The Daley Note: October 12, 2023
Storage capacity holders on the West Coast have closed a significant deficit supporting higher regional natural gas prices this year.
While the storage surplus to the 5-year average continues to erode on a national level, storage inventories on the Pacific Coast have been making up ground. Stocks in the Pacific region eclipsed the 5-year average for the first time this year as of the September 22 week, according to the Energy Information Administration’s (EIA) weekly storage survey.
Unlike most of the Lower 48, the western US saw a harsh 2022-23 winter that drained inventory and sent gas prices soaring to over $40/MMBtu. Cumulative gas-weighted heating degree days were 14% above normal in the Pacific region, according to National Weather Service data. An outage on the El Paso system also limited pipeline flows to Southern California and contributed to market volatility.
Following the punishing winter, Pacific Coast inventories entered spring at the lowest regional level in 22 years. Since then, capacity holders have injected an average of 8 Bcf/week over the past 25 weeks in the Pacific region, or double the 5-year average injection rate of 4 Bcf/week (see figure). The latest EIA report for the October 6 week brings Pacific region storage to 278 Bcf, 1.1% above the 5-year average.
In East Daley’s Macro Supply and Demand Forecast, we forecast total Lower 48 storage inventory to reach 3,824 Bcf by the end of October. – Jack Wiexel
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