U.S. gas storage 5% below five-year average

U.S. natural gas storage levels in the lower 48 states are 5% below the five-year national average for this point of year as the country heads into the winter heating season. Total gas in storage as of mid October, the latest date for which figures are available, is about 3.34 Tcf, slightly below the five-year average of 3.53 Tcf, according to the latest figures available from the U.S. Energy Information Administration.

Gas storage in the U.S. follows cyclical patterns, with storage falling in the winter as many homes and businesses draw on inventories to heat. In the late Spring and Summer, storage climbs again as utilities prepare for the coming winter.

With total gas in storage slightly lower than the average, many analysts expect some upward pressure on prices in the winter. Most of the focus for this year’s storage is on the East Coast, where storage levels are 9% below the five-year average and 6% below last year, the EIA reported.

All of the East Coast storage is in the Northeast, and 85% of that is in three states – Pennsylvania, Ohio and West Virginia.

The amount of natural gas in storage in the East region has been below its previous five-year average and close to or below the five-year range since the end of January. At the end of September, natural gas storage in the East region was 77% full, similar to levels on a percentage basis in the South Central and Midwest regions, and total storage in the Lower 48 states was 73% full.

Nationwide inventories are below average after a record consumption of natural gas in the electric power sector. This summer was the third hottest on record in the U.S. Strong demand for natural gas over the summer led to a reduction in net injections into U.S. working natural gas storage, the EIA reported.

Net injections into storage in the Northeast are needed to build natural gas inventories and supply the region with natural gas in the winter when demand exceeds supply. Imports of liquefied natural gs (LNG) can account for up to a third of New England’s natural gas supply on peak demand days, continue to account for a portion of the supply in the Northeast, the EIA reported.

Despite a substantial increase in dry natural gas production in the winter in the Northeast region over the last 10 years—a result of significant growth in natural gas production from shale in the Appalachian Basin—the Northeast region continues to supplement pipeline natural gas with stored natural gas in the winter.

Last winter, natural gas demand (total consumption plus net exports out of the region) exceeded natural gas production and LNG imports in the Northeast region by 4.2 Bcf/d, according to data from PointLogic. This gap has narrowed since the winter of 2012–2013, when demand exceeded production and LNG imports by 6.3 Bcf/d, the EIA reported.

Over the last decade, natural gas production in the winter months has grown by almost 245% (24.6 Bcf/d) while demand grew by 135% (22.4 Bcf/d). Natural gas withdrawals from storage remain a critical component of supply in meeting winter demand.