Natural Gas Next 2017: Natural Gas Storage Callie Kolbe Manager, Energy Analysis September 26, 2017
Natural Gas Storage Introduction to Storage Why it is the market s balancer Where it exists and who owns it How its value is determined PointLogic Energy s storage information and products Current state of the storage market
Many Roles of Storage Physical Balancing $9.00 Peak Day Supply $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Seasonal Balancing Daily Balancing $4.00 $3.10 $3.00 $3.00 $2.90 $2.00 $1.00 Intrinsic Value $2.80 $2.70 Extrinsic Value Financial Trading $0.00 $2.60
Growth of Salt Field Capacity Active Working Capacity (Bcf) 500 450 400 350 300 250 200 150 100 50 - # of Active Fields 350 300 250 200 150 100 50 0 Aquifer Depleted Field Salt Dome Aquifer Depleted Field Salt Dome
Who owns storage? Bcf 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Change in Working Storage Capacity Ownership 2006 2017 Pipeline LDC Independent Source: EIA; PLE
Who contracts storage? 3Q2017 Total MTSQ contracted by Sector 26% 1% 19% Electric & Gas Utility LDC Producer Pipeline 11% 5% 38% Marketer/Trader Storage Co. Source: IOC; PLE
But weather Weather it is a matter about which a great deal is said, but very little done. ~Charles Dudley Warner
How do we track storage?
How do you track storage?
Storage capacity reaches 4.37 Tcf (Demonstrated maximum capacity) Source: EIA
Current Storage Inventory Utilization 1400 Current Storage Utilization by Region Bcf 1200 1000 800 600 84% 79% 78% Lower 48 Stats: 78% full 3.8% below 2016 2% above 5-year average 400 200 0 77% 72% 68% East Midwest Mountain Pacific South South Central - Salt Central - Non Salt Current Inventory (as of Sept. 14) Demonstrated Maximum Capacity Source: EIA; PLE
Current State of Storage Market Storage began summer at a 429 Bcf deficit to last year. Summer-to-date storage injections average 1.7 Bcf/d longer than last year, with nearly 291 Bcf more injected. Additional 520 Bcf expected to be injected by end-october, resulting in an end-of-october inventory just over 3.9 Tcf. This is 2% above prior 5-year average. By end of withdrawal season in March 2018, inventories expected to sit at just under 1.8 Tcf.
The East 1200 East Inventory 1000 800 Bcf 600 400 200 0 Range 5 Yr Avg This Year last year Source: EIA; PLE
Dominion and TCO lead the way Source: PLE
The Midwest 1400 Midwest Inventory 1200 1000 800 Bcf 600 400 200 0 Range Avg This Year last year Source: EIA; PLE
The South Central 1600 South Central Inventory 1400 1200 1000 Bcf 800 600 400 200 0 Range Avg This Year last year Source: EIA; PLE
The Salts Bcf/d 3 2 Salt Field Behavior (2012-2017) 450 400 350 South Central Salt Inventory 1 0 Bcf 300 250 200-1 150 100-2 50-3 0-4 Range Avg This Year Forecast last year Source: EIA; PLE
The Non-Salts 1200 South Central Non-Salt Inventory 1000 800 Bcf 600 400 200 0 Range Avg This Year Forecast last year Source: EIA; PLE
The Mountain 300 Mountain Inventory 250 200 Bcf 150 100 50 0 Range Avg This Year last year Source: EIA; PLE
The Pacific Bcf 450 400 350 300 250 200 150 Pacific Inventory 40 30 20 10 0-10 -20-30 -40-50 Summer Injection Rates vs 5 Yr Average 100 50 0 Lower 48 Pacific Range Avg This Year last year Source: EIA; PLE
Aliso Canyon Update Major leak found October 2015. Field had a working gas capacity of 86 Bcf and maximum withdrawal rate of 1.9 Bcf/d prior to leak. SoCal Inventory The California Department of Conservation has issued an order that allows limited injections to resume at Aliso Canyon, and injections resumed on July 31, 2017. Storage balances at Aliso should stay between 14.8 Bcf and 23.6 Bcf and provide for maximum withdrawal rate of 0.86 Bcf/d.
Total U.S. Storage Inventories Source: EIA; PLE
Inverse relationship: Storage and HH Bcf 5,000 4,000 3,000 2,000 1,000 0 (1,000) Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Inventory 5 YR AVG Surplus/Deficit HH Cash Prices $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- $/MMBtu Source: EIA; PLE
Storage and Price Relationship Average Weekly Henry Hub Spot Price ($/MMBtu) $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 (200) (100) 0 100 200 300 400 500 Weekly difference between Inventory and Rolling 5-Year Average (Bcf) 2008-2010 2011-2013 2014-2016 2017
Storage: Conclusions Exceptional production growth and moderate demand growth have led to underutilized storage facilities. Overall, limited need for incremental storage infrastructure. However, higher regional utilization of high-deliverability fields exists to meet power demand growth in Southeast and LNG export growth in the Gulf Coast. Fundamental shifts point towards higher value of storage.
Contact Us Today! Callie Kolbe Manager of Natural Gas Storage Analysis 303.736.3654 ckolbe@pointlogicenergy.com Customer Support Phone: 855.650.4500 ext. 1 support@pointlogicenergy.com Sales Phone: 855.650.4500 ext. 2 sales@pointlogicenergy.com Denver, CO Office: 321 Inverness Dr. South Gaithersburg HQ: 9737 Washingtonian Blvd. Golden, CO Denver, CO Houston, TX Office: 1401 Enclave Parkway
Storage: Fields