Author Archives: Richard Meyer

Richard Meyer Natural Gas Storage Capably Poised As Winter Approaches

One of the largest slices of the United States’ natural gas supply pie is underground storage. Natural gas withdrawals from storage during winter months and injections during summer help manage seasonal swings in demand, a critical feature of meeting physical supply needs as well as helping stabilize natural gas prices.

natural gas supply polar vortex 2014 Natural Gas Storage Capably Poised As Winter ApproachesThe critical importance of having adequate gas in place to meet winter heating demand is one reason market observers focus on storage volumes and gauge the pace of injections each summer.

After last winter’s polar vortex, which brought persistent cold and record natural gas demand, storage stocks hit troughs not touched in a decade. Given the depths that storage levels plunged by winter’s end, many observers wondered or even worried whether storage refills would put sufficient supplies in place for the following winter.

Well, the market responded and supplies have returned to a strong position. But what happened between then and now?

First is that natural gas production has continued to grow steadily. Dry gas production is up five percent or three Bcf per day during the past year (March through October). New production volumes mean more flowing gas is available for storage.

The second reason is that cooler summer weather eased demand. Summer temperatures were down four percent compared with 2013. Those areas of the country that happen to have the most storage fields, such as the Gulf Coast, Upper Midwest, Northeast and even the Mountain region, coincidentally saw steeper drops in temperatures year over year. Cooler weather meant less air conditioning and electric demand, which led to lower volumes of natural gas directed to power generation.

natural gas supply map Natural Gas Storage Capably Poised As Winter Approaches

Regional Temperatures Relative to 2013
(May – Sept % Change in Cooling Degree Days)

The confluence of record production and reduced demand has led to a record injection season. Since the end of April, natural gas volumes directed into storage have averaged nearly 14 Bcf per day. This is a considerably strong pace of injections compared with the five-year average of only 10 Bcf per day.

natural gas supply storage build and incremental production Natural Gas Storage Capably Poised As Winter ApproachesSo where does that put us? As of October 10, the U.S. has about 3,300 Bcf of working gas in storage. Before the end of the injection season, stocks are likely to climb to about 3,500 Bcf or perhaps even more. While this level is below last year’s pre-winter storage peak, which was about 3,800 Bcf, this amount of working gas in storage is still a healthy position for the market when additional production is factored in.

Production since June is about 2.3 Bcf per day above last winter’s average volumes. These incremental production volumes could serve an additional 350 Bcf or more though the winter. When considered alongside storage, the country’s natural gas supply portfolio is robust.

Recent reports suggest another polar vortex could be in store this winter. Weather prognostication is a tricky business, but either way the industry appears ready. Last year’s polar vortex was a stress test and the industry performed. Looking ahead toward this winter, the industry is capably poised yet again to meet another winter.

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Richard Meyer Natural Gas Market Indicators: Oct. 15, 2014

The supply build for the United States is strong. Increased dry gas production coupled with relatively cooler weather this summer have bolstered natural gas storage injections and strengthened underground stocks that were at decadal lows following last winter’s polar vortex.

Since the end of March, injections of natural gas into underground storage have been at a record pace and well above the five-year average. Even with the rapid rate of injections, the deep starting point that stocks began the injection season still means storage volumes are about 10 percent below last year. Despite this, production is strong too. October dry gas volumes are 5.3 Bcf per day higher than last year, an incredible eight percent gain.

With production and storage factors considered, the strong supply outlook is reflected on a relatively narrow NYMEX natural gas pricing band between $3.85 and $4.00 for the upcoming winter heating season.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at or Richard Meyer at

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Richard Meyer Natural Gas Market Indicators: Sept. 26, 2014

The forward market for natural gas futures currently points to a price expectation range of only about 20 cents for the five-month period November 2014 through March 2015, which is essentially huddled around $4 per MMBtu. Conditions can change, but once again market stability seems to be the observed pattern for the coming winter heating season.

With the weather induced demand totals seen during the 2013-2014 winter and the possibility of a more normal winter this year, analysts will begin to scrutinize what portion of that seasonal demand noted last winter has become institutionalized. For example, what portion of power generation demand is here to stay? Are the conservation and efficiency patterns seen during the past decade in the residential and commercial sector staying intact? Is industrial demand growing with the completion of key projects many of which are founded on a stable natural gas market?

Comparisons of winter season performance year after year are part of the crucible that allows analysts to understand the ebb and flow of the natural gas supply/demand balance in this country.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at or Richard Meyer at

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Richard Meyer 7 lessons from last winter

Report Cover Art 214x300 7 lessons from last winterIt was the strongest winter in decades. The polar vortex, a new term to most of us last winter, brought a mass of freezing air from its usual home in the artic and dropped it over North America where it settled and stayed. As the bitter cold persisted, families turned up thermostats and power consumption jumped. Across the country, more natural gas was being used than ever before.

In fact, the top five days for natural gas consumption in history took place last winter. For the industry, it was the most exceptional heating season ever. But it was more than just records and high demand for natural gas. It was a test, the industry’s first during the shale era.

In recent years, abundant supplies have awakened broader recognition of new and greater use for natural gas and an expectation of performance. It’s in this context that the industry faced consumers’ unprecedented requirements this winter. How did the industry do?

Simply put, local gas companies rose to the occasion and customers were served. When presented with a real-world test of stability, capability, and reliability under exceptional conditions, gas utilities delivered. This outcome was the result of the planning, preparation and performance of the industry, and of gas utilities in particular.

This week, AGA released a new report entitled Promise Delivered, providing an examination of the past winter heating season from the perspective of natural gas utilities.

Here are the top seven observations and conclusions to take away from the 2013-2014 polar vortex:

  1. The 2013-2014 winter set new records for the largest volume of natural gas ever consumed.
  2. Natural gas utilities employ numerous flexible approaches to supply planning and operations. Across the country, resources were available when needed, which suggests that existing processes, regulatory oversight and planning procedures are working.
  3. Underground storage played its largest role ever to meet consumer demand, a result of investment and contracting to assure supply storage when needed.
  4.  Constraints on systems that feed into distribution company networks can affect gas utility operations and customers. These considerations are often recognized in system and regional infrastructure planning as appropriate.
  5.  Flowing natural gas was available and generally affordable for local gas utilities that needed it. Supplies were bolstered by strong and steadily increasing domestic production, incremental pipeline volumes from Canada, and short-term bursts of liquefied natural gas imports.
  6.  Customers that contract for interruptible service are a crucial component of gas utility supply planning and system operations management during peak days. Due to the exceptional winter, the frequency and duration of interruptions increased in some cases.
  7.  Stable and affordable natural gas prices and the cumulative contributions of energy efficiency helped to moderate customer bills this winter. Continued encouragement of policies to maintain affordable prices and spur greater efficiency will help further mitigate bills during future winter events.

Report Infographic 7 lessons from last winterIn many ways, these tangible experiences of this past winter pave the way for future development of natural gas applications in homes and businesses. The study’s observations reinforce a vision of a stable US natural gas market shaped by the following broader developments:

  • Growth across the natural gas industry – production, transmission, storage and distribution – has laid the foundation for today’s market. Future infrastructure development will be key to further growth and stability.
  • Demand signals have facilitated the substantial increase in domestic natural gas supplies. Future increases in demand are expected to continue this trend.
  • Policies and regulatory precepts evolve with time, and the natural gas industry will face new challenges in the future. However, the iterative process of aligning industry opportunity with regulatory principles has been most successful when it manifests sustainable value for utilities and consumers.
  • The future of the natural gas industry is one of efficiency at its core—in production, transportation, and direct-use.

Bottom line: a new bar has been set. Our vision of a stable natural gas market is predicated on today’s realities of abundant domestic supplies, diverse sources, flexible options and affordable prices, and this past winter’s experience substantiates that vision. Ultimately, it underscores the industry’s ability to deliver and serves as a proof point for new investments in the nation’s natural gas infrastructure.

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