia, is particularly noteworthy. Supply growth in the Northeast is causing natural gas forward prices in that region to fall even with or below Henry Hub prices outside of peak-demand winter months,” Sieminski said.

Turning to natural gas trade, growing domestic production over the past several years has displaced some pipeline imports from Canada, while exports to Mexico have increased. EIA expects these trends will continue through 2015. EIA projects net natural gas imports of 3.6 Bcf/d in 2014 and 2.6 Bcf/d in 2015, which would be the lowest level since 1987, the EIA official said.

Projections show that in 2040 natural gas will account for 35% of total electricity generation, while coal will account for 32%, the EIA official said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.