US natural gas storage fields likely added about half the five-year average in the week ended Sept. 3 as offshore production has been slow to recover following Hurricane Ida and amid winter supply issues in the South Central region, according to a survey of analysts by S&P Global Platts.
The US Energy Information Administration is expected to report a 33 Bcf injection for the week-ended Sept. 3, according to the Platts survey. Responses to the survey ranged from a 25 to 48 Bcf injection. The EIA plans to release its weekly storage report on Sept. 9 at 10:30 AM ET.
A 33 Bcf injection would measure less than the five-year average build of 65 Bcf. In 2020, 65 Bcf was added during the corresponding week. The addition would expand stocks to 2.904 Tcf and the deficit to the five-year average would grow to 254 Bcf, while the deficit to 2020 would grow to 611 Bcf. The injection would also be more than the 20 Bcf build reported for the week ended Aug. 27.
The EIA’s South Central region recorded its second consecutive week of withdrawals as it pulled 22 Bcf during the week ended Aug. 27. In the the Southeast and Texas portion of the region, total storage inventories stood at 715 Bcf, 100 Bcf below the five-year average and 280 Bcf below 2020 levels, according to S&P Global Platts Analytics.
Since mid-summer, stocks have seen continuous draw downs, falling 120 Bcf from the summer high of 835 Bcf on July 13. While overall US stock levels are likely to be sufficient under normal weather conditions this winter, Southeast and Texas inventories may face challenges as they help serve regional demand along with almost all US export demand, which is responsible for the largest portion of year-on-year demand increases.
Production in the South Central region is currently below normal as well. Total US offshore production is at 586 MMcf/d for Sept. 7, roughly 2 Bcf/d lower than pre-Ida levels, according to Platts Analytics. While the majority of offshore platforms have reported minimal damage from Ida, the main issue with ramping up operations has come from power outages and damage to helicopter platforms used to transport offshore personnel. As access to platforms improves and power returns to Louisiana this week, offshore production is likely to see rebounds as the week progresses.
Permian production is also keeping regional production levels low, averaging less than 12 Bcf/d in the past seven days. Multiple maintenances along the El Paso Pipeline and processing plants within the Delaware Texas basin have nearly halved sample production within Texas Delaware. The main maintenances are along the Cimarron, Cornudas and L2000 segments, and do not have a set completion date.
The NYMEX Henry Hub October contract fell 14 cents during the trade day on Sept. 7 to $4.57/MMBtu, still 20 cents higher than the level at which it closed one week prior. The upcoming winter strip, November through March, fell by a similar margin to $4.60/MMBtu, also 20 cents above the week prior.
Platts Analytics’ supply and demand model expects a 60 Bcf injection for the week ending Sept. 10, which would be nearly 20 Bcf less than the five-year average.
Source: Platts