(Reuters) - The volume of natural gas in storage in the United States hit a record high last week, despite one of the smallest builds in history during this year’s injection season, as production declines for the first time in over a decade.
The U.S. Energy Information Administration on Thursday said stockpiles hit 4.017 trillion cubic feet during the week ended Nov. 4, topping the previous all-time high of 4.009 tcf set during the week ended Nov. 20, 2015. [EIA/GAS]
This year’s high came despite utilities pumping 1.549 tcf into storage, which was on track to be the lowest amount of gas added during an injection season on record, according to EIA data going back to 1994.
That is because stocks started the injection season, which begins in spring when consumption falls as the weather turns milder and ends when heating demand rises in autumn, at a record high 2.468 tcf following the warmest winter (2015-2016) on record.
But with mild weather and light heating demand expected to remain in place through late November, analysts said utilities would likely keep injecting gas into storage for a couple more weeks. That could boost the amount of fuel added to stockpiles during the 2016 injection season over the current record low of 1.560 tcf in 2012.
Analysts said injections in 2016 were low because U.S. consumption so far this year was at a record high, while production was expected to fall for the first time since the start of the shale revolution a decade ago as low energy prices reduced drilling activity.
U.S. gas production last dropped in 2005 when Hurricanes Katrina and Rita slammed into the Gulf Coast, damaging energy infrastructure along the Gulf of Mexico that had been supplying more than 20 percent of the nation’s gas.
Since then, producers have figured out how to use horizontal drilling and hydraulic fracturing technologies to unlock more of the fuel trapped in shale rocks.
Today, the seven biggest U.S. shale fields provide more than 60 percent of the nation’s dry gas production.
Consumption in 2016 increased because the power sector boosted its use of the fuel because gas remained cheaper than coal for most of the year and gas was now the only option in some regions with the retirement of many coal plants over the past several years, analysts said.
Total U.S. gas usage was expected to reach 75.7 billion cubic feet per day in 2016, up from 75.0 bcfd in 2015, while dry production was projected to fall to 72.3 bcfd in 2016 from 74.1 bcfd in 2015, according to EIA data.
Reporting by Scott DiSavino; Editing by Marguerita Choy