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					               U.S. Weekly
         Natural Gas Storage Data

       United States – European Meetings to
         Discuss Oil and Natural Gas Data

                     September 28, 2007



  William Trapmann
  Natural Gas Analysis Team Leader
  William.trapmann@eia.doe.gov


www.eia.doe.gov
          Presentation Topics

•The Role of Storage in the Natural Gas Market
•Natural Gas Storage
•EIA’s Weekly Natural Gas Storage Data Project
•Major Issues Related to WNGSR
•WNGSR Performance
•The Role of Weekly Natural Gas Storage Data
•Weekly Natural Gas Storage Data Issues
The Role of Storage in the
   Natural Gas Market
               U.S. Gas Industry at a Glance
Industry               Segment Participants              Regulatory Authority

Producers              6,800 U.S. oil/ gas companies;    Price decontrol completed by
                       21 majors; 300,000+ wells         1/1/93 under the Wellhead
                                                         Decontrol Act
Gathering Systems      130+ systems                      State Regulatory Commissions
                                                         or FERC
Interstate Pipelines   90 majors, 109+ total             FERC
Intrastate Pipelines   100+                              State Regulatory Commissions
Local Gas Utilities    1,500                             State Regulatory Commissions
Marketers              about 300                         Unregulated
Natural Gas Storage    Underground: 133 operators        FERC if part of interstate
                       (390+ Fields); LNG storage 71     system, State Regulatory
                       operators (roughly 100 sites)     Commissions for others


Gas Consumers          Residential 63.6 million
                       Commercial 5.2 million
                       Industrial 205,000
                                                         Interstate commerce – FERC
                       Electric Generators: 670 plants
                       gas fired                         Intrastate commerce – State
                                                         Commissions
Natural Gas Data Surveys and the Industry




         Weekly Underground
         Storage Report

          EIA-912




                              EIA-914
                              EIA-895
           Producing Basins and Regional
                Natural Gas Flows




Source: Energy Information Administration, GasTran Gas Transportation Information System
Gas Demand Varies Seasonally During the Year
                                     (Billion Cubic Feet per Month)


                Residential                                           Commercial




             Electric Power                                            Industrial




 Source: Monthly Energy Review, August 2007
Monthly Consumption, Production and Net Imports

                                            Consumption




                      Net Imports


                                    Total     Daily
               Consumption
                                     Tcf      Bcf/d
                                                       Production
                     2006          21.82       59.8
                     2007          22.69       62.2
                                                                    History   Projection
                     2008          22.98       62.7




 Source: EIA, Short-Term Energy Outlook, August 2007
Natural Gas Storage
         Storage Reservoirs by Type


                                   E




                          C
                                         D
                     B
               A              Underground Storage:
                               A. Salt Caverns
                               B. Mines
                               C. Aquifers
                               D. Depleted Reservoirs
Source: PB-KBB Inc             E. Hard-rock Caverns
                   Storage Terms

Total Capacity: maximum volume of gas that can be
stored in a storage facility, determined by the physical
characteristics of the reservoir.

Base Gas: volume of gas needed as permanent
inventory in a storage reservoir to maintain adequate
pressure and deliverability rates throughout the
withdrawal season.

Working Gas: volume of gas in the reservoir above the
designated level of the base gas. It is gas that is
temporarily stored in a reservoir with the purpose of
being withdrawn at a future date.
Underground Natural Gas Storage Facilities in
           the Lower 48 States
             Consuming West
                                                                                            Consuming East




    Depleted Fields
    Salt Caverns
    Aquifers



                                                                     Producing

  Note: Aquifers in the Producing Region have been displayed as depleted oil/gas fields to preserve data confidentiality.
             Natural Gas Storage

• Critical supply component during heating season
• Smoothes domestic production of gas throughout
  the year by enabling storage refill during periods
  of low demand
• Withdrawals help satisfy sudden increases in
  demand or supply declines caused by weather or
  other factors
• Support pipeline and hub operations—e.g., peak
  day service and load balancing
Current Natural Gas Stocks Remain Above
            The 5-Year Range




                                                   Working Natural Gas Stocks




 Note: The shaded area represents the minimum and maximum values from 2002-2006.
 Source: Energy Information Administration, Weekly Natural Gas Storage Report.
EIA’s Weekly Natural Gas
     Storage Project
        EIA Weekly Storage Survey
• Objective: to provide weekly estimates of natural gas stocks for
  the Nation and by region
• Form EIA-912, ―Weekly Underground Natural Gas Storage
  Report‖
• Response is mandatory under Federal law
• Collect working gas in storage by company by three regions
• Sample survey – currently about 65 respondents drawn from
  EIA-191 census survey population
• Sample drawn such that the standard error would be no more
  than 5 percent for any region or the total
• Volume coverage is at least 90 percent in each region
• Forms due by 5:00 p.m. Monday for previous Friday
• Primary dissemination via Internet posting
    Development Project Milestones
• October 2001: Project begins
• November:     Working meetings with AGA
• December:     Submit clearance package to OMB
• January 2002: OMB clearance
• Feb/Mar:      System development and testing
•               Sample design and selection
•               Notification of respondents
• April:        Operational testing
• May:          Initial data release
                Methodology Report
                Comparative Assessment Report
       WNGSR Project Chronology
• May 9, 2002: First release of WNGSR
• May-July 2002: Revisions occur in 5 of the first 10 weeks
• November 2002: Federal Register notice (FRN) to announce
  revision policy
• October 2003: Methodology change
• July 2004: New sample
• November 2004: Large revision (the perfect storm)
• April 2005: FRN to announce new revision policy
• May 2005: New revision policy takes effect
• August 2005: Methodology change
• Sept 2007: WNGSR accepted by OMB as a Principal Economic
  Indicator for 2008
• Sept 2007: EIA announces redesign and new release
  procedure for WNGSR
Major Issues Related to WNGSR

   • Security issues

   • Operational procedures and issues

   • Release time and day

   • Revision policy

   • Data quality
        Security Is a Dominant Factor
• The storage data are highly sensitive given their timely nature
 and commercial value
• All compilation and processing are conducted in a secure
  work room
• Data collection – data are collected under the Confidential
  Information Protection and Statistical Efficiency Act (CIPSEA)
• No disclosure of individual company identification or data –
 except with consent of the companies
• Standard distribution is limited to team members only
• Conforms to policies established by the Office of
 Management and Budget for Principal Economic Indicators
Operational Procedures and Issues Focus on
     Timeliness, Quality, and Security

  • Survey forms are collected via FAX or e-mail (written
    copies are essential)
  • Initial quality checks on data
  • Estimation meeting on the day prior to release – includes
    rigorous quality checks
  • Non-response by sample companies – imputation
  • Questionable/suspect data are identified for followup
  • Estimates are established on the day prior to release
  • Pre-release status check
  • Release – secure delivery of files for posting
Release Time and Day Were Established
  To Accommodate Various Interests
  • Standard release: 10:30 a.m. on Thursday
  • Occurs during floor trading on the New York Mercantile
    Exchange (NYMEX)
  • Before the end of spot trading for the day
    (approximately 12:30 p.m. Eastern Time)
Public Comments Were Received Prior
 To Establishing the Revision Policy
 • Revisions to previously published data may occur for
   various reasons including resubmissions from
   respondents and late submissions from respondents
 • Changes that total 7 billion cubic feet (Bcf) [about 200
   million cubic meters (mcm)] or more for any region or
   total Lower 48 States trigger a revision
 • All revisions to date have been reported in the next
   scheduled release
 • Changes of 10 Bcf [about 283 mcm] or more can trigger
   an out-of-cycle release – this policy became effective on
   May 19, 2005
Data Quality Is an Ongoing Concern

• The weekly natural gas storage data are subjected to
  considerable scrutiny by EIA – submissions are
  evaluated with respect to individual company trends and
  relative to other companies
• Other relevant information such as weather reports and
  expectations of others are considered also
• EIA continually monitors survey performance
• Weekly, monthly, and annual storage data are compared
  with respect to anomalous patterns or inconsistent
  results—e.g., stocks exceeding capacity
WNGSR Performance
Natural Gas Stocks Are Estimated With
  A Relatively Small Sampling Error
                                                                               Coefficient of
                 Month                     Mean           Standard Error         Variation

                July-06                    3311                  59                1.79%

               August-06                   3435                  61                1.77%

             September-06                  3226                  54                1.69%

              October-06                   3065                  53                1.72%

             November-06                   2561                  42                1.66%

             December-06                   1622                  26                1.59%

              January-07                   1512                  24                1.58%

              February-07                  1746                  28                1.63%

               March-07                    2162                  35                1.63%

                April-07                   2522                  41                1.62%

                May-07                     2839                  45                1.59%

                June-07                    2968                  44                1.49%


Note: Coefficient of variation equals the ratio of the standard error divided by the mean.
Source: Energy Information Administration, Weekly Natural Gas Storage Report.
        EIA Monthly Storage Survey

• Form EIA-191, ―Monthly Underground Gas Storage Report‖
• Census survey, not a sample
• Reported by storage operators
• Almost 400 individual underground storage fields
• Approximately 2-month lag from report month to publication
• Provides the population frame for the weekly sample
 Volume Differences Between Weekly
and Monthly Natural Gas Storage Data




 Source: EIA, Natural Gas Division.
Percentage Differences Between the Weekly
  and Monthly Natural Gas Storage Data




    Source: EIA, Natural Gas Division.
The Role of Weekly Natural
    Gas Storage Data
Weekly Natural Gas Storage Data Serves
  A Number of Roles in the Industry

  • Storage operators and others in the industry rely on
    the weekly data to understand the status of this critical
    supply element
  • Industry analysts use weekly storage as an indicator of
    relative supply and demand
  • Financial traders use the information to establish their
    trading positions
Weekly Natural Gas Storage Data Can Have a
       Significant Impact on Trading


               EIA released the
               WNGSR at 10:30




    Source: INO.com
Weekly Natural Gas Storage
       Data Issues
EIA Provides as Much Data As Possible
  Without Disclosing Company Data

  • Release schedule
  • Methodology documentation
  • Historical data: weekly stock data and 5-year statistics
  • Revision policy
  • Comparison of weekly and monthly data
  • Background information on storage
       How “Full” Is Storage?
    Not a Straightforward Concept
• There are at least three ways to measure full, and each
  yields a different value
• One can measure full as working gas stocks as a
  percentage of
 – Design capacity
 – Working gas capacity
 – Historical maxima
• EIA does not report a measure of ―full‖
• EIA has published a report with a ―conservative‖ estimate
  of useable storage capacity
            Methodology:
    Estimation and Quality Issues
• Extrapolation method: the sum of working gas reported
  by respondents multiplied by a scale factor
• Refined extrapolation method (Oct-03): similar to the
  first method, but certain respondent companies were
  not included in the extrapolation
• Model-based method (Aug-05): Non-respondent
  companies are estimated on an individual company
  basis based on recent monthly stocks and individual
  company measure of variation
• The methodology documentation is located at:
  http://tonto.eia.doe.gov/oog/info/ngs/methodology.html.
www.eia.doe.gov




      www.eia.doe.gov

				
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