USA Underground Storage Injection 2nd Largest on Record
by Andreas Exarheas|Rigzone Staff|

In a new North America gas and LNG market update report, Rystad Energy Vice President Emily McClain highlighted that last week’s underground storage injection of 129 billion cubic feet was the second largest since the U.S. Energy Information Administration (EIA) began reporting weekly storage data in January 2010.

“This boost in gas stocks, resulting from increased domestic supply amid easing demand, means storage levels are now just eight percent below the five-year average,” McClain said in the note, which was sent to Rigzone this week.

“However, current market dynamics are transient, with peak seasonal demand trends this winter and increased U.S. LNG exports now in view,” McClain added.

In the report, the Rystad VP noted that U.S. dry gas production continues at record levels, “with supply hovering above 100 billion cubic feet per day in recent weeks, helping subdue natural gas prices and keeping regional fundamentals in check”.

Supply growth has largely come from the Permian and Haynesville regions, McClain outlined, but added in the report that not all gas basins are reporting gains.

“Appalachia has continued to show monthly declines in outbound flows, down seven percent in the first week of October compared to June and down two percent last week, compared to the final week of September,” McClain said.

“However, as the winter season approaches, the Appalachian region could boost supply as local consumption picks up,” McClain added.

According to the Rystad VP, total U.S. gas demand will remain elevated for the remainder of 2022, “supported by consistently high LNG exports which are expected to strengthen further once all operational facilities return to full capacity in the coming weeks”.

McClain highlighted in the report that Henry Hub gas prices remain under $7 per million British thermal units (MMBtu), “with strong demand forecasts tempered by recent gains in dry gas production and a boost in domestic supplies from ongoing U.S. LNG facility outages”.

The VP warned in the report, however, that the U.S. is not yet past the hurricane season which technically concludes at the end of November.

“If a severe weather event was to occur, it could have a material impact on supply and demand fundamentals,” McClain said.

“In addition, any severe winter events or a prolonged winter could quickly push gas storage inventories outside of the five-year range,” McClain added.

At the time of writing, the U.S. National Hurricane Center (NHC) is tracking two weather patterns in the Atlantic. One is Tropical Storm Karl, which is situated in the Gulf of Mexico, and the other is unnamed and located in the Eastern Tropical Atlantic.

Last month, oil and gas majors shut in production in response to Hurricane Ian. Over 5.1 million customers lost power across Florida and the Carolinas from damages caused by the hurricane, Rystad analyst Ryan Kronk revealed in a separate note sent to Rigzone this week.

Source:Rigzone.com