Deloitte: US gas supplies rebuilt since last winter, EIA’s Sieminski says

The biggest issue this winter could be electricity generation in New England because of pipeline constraints rather than a drawdown of stored natural gas as happened last winter because of severe cold weather, said Adam Sieminski, administrator for the US Energy Information Administration.

The biggest issue this winter could be electricity generation in New England because of pipeline constraints rather than a drawdown of stored natural gas as happened last winter because of severe cold weather, said Adam Sieminski, administrator for the US Energy Information Administration.

Speaking to a Deloitte energy conference in Houston Nov. 18, Sieminski said EIA uses weather models from the National Oceanic and Atmospheric Administration, which is calling for a fairly normal winter.

“Several private weather services have said the conditions that led to the cold air coming down into the US last year are still in place,” Sieminski said. “Natural gas inventories have really rebuilt from the low of last year…. [And] propane inventories are huge and way over the 5-year average in Texas storage.”

His comments came after cold air across the US early this week renewed expectations for increased heating demand. Freezing weather in some parts of the country sent gas prices soaring on the New York Mercantile Exchange in Nov. 17 trading (OGJ Online, Nov. 18, 2014).

The heating season from November through March is the peak demand period for US gas consumption.

Injections of gas into underground storage across the Lower 48 have surpassed the 5-year average for 30 consecutive weeks, alleviating gas supply concerns.

EIA recently estimated total US gas storage stood at 3,611 bcf. The next gas storage report is scheduled for Nov. 20.

Falling oil prices

Venezuela appears to be particularly vulnerable to falling crude oil prices, said Sieminski, noting that Brent crude oil prices have fallen under $80/bbl in recent weeks.

“The budget pain a number of oil producers are feeling is huge. Somebody is going to have to cut production,” he said. “I would say Venezuela is in terrible shape,” given its economic circumstances, he said.

Venezuela’s Foreign Minister Rafael Ramirez and Russia’s Oil Minister Alexander Novak met Nov. 17 to discuss falling prices. They talked about “coordinating action” to defend the market, said a statement published on Venezuela’s foreign ministry web site.

Crude prices have dropped about 30% since June amid rising US tight-oil production and tepid world oil demand growth. On Nov. 14, Russia President Vladimir Putin said dropping crude prices are potentially “catastrophic” for Russia, which is not a member of the Organization of Petroleum Exporting Countries.

Venezuela, South America’s biggest oil producer and an OPEC member, relies on oil for 95% of its exports. During October, Venezuela called for an emergency OPEC meeting but its request was not fulfilled. Instead, the cartel will meet as regularly scheduled Nov. 27 in Vienna.

Some OPEC members, including Saudi Arabia, have resisted calls to decrease production quotas while Venezuela and others seek action to support crude prices.

Looking at energy demand elsewhere worldwide, Sieminski said China’s issues with air pollution remind him of issues that the US faced during the 1970s, which prompted adoption of the Clean Air Act.

“A lot is going to depend on how fast China wants to adopt technology,” Sieminski said, adding that he believes China is headed toward adopting clean-energy regulations to clean up its air. China’s electric power generation now relies heavily on coal.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of the Unconventional Oil & Gas Report.

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