Working gas capacity in the U.S. to be tested as the U.S. natural gas storage injection season begins on April 1 with levels approximately 850 Bcf higher than 2011

Tuesday, March 27, 2012

This year, the warmest U.S. winter in the past 60 years has propelled a massive natural gas inventory surplus and an early start to injection season. Since 1977, March has experienced net withdrawals. However, BENTEK’s Natural Gas Storage Outlook reports that this year net natural gas injections are expected for the month of March. According to the EIA, for the storage week ended March 16, the U.S. natural gas withdrawal season was at 2,380 Bcf. BENTEK projects storage inventory levels on April 1 will be approximately 2,460 Bcf, eclipsing the previous record-high of 1,695 Bcf set in 2006 and approximately 850 Bcf higher than 2011 levels.

The early start to injection season will have serious implications for U.S. natural gas working capacity, which will be tested in the coming months – perhaps as early as this summer. Assuming natural gas injections mimic last summer, the trajectory would imply inventories of 4,698 Bcf by November, which is 220 Bcf higher than total U.S. design capacity. The current high storage levels will intensify downward price pressure throughout the U.S. this fall and likely force additional production shut-ins if stronger demand does not materialize this summer.

Stay informed about the U.S. natural gas storage market with the following BENTEK reports:

• BENTEK’s Natural Gas Storage Outlook is published every Tuesday and offers a running U.S. storage estimate, forecasts the weekly EIA number using activity reported by more than 75% of all storage operators and includes the previous year and five-year averages and regional fill analysis.

The Market Call is BENTEK’s monthly publication that pulls together the fundamental natural gas market dynamics to provide a comprehensive, forward-looking view of the U.S. market, including a sector-by-sector analysis of the underlying factors that drive prices.

• BENTEK’s Market Alert, Production, Storage to Challenge 2012 Price Floor, provides an overview of natural gas fundamentals analysis for 2012, including how record-high storage inventories and strong production will affect prices. Stay tuned for an update to this Market Alert, available next month.

To learn more, please contact your BENTEK sales representative or call BENTEK Sales at 1-888-251-1264.