Gas Storage: How High Can Inventories Go? North American gas storage inventories may test operational limits this year, leaving little room to accommodate mild weather or a spurt in gas supplies, perhaps from increased liquefied natural gas (LNG) imports. This specter raises the question: How much can gas storage fields accommodate? If there is insufficient storage working capacity or there are constraints on the rate of injection, there could be a quick drop in gas prices to $5.00 per million British thermal units (MMBtu) or less to rebalance the gas market. The gas market is likely to be rebalanced by gas-fired generation displacing some marginal, higher-cost, coal-fired generation rather than by a shut-in of gas production. CERA's assessment of storage capacity for this summer is * US lower-48 and Canadian working gas storage capacity this summer is expected to be 3,760 and 634 billion cubic feet (Bcf), respectively. Assuming normal weather, US lower-48 gas storage inventory levels are expected to reach record levels of 3,326 Bcf (88 percent of capacity) at the end of September and 3,643 Bcf (97 percent of capacity) at the end of October. Canadian gas storage inventory levels are expected to reach record levels of 541 Bcf (85 percent capacity) at the end of September and then 558 Bcf (88 percent capacity) at the end of October.
* Daily storage injection capability in September and October for the US Lower 48 and for Canada is estimated at 10.7 Bcf or less and 4.7 Bcf per day, respectively. Assuming normal weather, US lower-48 gas storage injections are expected to average 11.0 Bcf and 10.2 Bcf per day, respectively, for September and October. Canadian gas storage injections are expected to average 1.5 Bcf and 0.5 Bcf per day for September and October, respectively.
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