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US gas demand climbs on weather support, supply falters in week to Oct. 11

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US gas demand climbs on weather support, supply falters in week to Oct. 11

Total U.S. natural gas demand was higher amid mixed but ultimately supportive weather during the week ended Oct. 11, while overall supply was lower due to reduced production, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update" released Oct. 12.

Colder weather in the western half of the country during the week in review prompted elevated levels of heating demand, while warmer conditions in the eastern half drove down heating demand but also bolstered electricity demand for home cooling along the Atlantic Coast, the EIA said. Total U.S. gas consumption during report period was up 7% week on week, from 52.6 Bcf/d to 56.5 Bcf/d.

Residential/commercial-sector demand for natural gas notched an 18% increase relative to the prior-week figure as it rose from 7.1 Bcf/d to 8.4 Bcf/d, while power burn logged a 12% gain over the same period as it climbed from 25.7 Bcf/d to 28.7 Bcf/d. Industrial-sector consumption deflated by 2% on the week, from 19.8 Bcf/d to 19.4 Bcf/d.

Natural gas exports to Mexico grew by 3% week over week, from 4.1 Bcf/d to 4.3 Bcf/d. Natural gas pipeline flows to the Sabine Pass liquefaction terminal widened from 2.0 Bcf/d to 2.8 Bcf/d over the same period, with five vessels carrying a combined 18.4 Bcf of LNG seen to have left the terminal from Oct. 5 to Oct. 11.

Overall U.S. gas supply was down 2% week on week, from 80.0 Bcf/d to 78.4 Bcf/d. Dry production posted a 2% decline compared to the week-ago level as it faltered from 74.1 Bcf/d to 72.4 Bcf/d, while net imports from Canada reportedly averaged at 5.9 Bcf/d during the week in review.

The EIA noted that substantial production shut-ins occurred in the Gulf of Mexico due to Hurricane Nate during the week in review. Production recovered after the storm passed.

In terms of inventories, the latest storage data from the EIA outlined a net 87-Bcf injection for the week ended Oct. 6 that took total working gas stocks to 3,595 Bcf, or 153 Bcf below the year-ago level and 8 Bcf below the five-year average of 3,603 Bcf. The reported build matched the five-year-average addition and exceeded the 79-Bcf injection seen in the corresponding week in 2016.

Diminished power burn despite reduced production contributed to an acceleration in the pace of storage-building relative to the week ago, according to the EIA.

Net storage injections thus far in the refill season have totaled 1,544 Bcf, or 15% lower than the five-year average of 1,817 Bcf, according to the EIA. A continuation of the slower-than-normal pace of storage rebuilding through the balance of the refill season would bring end-of-season inventories to 3,834 Bcf, while injections at par with the five-year average should bring working gas stocks to a total of 3,842 Bcf at the close of the season, the agency estimates.

SoCalGas pipeline outage halts regional storage builds

An outage for a Southern California natural gas pipeline at the start of October briefly halted storage injections in the region, the EIA said.

The Southern California Gas Co., a Sempra Energy utility, issued a critical notice on Oct. 2 that Line 235-2 in the North Needles Subzone, a crucial corridor for bringing natural gas across the state to coastal Southern California, was taken offline for repairs for an undetermined amount of time following an incident currently under investigation that occurred near Newberry Springs, Calif. The outage stopped pipeline deliveries through the North Needles Subzone, severely curtailing the supply of natural gas from east to west and limiting injections into SoCalGas storage facilities.

Aggregate daily natural gas sendout on the SoCalGas system throughout September averaged 2.5 Bcf/d. "About 25% of the supply for this natural gas came through the Transwestern and Southern Trails North Needles receipt points — natural gas destined to flow through the SoCalGas North Needles Subzone," the EIA said. Since the pipeline outage, however, SoCalGas has taken to using alternate routes.

Meanwhile, net storage injections have fluctuated since the pipeline outage. Positive net injections have resumed, however, reaching a maximum of 350 MMcf on Oct. 8, following two consecutive days of net withdrawals from Oct. 1 to Oct. 2.