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Energy Information Administration’s Outlook On Gas Pricing and Storage Deliverability. Infocast Conference Boston, Massachusetts June 17, 2003 William Trapmann Energy Information Administration. www.eia.doe.gov. Presentation Coverage. Natural Gas Supply

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energy information administration s outlook on gas pricing and storage deliverability

Energy Information Administration’s Outlook On Gas Pricing and Storage Deliverability

Infocast Conference

Boston, Massachusetts

June 17, 2003

William Trapmann

Energy Information Administration

www.eia.doe.gov

presentation coverage
Presentation Coverage
  • Natural Gas Supply
  • Natural Gas Markets in the Northeast
  • Natural Gas Storage
  • Status of Working Gas Storage
  • U.S. Natural Gas Markets
  • Natural Gas Market Outlook
gas rigs tend to follow spot prices with a lag
Gas Rigs Tend To Follow Spot Prices With A Lag

Source: Natural Gas Intelligence Weekly Gas Price Index, Baker-Hughes Weekly US Rig Report.

most production flows from wells not more than three years old
Most Production Flows from Wells Not More Than Three Years Old

Source: Energy Information Administration.

interstate natural gas pipeline capabilities in the northeast
Interstate Natural Gas Pipeline Capabilities in the Northeast

Maine

New Brunswick

Quebec

445 MMcf/d

Ontario

52 MMcf/d

Vermont

178 MMcf/d

New Hampshire

1,368 MMcf/d

1,011 MMcf/d

628 MMcf/d

New York

Massachusetts

Capacity

1,059 MMcf/d

3,077 MMcf/d

(in Million Cubic Feet per Day)

Pennsylvania

2,041 MMcf/d

Rhode Island

6,000

3,495 MMcf/d

4,800

4,495 MMcf/d

3,600

2,400

5,157 MMcf/d

Connecticut

1,200

0

1,800 MMcf/d

New Jersey

2,556 MMcf/d

Total Capacity Into the Region – 12,567 MMcf/d

Note: Capacity is as-of December 2002. MMcf/d = Million cubic feet per day

Source: Energy Information Administration, GasTran Gas Transportation System, Gas Pipeline Capacity Database.

underground natural gas storage in the northeast 2002
Underground Natural Gas Storage in the Northeast 2002

State Number Working Gas Withdrawal

Name of Sites Capacity Capability

----------- ---------- ----------------- -------------

Maine

New York 23 98 Bcf 1,682 MMcf/d

Pennsylvania 59 390 7,570

Total 82 488 9,252

Vermont

New York

Bcf = Billion cubic feet;

MMcf/d = Million cubic feet per day

New Hampshire

Massachusetts

Pennsylvania

Connecticut

Rhode Island

New Jersey

Source: Energy Information Administration, GasTran Gas Transportation System, Underground Natural Gas Storage Database.

liquefied natural gas storage facilities in the northeast 2002
Liquefied Natural Gas Storage Facilities in the Northeast 2002

State Sites Capacity Sendout Rate

Connecticut 3 2.5 Bcf 127 MMcf/d

Maine 1 .1 14

Maine

Massachusetts 21 9.4 985

New Hampshire 3 .1 18

New Hampshire

New Jersey 8 4.7 624

New York 3 3.4 261

Pennsylvania 3 4.5 634

Rhode Island 3 2.5 261

Vermont

Total 46 27.2 2,924

New York

Bcf = Billion cubic feet;

MMcf/d = Million cubic feet per day

Everett LNG Import Facility

3.5 Billion Cubic Feet Capacity

450 Million Cubic Feet per day Deliverability

100 Million Cubic Feet per day by Truck

Massachusetts

Satellite Facilities

Peaking Facilities

Pennsylvania

LNG Import Site

Connecticut

Rhode Island

New Jersey

Note: Satellite facilities must have LNG trucked to the site since they do not have liquefaction capabilities.

Source: Energy Information Administration, GasTran Gas Transportation System, LNG Facilities Database.

northeast natural gas consumption by customer sector 2001
Northeast Natural Gas Consumption by Customer Sector - 2001

Total Deliveries to Consumers – 3,102 Bcf

2001 Peak Monthly Delivery – 388 Bcf (January)

Annual – 23 Bcf (2001) vs 19 Bcf (1998)

2001 Peak Month – 2.8 Bcf (January)

Annual - 8 Bcf (2001) vs 8 Bcf (1998)

2001 Peak Month – 1.2 Bcf (January)

Annual – 95 Bcf (2001) vs 5.7 Bcf (1998)

2001 Peak Month - .87 Bcf (January)

Annual – 364 Bcf (2001) vs 359 Bcf (1998)

2001 Peak Month - 44 Bcf (January)

Annual – 1,171 Bcf (2001) vs 1,232 Bcf (1998)

2001 Peak Month - 134 Bcf (January)

Annual – 96 Bcf (2001) vs 131 Bcf (1998)

2001 Peak Month - 10 Bcf (March)

Consumption by Customer Sector - 2001

(Total Volume – Billion Cubic Feet (Bcf))

Annual – 146 Bcf (2001) vs 132 Bcf (1998)

2001 Peak Month - 17 Bcf (January)

Annual – 635 Bcf (2001) vs 644 Bcf (1998)

2001 Peak Month - 96 Bcf (January)

Annual - 564 Bcf (2001) vs 680 (1998)

2001 Peak Month - 82 Bcf (January)

Sources: Energy Information Administration: Annual - Form EIA-176, “Annual Report of Natural and Supplemental Gas Supply and Disposition;”Monthly – Form EIA-857, “Monthly Report of Natural Gas Purchases and Deliveries to Consumers.” (2001 Preliminary).

natural gas storage attributes
Natural Gas Storage Attributes
  • Critical supply component during heating season
  • Helps satisfy sudden shifts in demand and supply
  • Accommodates stable production rates
  • Supports pipeline operations and hub services
natural gas storage in the united states
Natural Gas Storage in the United States

Underground Storage

  • Depleted reservoirs in oil and/or gas fields
  • Aquifers
  • Salt cavern formations (high deliverability)

Additional Storage

  • Liquefied natural gas (LNG) facilities
  • Propane and CNG
  • Pipeline line pack
storage capacity and volumes january 1999 january 2003

Total Capacity

Working Gas in Storage

Working Gas Capacity

Base Gas

Storage Capacity and Volumes January 1999-January 2003

Natural Gas In Underground Storage

natural gas storage facilities in the lower 48 states
Natural Gas Storage Facilities in the Lower 48 States

West Region

East Region

Depleted Fields

Salt Caverns

Aquifers

LNG Storage Facilities

Producing Region

Note: Aquifers in the Producing Region have been displayed as depleted oil/gas fields to preserve data confidentiality.

slide20
Assuming Average Refill Rates, Natural Gas in Storage on Nov. 1 Will be Low Relative to Recent History

Estimate:

2,617 Bcf

Average

Refill Rate

1998-2002

Working Gas in Storage

(billion cubic feet)

Level as of

June 6, 2003

1,324 Bcf

Storage Stocks as of November 1

Source: EIA data and estimate assuming average refill rate from June 7 – Oct. 31.

working gas stock projections

Maximum Refill 1998-2002

Average Refill 1998-2002

Working Gas Stock Projections

3,004 Bcf

2,617 Bcf

1,324 Bcf in Underground Storage as of June 6, 2003

natural gas storage1
Natural Gas Storage
  • Injections and withdrawals from storage occur throughout the year.
  • Inventories at the start of the past 5 winters have been 2.7-3.2 Tcf .
  • With an average refill rate for the remainder of the refill season, Nov 1 stocks will exceed 2.6 Tcf
  • EIA projects that the refill rate this summer will be slightly higher than the average, yielding almost 2.9 Tcf in storage on Nov 1, 2003.
high natural gas prices in winter 2002 2003
High Natural Gas Prices in Winter 2002-2003
  • High crude prices
  • Cold temperatures in major gas markets
  • Relatively low storage volumes
  • Weak production
  • Low net imports
this winter was colder than last winter cumulative heating degree days heating season 2002 2003
This Winter Was Colder Than Last Winter(Cumulative Heating Degree Days, Heating Season 2002-2003)

Source: Energy Information Administration, derived from Heating Degree Day Monitoring, National Climatic Center.

short term outlook natural gas
Short-Term Outlook: Natural Gas
  • Consumption expected to be essentially flat in 2003 and 2004
  • Prices encourage supply activities, but supplies must fill depleted storage and meet current demand
  • Supply picture is mixed
    • Need increasing completion rates to offset decline from producing wells
    • Expect net imports to remain fairly steady through 2004
    • Storage refill is a question
slide30

Natural Gas Spot Prices Will Decline FromThe Level of the First Quarter of 2003 (Base Case and 95% Confidence Interval)

Sources: History: Natural Gas Week; Projections: Short-Term Energy Outlook,June 2003.

natural gas market outlook summary
Natural Gas Market Outlook Summary
  • Demand is projected to be flat through 2004
  • Domestic production is expected to expand with rising gas rigs drilling
  • Net imports are projected to remain generally stable
  • Storage refill will depend on weather and other market conditions this summer
near term natural gas market issues
Near-Term Natural Gas Market Issues
  • Supply:Will supply increase enough to satisfy potential growth in demand? Will boom and bust cycles discourage investment?
  • Weather: The possibility of a hot summer or cold winter would put upward demand pressure on gas markets.
  • Storage: Will refill be adequate for next winter’s demand?
  • Consumption: Will forecasted growth in natural gas consumption be realized? How will consumption be affected by price volatility, fuel competition and service requirements of electric generators?