Working natural gas in storage was 1,919 Bcf as of Friday, May 13, according to EIA’s WNGSR (see Storage Figure). The 92 Bcf net injection exceeded last year’s injection of 78 Bcf and the 5-year (2006-2010) average injection of 91 Bcf. Inventories, however, continue to run below the 5-year average of 1,955 Bcf despite high domestic production. Inventories are 235 Bcf below last year’s level of 2,154 Bcf. The East Region, the largest of the storage regions, accounts for much of the shortfall. Inventories in the East Region are 109 Bcf below the 5-year average and 183 Bcf below last year’s level.
This week’s build is the largest of this year’s injection season. The East saw a net build of 56 Bcf; the West, 11; and Producing, 25. Each region also injected their largest build of the official injection season, although the Producing region this week matched a 25 Bcf injection in March.
Temperatures in the lower 48 States during the week ending May 5 averaged 63 degrees, 2.9 degrees warmer than normal and 5.9 degrees warmer than last year. According to the National Weather Service’s degree-day data, temperatures were warmest in the West North Central, averaging 65.0 degrees, which is 7.3 degrees warmer than normal and 15.1 degrees warmer than last year (see Temperature Maps and Data). Both heating degree-days and cooling degree-days were at relatively low levels this week, implying little demand for heating or cooling. As temperatures warm, cooling degree-days will begin to have a major impact on natural gas storage figures, as high power demand is often driven by high temperatures during the summertime.
Other Market Trends
Excess Power Generation Could Limit Non-Hydro Sources in the Pacific Northwest. In the Pacific Northwest, runoff from the largest snowpack in years could lead to excess power generation, with power generation exceeding demand. As a result, on May 13, the Bonneville Power Administration (BPA) issued an interim Environmental Redispatch Policy that would limit power generation from natural gas and coal sources, and wind as a last resort. Under the action, the BPA will replace reductions in natural gas, coal, and wind sources with free hydropower. The Northwest River Forecast Center, according to the BPA, has forecast that the runoff from the Columbia River Basin will be the largest volume since 1999. The interim rule is in effect until March 30, 2012.
Natural Gas Rig Count Falls to 874. The natural gas rotary rig count fell by 16 this week to 874, according to data reported on May 13 by Baker Hughes Incorporated. Natural gas rigs are at their lowest level since January 2010, and oil rigs have risen over the past several weeks. Oil rigs as of May 13 totaled 947, an increase of 13 from the previous week. Year to date, oil rigs have risen 24 percent while natural gas rigs have fallen about 5 percent. Horizontal rigs (including both oil and natural gas), however, have continued to grow over the first 5 months of 2010, increasing about 10 percent to 1,047, as of Friday. At 563, vertical rigs have risen, though less dramatically.