Warren R. True
Pipeline/Gas Processing
Editor
American Gas Association (AGA) analysis of its weekly U.S. natural-gas storage reports for 1994, the first full year of AGA surveying and reporting, shows that January was the largest drawdown month (831 bcf) for that first year and that May was the largest refill month (423 bcf).
Additionally, 1994 working-gas storage data from both AGA and the U.S. Energy Information Administration (EIA) varied by less than 5% for 9 of the 12 months at month-ends.
Through first quarter 1995, storage levels exceeded 1994 year volumes by as much as 400 bcf. These volumes, however, were approximately equal to the 5-year average for working gas reported by EIA, which further documents the severity of January 1994 winter weather.
(Editor's note: See OGJ's own storage report on U.S. capacity, OGJ, Sept. 12, 1994, p. 45.)
WEEKLY SURVEY
On Jan. 5, 1994, AGA released its first weekly report of U.S. working gas in underground storage as of Dec. 31, 1993.
During subsequent drawdown and storage refills, AGA each week has published working-gas levels for three large regions of the U.S. The data supplement monthly reports by the EIA. Although not identical, AGA says its data have remained comparable with EIA reporting.
AGA's survey of U.S. natural-gas storage operators is co-sponsored by the Interstate Natural Gas Association of America.
Fig. I (48899 bytes) shows an actual storage summary sheet covering the week ending Friday, Dec. 30, 1994. AGA releases summary data every Wednesday by 5 p.m., Eastern U.S. time.
On Monday of each week, approximately 46 companies that operate storage report to AGA their working gas in storage as of the previous Friday morning. These companies represent approximately 88% of the total working gas in storage throughout the U.S., says AGA.
Most are AGA pipeline or local distribution company members. Some independent and producer operators of storage also participate in the weekly survey.
Survey responses report two key volumes: working gas for that Friday and maximum that the reported pool or pools have held during the past 3 years. Numbers in both sets of data are added by region.
To establish a percentage-of-full value, the current week's sum is then divided by the maximum working-gas capacity reported for those pools.
This percentage is then multiplied by the "estimated full working gas" (sum of working-gas capacities for all storage) for that region as shown on the summary sheet.
For example, if survey participants reported 300 bcf of working gas in storage for a given week in the producing region and also reported that the maximum held by that set of pools in recent years was 400 bcf, then the percentage full would be 75% for the reporting companies.
That same percentage relationship would then be applied to the estimate of "full" for all companies (898 bcf for the producing region as of second quarter 1995), resulting in an estimate of 674 bcf of working gas in storage for the producing region for that week.
AGA then combines regions to determine a national volume for that week. Fig. 2 (68192 bytes) identifies the reporting regions for survey participants.
This technique, says AGA, permits the survey to represent an estimate of working gas in storage from an operational point of view, not a theoretical volume that has yet to be reached during the course of normal operations.
Working gas when "full" for the nation (normally this would occur at month-end October) is estimated to be 3.206 tcf. The "full' volume is estimated from EIA data.
This value and the regional values will require revision from time to time as additional restructuring of working gas to base gas occurs, as well as when new additions to storage inventories are completed.
It is the volume expanded from the AGA sample to regional and national levels that is reported under the "This Week" column (Fig. 1 (48899 bytes)). "Last Week" values are simply the "This Week" values from the previous week.
Appropriate percentage changes and volume changes are also noted.
Percentages reported in the "Survey Sample Size" column are a tool for the reader to understand the regional and national coverage represented by the sample data collected for a given week.
In short, sample size is determined by comparing the maximums reported by the companies (and referenced previously) to the estimated "full" working gas in each region and the nation as a whole. That is, for the companies reporting, if it were October and storage was full nationwide and thus the companies reporting were full, then the "Survey Sample Size" represents how much of the total of working gas in storage nationwide was held by the participating companies.
The "Survey Sample Size" does not change from week to week if all companies report. On occasion a participant is unable to report and thus the sampling may decrease.
In contrast, "Survey Sample Size" will increase as additional participants are added to the weekly survey. Sample size of companies currently reporting to AGA exceeds 90% in the East and West Consuming Regions to slightly less than 70% in the Producing Region.
When all companies report, coverage for the entire nation is approximately 88% of the working gas in storage. If data are reported after a given week's release time or are modified because of a reporting error, AGA says, revisions are reflected in the following week's report.
Participants in AGA's storage survey can be characterized not only by their geographic location in one of AGA's three storage regions but they also can be examined by reservoir type.
In the producing region, AGA survey respondents are primarily storing gas in depleted gas fields (96% of the volume), while 4% of the volume reported is located in salt caverns.
Consuming Region-West is also 96% depleted gas field, but 4% aquifer storage. Respondents in consuming region-East report 81% depleted reservoir storage and 19% aquifer storage.
ESTIMATED "FULL"
To extrapolate from the sample of participants to national levels in the AGA storage survey, some estimate of the universe of working gas in storage is necessary. To these estimated, regional full volumes is applied the weekly percentage of working gas in storage and what "full" would be for those pools.
Understanding what is being reported requires first a definition of what portion of storage is being captured by the survey.
The AGA storage survey is intended to capture a measure of what operationally exists in storage to be withdrawn as working gas. AGA survey participants report not the theoretical (or "design") capacity of working gas in their pools but what has actually been held there.
AGA's examination of recent EIA records showed that the peak for working gas in storage occurred at month-end October 1991, when 3,369 bcf was reported by EIA. AGA's current estimate of 3,206 bcf reflects not only this EIA historical maximum, but also the restructuring of primarily working gas to base gas by certain companies since October 1991 due to requirements brought on by Federal Energy Regulatory Commission (FERC) Order 636.
Future AGA views of the "universe" of working gas in storage will not only be influenced by other restructuring, but also by additions to storage. At the beginning of second quarter 1995, there were new and expansion storage projects scheduled for completion by 1998 that account for more than 400 bcf of working-gas additions.
Even if all of these projects are not completed, says AGA, the "universe" of working gas in storage will need to be reevaluated as additional facilities are made operational. The next evaluation will be completed prior to the start of the 1995-96 winter heating season.
WORKING GAS 1994-1995
Fig. 3 (81105 bytes) shows the results of AGA's weekly survey of underground storage operators from Dec. 31, 1993, to Mar. 31, 1995. Data are reported for each of the three defined regions and the nation.
For the 1993-94 winter heating season, working gas in storage reached its low point during the week ending Apr. 1, 1994, at 844 bcf.
Storage drawdown for the 1993-94 winter heating season was the most pronounced during the week ending Jan. 21, 1994, when a net of 253 bcf (36.1 bcfd) were withdrawn. Of those withdrawals, 95% was in the east and producing regions.
In contrast, AGA data show that storage refill was the greatest for the week ending June 3, 1994, when 120 bcf (17.1 bcfd) were added to working-gas inventories. As a net refill month in 1994, May was the largest month, accounting for 423 bcf of gas added to underground storage (an average of 13.6 bcfd).
Daily rates of net additions or withdrawals from working gas in storage are plotted in Fig. 4 (55604 bytes).
Fig. 3 (81105 bytes) shows that on Jan. 6, 1995, estimates of working gas in underground storage were 2,381 bcf. That volume a year earlier was 2,203 bcf, 178 bcf lower.
By the last full week of January, the same comparison yielded a 409 bcf difference between 1995 and 1994; that is, storage levels in 1995 significantly exceeded the working-gas level at month-end January 1994. This, in part, is a function of comparing a month of extreme weather conditions on average (January 1994) to a relatively warm month (January 1995).
AGA says that such year-by-year comparisons for the sake of determining long-term trends are tenuous at best and more properly made by comparing a given year's data to some average.
By Mar. 31, the difference in comparisons between 1994 and 1995 data had been reduced to 320 bcf. In 1994, the first week of net refill occurred during the week ending Mar. 25, for 1995, the week ending Mar. 24 also resulted in a net refill of inventories for the nation.
In 1995, the strongest drawdown has occurred during the week ending Feb. 17, when a net of 206 bcf was withdrawn (29 bcfd).
NEW STORAGE
Traditionally, natural-gas storage services have been primarily used to support the seasonal and peak demand for natural gas. Deregulation and market forces in the U.S. during the last several years, however, have dramatically changed storage services today.
FERC Order 636, in particular, says AGA, introduced a complete restructuring of the natural-gas industry, mandating the separation of pipeline company services.
Interstate pipeline companies were forced to abandon their traditional merchant-service role for a new unbundled array of services. FERC determined that pipelines could only retain enough storage and transportation capacity for operational balance and to provide "nonotice" services.
Because FERC Order 636 significantly restructure the pipeline/local distribution company (LDC) relationship, LDCs now fully manage their own supply and transportation portfolios and use storage for managing risks associated with the elimination of bundled sales.
These new market requirements, combined with the growth in gas demand, are behind the surge in new underground gas-storage construction. AGA has monitored this growth in new storage construction for the past 2 years to determine the current level of working-gas capacity.
Table 1 (55604 bytes) presents AGA's compilation of new storage that was recently placed in service. Table 2 (103403 bytes) and 2a (81984 bytes) presents AGA's list of additional storage projects scheduled for completion by 1998. If all new projects and storage enhancements were completed, more than 400 bcf would be added to working-gas levels.
For yearend 1994, AGA was able to identify 18 new storage projects that were constructed and placed in service. Of the 18 new projects, 7 were salt domes, 7 depleted reservoirs, 4 aquifers.
Overall, the additional storage increased working gas capacity approximately 130 bcf from the 1993-94 beating season. The majority of additional storage was attributed to depleted reservoirs, increasing working-gas capacity by nearly 100 bcf. Of the 18 new storage construction projects, 11 were built in the producing region (7 salt-cavern projects).
Salt-dome storage is primarily developed with the intent of cycling the entire working-gas capacity several times a year, says AGA. In the producing region, the proximity to numerous pipeline interconnects, salt-cavern geology, and high deliverability requirements all support the use of salt-cavern storage.
Salt-dome cavern storage has several advantages over other types of storage that include high deliverability and increased flexibility. Because salt caverns allow high rates of injection as well as withdrawals, the facility is able to cycle quickly and maintain high deliverability.
Base-gas requirements are low and, on average, cycling rates range from 4 to 6 times/year, in comparison with 1 to 1.2 cycles for depleted gas/oil field storage, and 0.95 to 1 for aquifer storage.
Salt-cavern storage is thus well suited for meeting swings in demand.
According to DOE's Energy Information Administration, total U.S. working-gas capacity and daily deliverability is estimated at 3,754 bcf and 65.9 bcfd, respectively, for yearend 1993.
PROJECTS
Assuming all new storage construction projects were completed after yearend 1993, AGA says working-gas capacity increased an additional 130 bcf and maximum deliverability increased an additional 5.1 bcfd from the 1993-94 heating season,
- Blue Lake gas storage is a depleted gas reservoir with a working-gas capacity of 42 bcf. Located in Kalkaska County, Mich., the storage has a maximum injection capability of 210 MMcfd and a maximum withdrawal capability of 600 MMcfd. Blue Lake, owned equally by subsidiaries of Coastal Corp. and MCN Corp., is operated by ANR Storage Co.
- Chevron USA began offering storage services at Petal Gas Storage in 1994. The salt-dome cavern has a total volume of 5 bcf of which 3.2 bcf is working gas. FERC granted Petal's request for market-based rates after the commission determined that the facility's working gas, as a percentage of working storage in the Gulf Coast region, is less than 0.5%, thus giving Petal "no market power."
- Carbon Storage Field is aquifer storage located in Clay County, Ind. Working-gas capacity of the field is 3 bcf with maximum deliverability of 34 MMcfd. In addition, Carbon Storage Field interconnects with Panhandle Eastern Pipe Line, Texas Eastern Pipe Line, Indiana Gas Pipeline, and Terre Haute Pipeline, serving communities in the Midwest.
- The Spindletop Gas Storage facility, Beaumont, Tex., has a total working-gas capacity of 5.2 bcf in two underground salt dome caverns. The maximum withdrawal capacity is 600 MMcfd, while the facility's maximum injection rate is 150 MMcfd (OGJ, Sept. 12, 1994, p. 68).
- In 1994, Bay Gas Storage received FERC approval for market-based rates for the McIntosh Salt Cavern, Washington County, Ala. The storage has a working-gas capacity of 2.6 bcf and 1.4 bcf of base gas.
In addition, McIntosh has an initial withdrawal rate of 100 MMcfd that may eventually be expanded to 260 MMcfd. Storage injections began in August 1994 and the facility was placed in-service in November 1994.
- The Richfield Gas Storage system was the first storage to receive FERC approval to charge market-based rates. FERC granted the owners of the Richfield system approval to construct and operate the storage and transportation system in June 1992. Currently, 5 bcf of working gas can be stored.
- American Pipeline Co. began injections of natural gas into the depleted Felmac field in March 1994. The North Felmac Gas Storage project has a working-gas capacity of 5.6 bcf and direct pipeline interconnects with El Paso Pipeline, Northern Natural Pipeline, and Red River Pipeline.
- Questar Pipeline began injecting gas in the second quarter of 1994 into its expanded Clay Basin storage in northeastern Utah. Capacity of the facility was expanded to 110 bcf, with an additional 15.3 bcf of working gas made available.
Maximum deliverability was increased from 575 MMcfd to 800 MMcfd. The $50-million expansion included installation of three 6,500-hp turbine compressor units.
- Western Gas Resources has completed construction on its Katy Natural Gas Storage and Exchange Facility, Katy, Tex. The facility has pipeline interconnects with 11 pipelines and plans to expand to 14 pipelines in the near future.
Copyright 1995 Oil & Gas Journal. All Rights Reserved.
