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Gas storage due for 'rebound' in value; environmental groups target DOE's LNG permitting

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Gas storage due for 'rebound' in value; environmental groups target DOE's LNG permitting

Changesin the natural gas market will make storage facilities more valuable in comingyears, especially those inventories capable of rapid deliveries to electricpower plants and LNG export terminals, ICF International experts said.

"Themarket in our view is approaching an inflection point, where we expect to seeover the next three to four years a very significant shift in the market forstorage," ICF Principal Michael Sloan said in a June 28 webinarhosted by the firm.

ICFexpects market conditions to cause seasonal gas price basis to rebound andstorage value to rise with it in the medium term, Sloan and Technical DirectorHua Fang said. Sloan said the market will first go through a "reboundyear" in 2017-2018, in which high storage inventories left over from a warm 2015-2016winter should rebalance and the gas market returns "to what we consider anormal condition."

Someenvironmental groups that oppose natural gas transportation projects areshifting their focus from FERC to the U.S. Department of Energy after a pair ofunfavorable federal appeals court decisions.

"Thisdisappointing decision fails to address the significant environmental harms ofincreased gas exports, and is not the end of the road in this fight," saidLena Moffitt, spokesperson for the Sierra Club's Beyond Dirty Fuels campaign.

PatGallagher, legal director at the Sierra Club, added that the organization willalso bring a suit against U.S. Department of Energy project permitting. TheU.S. Appeals Court for the District of Columbia Circuit ruled June 28 that theSierra Club and other groups "fail on the merits" in their suitsagainst FERC to block LNG export projects.

Hawaii Gov. David Ige has named the state Public UtilitiesCommission's top lawyer to fill the third seat on the PUC on July 1 as membersedge close to a decision on NextEra Energy Inc.'s bid to take over utilities ofHawaiian Electric IndustriesInc.

Ige is opposed to the acquisition, saying he believesNextEra is not the right company to help his state achieve its 100%-by-2045renewable energy goal.

A PUC decision to disapprove the NextEra acquisition coulddetermine whether HECO proceeds with two major fossil fuel projects for whichit has submitted applications. Plans for the 383-MW Kahe combined-cycle projecton Oahu and LNG fuel supply agreements are conditioned upon approval of amerger, HECO said.

The Hawaiian utilities have reached a"take-or-pay" agreement with Fortis Inc. subsidiary Fortis Hawaii Energy Inc. toprovide 800,000 metric tons of LNG per year for an initial 20-year termbeginning in 2021 to supply fuel to the Kahe plant and other plants theutilities want to retrofit from oil to gas. HECO said it would still pursuerevised LNG plans absent a merger.

Naturalgas consumption in the U.S. ticked slightly higher while supply slipped duringthe week ended June 29, the U.S. Energy Information Administration said in itsNatural Gas WeeklyUpdate released June 30.

Duringthe report week, total U.S. consumption of natural gas rose by 1%, from 60.9Bcf/d in the previous week to 61.5 Bcf/d.

Pipelineflows to the Sabine Pass LNG facility averaged 0.4 Bcf/d, down from 0.6 Bcf/din the previous week. One vessel with an LNG-carrying capacity of 3.7 Bcfdeparted Sabine Pass terminal June 23 and one vessel with an LNG-carryingcapacity 3.0 Bcf is currently loading at the terminal, the EIA said.