Natural gas storage capacity up slightly in nearly every region

Natural gas working storage capacity (in terms of demonstrated maximum working gas volumes and design capacity) in November 2016 was slightly higher than November 2015 in the Lower 48 states. Peak demonstrated capacity grew by about 1% in most regions, with the exception of the South Central Salt sub-region, which grew by nearly 3%, and the East region, which fell by less than 1%. Similarly, design capacity over that same period was down slightly in the East region; flat in the Midwest, Mountain, and Pacific regions; and up in the South Central region.

The U.S. Energy Information Administration (EIA) uses two measures of natural gas storage capacity: demonstrated maximum working gas volume and design capacity.

Demonstrated maximum working gas capacity: This measure represents the sum of peak volumes reported by each of the 385 active storage facilities (as of November 2016) in the Lower 48 states, regardless of when the individual peaks occurred over the most recent five-year period (covering December 2011—November 2016).

This incremental growth in maximum demonstrated storage capacity occurred amid the following market conditions:

• The 2016 injection season began in April with record-high start-of-season natural gas storage levels and ended in October with an end-of-month record. Natural gas storage levels reached an all-time high in November.
• Southern California Gas Company's Aliso Canyon storage field was shut in from normal storage operation because of a major leak in late 2015.
• Total U.S. production of natural gas was down slightly in 2016 compared to 2015, but production in the Northeast was up.

The total demonstrated maximum working gas volume, or demonstrated peak, in the Lower 48 states increased between November 2015 and November 2016, rising by 0.7%, or by 31 billion cubic feet (Bcf), to 4,373 Bcf. This period's increase was driven largely by the South Central region, which expanded by 20 Bcf.

In the South Central Salt sub-region, the new demonstrated peak was 448 Bcf, an increase of 12 Bcf, or 2.7%, compared with the previous period. This increase is largely attributed to several facilities reaching new five-year maximum levels in 2016.

The East region this period, by contrast, showed a slightly lower demonstrated peak of 989 Bcf, 3 Bcf lower than last year's demonstrated peak, which was based on storage volumes between December 2010 and November 2015. Decreases were spread across many different facilities in the region, whose previous maximum levels occurred before December 2011.

Design capacity: This measure is the sum of the working gas design capacities of the 385 active storage fields as of November 2016, as reported on survey Form EIA-191, Monthly Underground Natural Gas Storage Report. Design capacity is based on physical characteristics of the reservoir, installed equipment, and operating procedures particular to the site and is often certified by federal or state regulators.

In 2016, for the third consecutive year, no new underground storage facilities began operation. Relatively few existing storage facilities were expanded. Market conditions during this period include:

• In recent years, wintertime prices have spiked less than in previous winters, and have been lower in the futures market, making it more difficult for storage operators to take advantage of price differentials.
• Higher levels of production relative to a few years ago reduce the reliance on storage as a source of supply. Dry natural gas production in 2016 was 24% higher than in 2010.
• With development of the Marcellus and Utica shale plays, production is geographically closer to several large market centers in the Northeast and Midwest. EIA figures for February 2017 show that monthly dry gas production in the Marcellus and Utica together accounted for about 49% of all U.S. shale gas production.
• Overall energy intensity was lower because of increased efficiency and southwestward population migration, which may be moderating demand for heating.

The total design capacity in the Lower 48 states grew by 0.7%, or 31 Bcf, between November 2015 and November 2016, increasing to 4,688 Bcf.

With the exception of the South Central region, the capacity of most storage regions was relatively unchanged capacity between the two periods. The East region decreased by 0.4%, or 4 Bcf, and the Midwest, Mountain, and Pacific regions all showed no significant change. The South Central region, by contrast, showed increased capacity of 35 Bcf, or 2.3%, with most of that increase attributable to the South Central Nonsalt sub-region.

Working gas capacity in the South Central Nonsalt sub-region expanded by 23 Bcf, or 2.2%, from November 2015 to November 2016. Most of this increase can be attributed to two fields. Kinder Morgan Tejas' West Clear Lake field expanded working gas capacity by more than 16 Bcf, accounting for most of the increase, and Oneok's Haskell/Booch field significantly expanded its working capacity by converting base gas into working gas, adding 4 Bcf to the regional total. Several other incremental expansions occurred throughout the region.

Working gas capacity in the South Central Salt sub-region expanded by 12 Bcf, or 2.5%. Most of this increase can be attributed to two fields: Bridgeline's Napoleonville field in Louisiana, which added almost 8 Bcf of working gas capacity when restored to service, and Energy Transfer Fuel's Bethel/Lou Ann Salt field in Texas, which added 4 Bcf of working gas capacity by converting it from base gas capacity. These capacity additions more than offset the 3.6 Bcf decrease at Boardwalk Louisiana Midstream's Boardwalk/Bayou Choc facility in the region.

No new underground storage facilities: No new storage facilities began operating in 2016, for the third consecutive year. Increases in working gas design capacity for the period came from expansions to existing fields. Eight existing facilities expanded capacity by 1 Bcf or more between November 2015 and November 2016, and the Bridgeline Napoleonville facility, with a working gas capacity of 8 Bcf, was restored to service. All eight expansions were located in the South Central region. The largest expansion was at the Kinder Morgan Tejas West Clear Lake facility in Texas, which expanded by more than 16 Bcf.

As with November 2015, most planned storage projects as of November 2016 are concentrated in salt formations possibly because of their high deliverability rates. Salt storage facilities are capable of sending out natural gas within a short time, sometimes within an hour, making them more responsive to customer demand than other types of underground storage. Most new storage capacity for 2017 will be expansions to existing facilities. One exception is the Magnum Gas Storage facility in Utah, a new facility and the first high-deliverability salt facility in the West, which may be operational in late 2017. However, developers of this facility are still finalizing the facility's construction plans. This facility will most likely not become operational in 2017 if construction delays occur.

Few newly inactive or newly active fields: Three facilities in the East and Midwest regions became inactive in 2016, which collectively removed less than 1 Bcf from the design capacity total. A facility is considered inactive after a full year without any injection activity, or when the company declares that a storage field is drawing down its stocks for abandonment. Two facilities resumed storage activity in 2016, adding more than 8 Bcf of storage capacity. As mentioned above, the Bridgeline Napoleonville field in Louisiana was restored to service, adding nearly 8 Bcf of working gas capacity. The Atmos Energy Corporation's Liberty South /Squirrel field in Kansas was also restored to service, adding 0.4 Bcf of working gas capacity.

Leak at the Southern California Gas Co. (SoCalGas) Aliso Canyon field: SoCalGas' Aliso Canyon experienced a large leak in late 2015, which took several months to plug and led to several more months of safety review and integrity testing. Because natural gas storage facilities provide additional supplies during times of increased demand, the removal of this facility from service led to price volatility in the region and raised concerns about meeting peak demand. Aliso Canyon is one of the largest storage fields in the nation and serves as an important supplement to regional supply. The facility's delivery capabilities will likely be diminished as a result of this incident. Reduction in the facility's capabilities may represent a reliability concern for the region.

The capacity and peak demonstrated volumes of SoCalGas' Aliso Canyon field were included in this report and in the Pacific region totals. Although this field was mostly unavailable during 2016 for storage service, it technically met EIA's criteria as an active storage facility. EIA reports daily Southern California energy market information in the Southern California Daily Energy Report.

High storage volumes: For the second consecutive year, the injection season ended in October 2016 with record-high levels of natural gas in storage. Working gas stocks in the Lower-48 states totaled 3,987 Bcf on October 31, 2016, and 3,926 on October 31, 2015. These figures are notably lower than the peak capacity figures, as the October end-of-month stocks reflect the volumes at all storage facilities on one specific day. Maximum demonstrated capacity can occur during any month over the five-year period, and design capacities may exceed levels that storage facilities would regularly reach. The Midwest, Mountain, and South Central regions, the two South Central sub-regions, and the Lower 48 each reached a new five-year maximum in November 2016.

High storage volumes generally apply downward pressure on natural gas spot prices. The average Henry Hub spot price in 2016 was $2.52 per million British thermal unit, $0.10 lower than in 2015. This is the lowest average annual spot price since 1999.

Elevated demand: Natural gas accounted for a larger share of electricity generation in 2016 because of its relatively low cost, new generating capacity build-out, and recent coal plant retirements. High levels of natural gas-fired generation even led to a rare national summertime net withdrawal from storage. In addition, pipeline and liquefied natural gas (LNG) exports were up in 2016. The U.S. began exporting LNG out of the Sabine Pass terminal in Louisiana in February 2016.

Declining production nationally, but elevated production in Appalachia: With relatively low natural gas prices, total U.S. production of natural gas was slightly down in 2016, the first year-on-year production decline since 2005. However, Ohio and Pennsylvania produced substantially more natural gas than in 2015. New pipeline infrastructure came online in the Northeast, as well as the reversal of a major interstate pipeline that connects regional production to consuming markets. Higher natural gas production may reduce reliance on storage as a source of supply, particularly in the Northeast and Midwest, regions that in the past were geographically removed from production centers. EIA forecasts that higher natural gas prices over the next few years will lead to increases in national production.

In the Northeast, production in 2016 continued to grow and new pipeline infrastructure came online, coinciding with the only regional decline in storage. Conversely, in the Gulf Coast states (South Central region), production declined while new export outlets opened, coinciding with increases in regional storage capacity.

Estimates of Underground Natural Gas Storage Demonstrated and Design Capacity, as of November 2015 and November 2016 (billion cubic feet, unless otherwise noted)
	Demonstrated Maximum Working Gas Volume1			Working Gas Design Capacity2			Demonstrated Maximum Working Gas Share of Working Gas Design Capacity
Region	(Dec 2010 - Nov 2015)	(Dec 2011 - Nov 2016)	Percent Change	Nov 2015	Nov 2016	Percent Change	Nov 2015	Nov 2016
East	992	989	-0.3%	1,032	1,028	-0.4%	96%	96%
Midwest	1,189	1,194	0.5%	1,226	1,226	0.0%	97%	97%
Mountain	274	277	1.2%	462	462	0.0%	59%	60%
Pacific	411	415	1.1%	416	416	0.0%	99%	100%
South Central	1,477	1,497	1.4%	1,521	1,556	2.3%	97%	96%
Salt	436	448	2.7%	480	492	2.5%	91%	91%
Nonsalt	1,041	1,050	0.8%	1,042	1,065	2.2%	100%	99%
Lower 48	4,342	4,373	0.7%	4,658	4,688	0.7%	93%	93%
Sources: Form EIA-191, Monthly Natural Gas Underground Storage Report Note: Design capacity information for all facilities, including inactive fields, is available in the Natural Gas Annual Respondent Query System. Totals and calculations may not equal the sum of the components because of independent rounding. Information about storage regions is available at Storage Basics. Mentions of specific companies in this report include only information that is publicly available on EIA's website or on the Federal Energy Regulatory Commission (FERC) dockets. (1) Demonstrated maximum working gas volume is the sum of the highest storage inventory levels of working gas observed in each distinct storage reservoir over the previous five-year period as reported by the operator on the Form EIA- 191, Monthly Underground Gas Storage Report. The timing of the peaks for different facilities need not coincide. Inactive fields were removed from aggregate statistics. (2) Working Gas Design Capacity is an estimate of a natural gas facility's physical working gas capacity as reported by the operator on the Form EIA-191 Monthly Underground Natural Gas Storage Report. It represents the sum of all fields' capacities at a point in time. It is a measure based on the physical characteristics of the reservoir, installed equipment, and operating procedures particular to the site that is often certified by federal or state regulators. Inactive fields were removed from aggregate statistics.

Estimates of Underground Natural Gas Storage Demonstrated and Design Capacity, as of November 2015 and November 2016 (billion cubic feet, unless otherwise noted)
		Demonstrated Maximum Working Gas Volume1			Working Gas Design Capacity2			Demonstrated Maximum Working Gas Share of Working Gas Design Capacity3
Region	State	(Dec 2010 - Nov 2015)	(Dec 2011 - Nov 2016)	Change	Nov 2015	Nov 2016	Change	Nov 2015	Nov 2016
East	PA	408	405	-3	421	417	-4	97%	97%
	WV	231	231	-1	230	230	0	100%	100%
	MD	18	17	0	18	18	0	97%	95%
	VA	6	6	0	5	5	0	103%	103%
	OH	209	209	0	231	231	0	90%	91%
	NY	121	122	0	127	127	0	96%	96%
Midwest	IL	283	281	-2	301	301	0	94%	93%
	IA	83	82	-1	90	90	0	92%	92%
	MN	2	2	0	2	2	0	107%	107%
	TN	1	1	0	2	2	0	62%	72%
	IN	31	31	0	31	31	0	97%	98%
	MO	7	7	0	6	6	0	109%	109%
	KY	107	108	1	108	107	0	99%	101%
	MI	675	682	7	686	686	0	98%	99%
Mountain	MT	65	54	-11	197	197	0	33%	27%
	NE	15	14	-1	13	13	0	119%	114%
	UT	52	53	1	55	55	0	95%	96%
	NM	45	49	4	60	60	0	76%	82%
	CO	51	61	5	64	64	0	89%	96%
	WY	39	45	6	73	73	0	54%	62%
Pacific	WA	24	24	0	25	25	0	96%	96%
	OR	19	19	0	16	16	0	117%	118%
	CA	368	373	4	375	375	0	98%	99%
South Central	MS	188	187	-2	201	205	3	94%	91%
	AR	6	5	-1	12	12	0	49%	44%
	KS	119	119	0	123	123	0	97%	97%
	AL	25	27	2	33	33	0	76%	82%
	LA	444	446	2	451	455	4	99%	98%
	OK	185	189	4	189	195	6	97%	97%
	TX	509	523	14	512	533	22	100%	98%
Lower 48		4,342	4,373	31	4,658	4,688	31	93%	93%
Sources: Form EIA-191, Monthly Natural Gas Underground Storage Report Note: Design capacity information for all facilities, including inactive fields, is available in the Natural Gas Annual Respondent Query System. Totals and calculations may not equal the sum of the components because of independent rounding. Information about storage regions is available at Storage Basics. Mentions of specific companies in this report include only information that is publicly available in EIA's query system. (1) Demonstrated maximum working gas volume is the sum of the highest storage inventory levels of working gas observed in each distinct storage reservoir over the previous five-year period as reported by the operator on the Form EIA- 191, Monthly Underground Gas Storage Report. The timing of the peaks for different facilities need not coincide. Inactive fields were removed from aggregate statistics. (2) Working Gas Design Capacity is an estimate of a natural gas facility's physical working gas capacity as reported by the operator on the Form EIA-191 Monthly Underground Natural Gas Storage Report. It represents the sum of all fields' capacities at a point in time. It is a measure based on the physical characteristics of the reservoir, installed equipment, and operating procedures particular to the site that is often certified by federal or state regulators. Inactive fields were removed from aggregate statistics. (3) Demonstrated Maximum Working Gas Design capacity in some cases exceeds 100% of design capacity. This is because design capacity limits may differ from actual capacity limits in storage fields, as determined by the facility operator and local regulations. Demonstrated Maximum Working Gas Capacity more commonly exceeds Design Capacity in states with a smaller number of facilities and smaller total storage volumes.

Capacity increases concentrated in South Central region states: Looking at state-level data, all substantial increases in design capacity took place in the South Central region, with Texas accounting for the majority of the increase. The increase is attributable to two fields: Kinder Morgan Tejas' West Clear Lake facility and Energy Transfer Fuel's Bethel/Lou Ann Salt field. Pennsylvania was the only state that showed a significant decrease in design capacity, accounting for nearly all of the decline in the East region. Several facilities showed small decreases in design capacity, but the main driver was the 3.4 Bcf decrease at the Equitrans Rager Mountain field.

Changes in demonstrated peaks varied across states: Many states that have underground natural gas storage showed minor changes to their maximum demonstrated storage levels. Texas, which featured the largest increase in design capacity, also showed the largest increase in demonstrated peak capacity. Some decreases were attributable to prior demonstrated peaks occurring in 2010, which fell outside of the December 2011-to-November 2016 range. New demonstrated peaks do not necessarily coincide with new capacity, but generally, states with increased capacity also tended to show new demonstrated peaks.