AGA: US gas delivery system hit record levels past winter

The natural gas delivery system in the United States achieved historic levels of performance this past winter, the American Gas Association (AGA) said in a report.

More natural gas was delivered through more pipelines to more customers than ever before, and customer bills remained affordable. AGA released Promise Delivered, a study of the planning, preparation and performance of the natural gas system during the 2013-14 Winter Heating Season.

“America’s natural gas utilities prepare every year, knowing that the eventuality of an extraordinary winter may be just around the corner. That event clearly materialized during the 2013-14 winter heating season,” said AGA Chairman Gregg Kantor, who is also the President and CEO of NW Natural in Portland, Oregon. “Utilities plan all year for the possibility of extreme temperatures and employ a portfolio approach to gas purchasing and storage utilization, with the idea of meeting customer requirements affordably even on the coldest days of the year. Before last year’s extraordinary winter concluded, LDCs were already preparing for the next winter cycle. Reliable performance is what our customers have come to expect from us, and you can’t get there without this level of planning and preparation.”

The United States faced extreme temperatures and record-setting natural gas consumption during the 2013-2014 winter heating season, which is defined as November 2013 through March 2014. This past winter also saw the top five days for natural gas consumption for the country as a whole. On January 7, 2014, the United States set the single day record for natural gas consumption at 139 Bcf – almost double the daily average. Families used more natural gas than ever to keep warm, and power generators pulled unprecedented volumes of gas to maintain electric system reliability. In addition, industrial demand of natural gas surged, and even exports to Mexico were consistent.

Despite these record conditions, residential customer bills increased only 10 percent on average from the prior winter – an increase mostly due to higher consumption. AGA expects relatively warmer temperatures this coming winter based on information from the climate Prediction Center, which may lead to a reduction in demand. Natural gas prices are likely to be slightly higher, resulting in an increase in customer bills of about seven percent this winter.

AGA President and CEO Dave McCurdy said, “A new bar has been set. Our nation has an incredible abundance of natural gas and a pipeline network that is the safest energy delivery system in the nation. As more homes and businesses continue to rely on natural gas, and we see increased and strategic use of American natural gas across all sectors, we are confident that utilities will continue their record of reliability, delivering clean and affordable energy.”

The United States now produces approximately 14 billion cubic feet (Bcf) more today on a daily basis than in 2002-03, a similarly cold winter in the U.S., and natural gas reserves have also grown by almost 63 percent in the past decade. In addition, natural gas working storage capacity has increased by more than 18 percent in the same period, as utilities and others have added storage capacity by building, or have contracted for sufficient volumes in order to assure storage was available when it was needed most. This growth has been accompanied by increased efficiency as residential and commercial sector use per customer has declined by 25 percent from 2003 levels. More than 177 million Americans use natural gas, and the nation’s pipeline network has expanded more than 11 percent compared to ten years ago.

Further examination of critical storage inventories shows that working gas injections have remained solid with national inventories at 2.9 Tcf for the week ending September 12, according to the Energy Information Administration. After a three-week warm stretch nationally late in the summer, temperatures have moderated, leaving a strong supply picture for continued injections during September and October. This fact, along with a net injection season that can continue past November 1, points to an ending inventory which may reach 3.5 Tcf.

“This winter was not only a validation of years of efforts by utilities, pipelines, producers and regulators, it was a signal that continued investments, planning and analyses are prudent and necessary as we begin to understand this era of resource abundance and accompanying opportunities for our economy,” said McCurdy. “We expect the trend of greater demand to continue, and it will be accompanied by substantial growth in domestic natural gas supplies and increased infrastructure development to deliver this gas to more customers. This supply-demand balance lends itself to continued market stability, thereby creating more opportunities for natural gas in our nation.”

Press Release, September 23, 2014; Image: AGA