The remainder of 2012 is looking to stay at all time high for underground natural gas storage. The surplus of natural gas stems from the energy industry’s continued success in implementing the new and more efficient drilling techniques. While production has been increasing, demand for natural gas has not been able to keep up, forcing producers to put their natural gas into storage.
Furthermore, the natural gas imbalance can be directly linked to the mild winter that the country has had. Natural gas is witdrawn from storage during the cold winter months to meet heating demands. With winter temperatures averaging way above normal, the withdrawals of natural gas have been averaging way below normal.
Unless the U.S. experiences an extremely hot summer or a drastic cut-back on natural gas production, record-high storage levels are expected to last.
The projected forecast for the summer has been reported as normal temperatures. This creates the possibility of the actual physical storage capacity of natural gas being exceeded by October 2012. If this maximum is reached, then it will result in the production of natural gas to be hauled until the storage is used up.
A direct correlation to the plummeting gas prices is the industry’s demand to use up the excessive amount of natural gas in storage. Prices need to go low enough so that electricity generation produced by coal fired power plants is replaced by the lower priced natural gas fired power plants.
Low natural gas prices are translating into low power prices in several regions for the remainder of 2012. Customers who would like to discuss a strategy to take advantage of these low prices should contact their Business Development Manager or their local trusted Energy Service Provider.