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US to add 27 gas storage sites by 2016
Eric Lidji For Petroleum News
An abundance of natural gas production and consumption in the near future will likely lead to an expansion of storage facilities in the coming years, according to a new report.
The United States will add 27 storage facilities by the end of 2016, according to a GlobalData analysis of the North American underground natural gas storage industry.
With as much as 80 percent of U.S. electricity production coming from gas by 2035, storage capacity should increase to 4.9 trillion cubic feet in 2016 from 4.6 tcf in 2011.
As of 2011, the U.S. led global storage with 405 facilities, according to the report.
Although most storage facilities currently utilize depleted fields, the report predicts a proliferation of salt caverns, saying they can be withdrawn from faster. These caverns could account for as many as 19 of the additional 27 facilities, according to the report.
Glut of supply The switch highlights the changes in the natural gas market brought about by the development of shale gas plays across North America. A glut of supply drove down prices this past year, leading many power producers to switch from coal to natural gas.
As of March, the U.S. had 2.4 tcf of working gas in storage, according to the U.S. Energy Information Administration. That’s up almost 60 percent since March 2011, the second largest year-over-year increase since at least 1976. Michigan currently leads the nation in working gas in storage with 394 billion cubic feet, followed by Texas with 359 bcf and Louisiana with 320 bcf. The EIA does not collect storage data from Alaska.
The U.S. natural gas inventory surplus is currently 645 bcf, according to Bentek Energy LLC, down 30 percent from its five-year high of 927 bcf reached in April 2012.
While the surplus should fall through the summer, Bentek believes coal and nuclear generation will eat into gas market share in the fall, dropping prices below $2 per thousand cubic feet.
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