AGA: U.S. 1993-94 WINTER GAS SUPPLIES ADEQUATE

American Gas Association predicts U.S. supplies of natural gas will be adequate this winter heating season at competitive prices. AGA Pres. Michael Baly said, "Available peak month natural.gas supplies are expected to be about 2.583 tcf, meeting or more likely exceeding demand for the 1993 winter heating season's peak month." AGA noted U.S conventional gas production will account for 60.5% of total peak month gas supplies this winter, underground and liquified natural gas storage provided

Oct. 25, 1993

4 min read

American Gas Association predicts U.S. supplies of natural gas will be adequate this winter heating season at competitive prices.

AGA Pres. Michael Baly said, "Available peak month natural.gas supplies are expected to be about 2.583 tcf, meeting or more likely exceeding demand for the 1993 winter heating season's peak month."

ADEQUATE SUPPLIES

AGA noted U.S conventional gas production will account for 60.5% of total peak month gas supplies this winter, underground and liquified natural gas storage provided 31.2%.

AGA's estimate of monthly U.S gas supplies includes

About 1.59 tcf by conventional wells.
As much as 820 bcf underground gas storage and liquified natural gas storage facilities.
About 205 bcf of Canadian gas and LNG imports.

As much as 13 bcf of gas from propane-air and synthetic gases sources.

AGA assumes a peak-month demand maximum of 2.583 tcf for January 1994, although it said the conditions necessary to reach that level are unlikely to, occur. The highest monthly consumption of natural gas in history was 2.426 tcf in January 1979. U.S. monthly gas consumption reached a peak during the past 4 years of 2.308 January 1991.

"Even accounting for gas and storage injections, sufficient supplies to meet monthly demand are expected for the 1993-94 winter heating season," AGA said.

"Although, in aggregate, supplies will be available to meet demand, it is the process of acquiring gas and transporting the gas from supplier to purchaser during a peak period that continues to be tested. In addition, pressures to make key business decisions appropriate gas supply decisions within the purview of state regulatory bodies will become more acute the ever."

AGA said 19 major pipeline companies and 69 local distribution companies responded to its survey on the winter heating season out-look, and the pipeline sample represented about 66% of gas transportation throughput last January.

GROWING ROLE FOR STORAGE

Baly said more than 3 tcf of working gas will be in storage for the coming winter peak demand periods.

AGA said 1.85 bcfd of peak deliverability storage capacity has been added for the 1993-94 winter.

AGA estimated that additions and planned additions to gas storage in the U.S. during 1989-94 and beyond total about 365 bcf of working gas capacity and 11.2 bcf of peak day deliverability.

Industry sources estimate working gas in storage by the end of October will reach about 3.3 tcf, slightly more than average storage fill at the start of heating seasons during the past 6 years.

Storage withdrawals this winter are expected to account for about 5% of U.S. interstate gas pipeline non-peak month throughput, firm transportation volumes 71%, interuptible transportation 17%, and no-notice and pipeline system gas the balance.

During peak month demand, gas withdrawn from storage is to increase to about 16% of interstate pipeline volumes and no-notice and pipeline system gas to 8%. Meanwhile firm transportation volumes likely will decrease to about 68% of pipeline throughput and interruptible transportation to 8%.

Overall during the 1993-94 winter heating season, firm and interuptible transportation gas is expected to account for about 90% of total pipeline throughput.

PRICES UP

Baly said U.S. average residential prices this winter will be higher than last year's.

He noted wellhead prices are running above last year's levels, and futures prices on the new York mercantile Exchange are above last year's wellhead prices for February and March. For the past 3 years, futures market prices in October have overshot February and March wellhead prices.

Baly said, "In terms of the transportation component of residential gas prices, the straight fixed variable rate design for pipelines mandated by the Federal Energy Regulatory Commission's Order 636, in general, will increase the cost of serving temperature-sensitive load, but the level will vary substantially among each LDC according tot he mix of services used, the load factor of the individual LDC, the load factor of the pipelines servicing the LDC, and the availability and need for storage."

He added that FERC has pledged that if the straight fixed variable rate design increases any customer class' prices more than 10%, it will consider mitigatory measures.

Baly said AGA did not estimate how much gas prices would rise for consumers on a national basis because of the variables among regions, states, and companies and noted that weather would be the greatest variable of all.