HOUSTON May 9 The operator one of the largest
natural gas pipeline systems in the United States is urging
customers to accelerate the pace of rebuilding stocks to ensure
sufficient supply to meet heating demand next winter.
Columbia Gas Transmission (TCO), a unit of NiSource Inc
, said gas injections on the system in April and early May
trailed historical amounts due to heavy withdrawals during the
coldest winter in decades, leaving working gas in the system at
half the amount it was a year ago.
"This raises concerns about customers expecting to inject at
higher rates later in the season," Columbia Gas said in an
advisory on May 2. "If the majority of storage customers take
this approach, demand for storage injections late in the season
may exceed TCO's injection capabilities."
Some analysts are concerned that it will be difficult for
utilities and others to rebuild the nation's gas stockpile
sufficiently before the next heating season to avoid price
spikes when cold weather arrives. Others expect rising gas
production to allow storage to refill in time.
"We have just reminded our customers that being at 55-60
percent (of storage contract amounts) by July 1 will help ensure
that everyone is on track for next winter," said Columbia
spokeswoman Katie Dupuis Martin.
Analysts are closely watching storage levels on pipeline
systems operated Columbia, Dominion Resources Inc, ANR
Pipeline, a unit of TransCanada Corp and others.
Pipelines commonly post levels of working gas, but Dominion
has no plans to issue an advisory similar to Columbia's.
"Our customers have indicated they intend to fill storage as
they have done in the past," said Dominion spokesman Frank Mack.
STOCKS NEED TO MORE THAN TRIPLE
Utilities will need to inject more than 13 billion cubic
feet of gas per day on average over the summer to rebuild the
inventory to the five-year average of 3.8 trillion cubic feet,
said the American Gas Association (AGA), a trade group in
Net gas injections in recent years have averaged just 10
bcfd, AGA said, but weekly injections are more seasonal in
"Historically, we always put more gas in storage on a weekly
basis in May and June than we do in October or later," said
Chris McGill, AGA vice president of policy analysis. "When the
balloon is less full at the beginning of the injection season,
it's not as hard to push the gas in as it is at the end of
injection season," McGill said.
Five weeks into injection season, total gas in storage
stands at 1.055 tcf, the U.S. Energy Information Administration
said on Thursday, or 48 percent below the five-year average.
Analysts polled by Reuters said they expect gas in storage
to refill to 3.44 tcf by early November, below the robust 3.8
tcf five-year average due to soaring shale gas production.
Utility officials said they do not dwell on the total gas
figure tracked by EIA, they know the amount of stored gas
available in November will impact the price they will pay when
"Operationally, all (local distribution companies) are going
to put gas in storage to be as prepared for the winter as we can
be regardless of the national storage picture," said Gerald
Ballinger, president of the Public Energy Authority of Kentucky
which has about 22 municipal utility members.
Ballinger said having more gas in storage will keep prices
lower. "If we don't get to 3.4 (tcf), it could have quite an
impact on where prices go."
(Editing by Marguerita Choy)