Demand, LNG Commitments Dragging on U.S Gas Storage

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

While storage levels are reasonably high, a surge in demand is putting a limit on the availability of natural gas. Meanwhile, the LNG sector in the United States continues to expand, drawing on gas stocks even further.

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Gas Consumption for Power Highest in the Summer

An increase in power demand stemming from an ongoing heat wave, on top of increasing commitments for liquefied natural gas exports, is keeping a lid on U.S. storage levels, data show.

Much of the country is getting a bit of relief from the recent heat wave, though the Pacific Coast has been left behind. Parts of southern California and into Nevada were expecting triple-digit temperatures on Wednesday, with a high of 117 Fahrenheit expected in Las Vegas, the National Weather Service forecasted.

IIR Energy in a report on U.S. storage levels found ongoing demand for electricity, presumably from both increased temperatures and the rise of data centers, along with heightened commitments for exports of liquefied natural gas (LNG) are putting limits on what can go into storage.

In its report, however, IIR Energy found natural gas stockpiles remained healthy. As of Wednesday, working gas inventories were only 0.1% above year-ago levels, but 7.5% higher than the five-year average for this time of year.

Power burns may be on the rise, however. Federal data from July show both the amount of home-heating and home-cooling days are on pace to increase from current levels by next year.

"Natural gas consumption in the electric power sector remains highest in the summer (June--September), when cooling demand raises electricity use and natural gas-fired generators are dispatched more often to meet peak demand," a July report from the U.S. Energy Information Administration read. "Although consumption peaks in summer, we forecast similar year-over-year proportional increases across much of the forecasted period."

By the Numbers

• 100-degree days amplifies power demand
• 2031 is when yet another U.S. LNG export facility will come online

LNG Commitments Keep Growing and Growing

Elsewhere, exports of LNG are putting a strain on natural gas supplies as well. A near 8% year-on-year increase in LNG exports by 2027 surpasses the expected increase in total U.S. natural gas production.

That demand pull was amplified on Wednesday when the developers of the Coastal Bend LNG facility slated for the Gulf Coast of Texas said they started the process of filing for permits with the Federal Energy Regulatory Commission (FERC).

Project planners said the facility would enjoy a strategic export location along the Gulf Coast, while at the same time drawing on shale reserves in Texas.

"This is a key milestone for Coastal Bend LNG and reflects our disciplined engineering, commercial, and regulatory execution," Nick Flores, the chief executive officer at Coastal Bend LNG, said in a statement.

Coastal Bend could employ four trains, or liquefaction units, that would combine for 19.2 metric tons per annum of gas in the liquid form. If sanctioned, Industrial Info Resources data show the plant could be online by 2031. Industrial Info Resources offers more information on Coastal Bend in its Global Market Intelligence (GMI) Oil & Gas Production Plant and Project databases, where readers can find details--including construction schedules, investment values and necessary equipment--in a plant profile and detailed project reports.

Key Takeaways

• Gas storage holding up, but strains are abundant
• Coastal Bend LNG is close to filing with FERC

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).