natural gas storage

The U.S. may be in a monthslong pause in approving new LNG exports but that doesn’t change the fact that U.S. LNG export capacity will nearly double over the next four years, that most of the new liquefaction plants are being built along the Texas coast, and that their primary source of natural gas will be the Permian Basin. That helps to explain why three big midstream players — WhiteWater/I Squared, MPLX and Enbridge — recently formed a joint venture (JV) to develop, build, own and operate gas pipeline and storage assets that link the Permian to existing and planned LNG export terminals. In today’s RBN blog, we examine the new JV and discuss the ongoing development of midstream networks for crude oil, natural gas and NGLs. 

Natural gas storage — especially well-sited storage with lightning-fast deliverability rates — is taking on a new significance (and value) as LNG export facilities and power generators seek to manage their often-volatile gas demand. But developing new gas storage capacity is costly and, with only a few exceptions, it’s hard to make an economic case for greenfield projects. That reality has spurred a lot of interest among midstream companies in acquiring existing storage assets and, where feasible, expanding that storage. In today’s RBN blog, we discuss one of the biggest storage-acquisition deals to date: Williams Companies’ recent purchase of six facilities with a combined working gas capacity of 115 Bcf in Louisiana and Mississippi. (It’s not all that Williams has been up to on the gas-storage front.) 

We’ve been saying for a while now that the natural gas storage market may be on the verge of a comeback. At the same time, we’ve cautioned that the world has changed since the heyday of gas storage in the mid-to-late 2000s, and that while market participants are clamoring for storage solutions and storage values are rising, what’s driving storage values today is vastly different than what drove the last big capacity build-out (which resulted in a major storage overbuild). As a result, only a handful of storage projects meeting special needs in particular places are likely to reach a final investment decision (FID). In today’s RBN blog, we discuss one such project: a greenfield storage facility under construction at two depleted dry-gas reservoirs 90 miles southeast of Dallas.

Two of the biggest challenges that Europe faces in the race to wean itself off Russian natural gas are the need to develop new pipeline connections between the continent’s many isolated gas networks and to integrate the European Union’s multiple gas markets. Addressing these won’t be easy. Unlike the U.S., whose pipeline systems were designed to transport gas long distances and across jurisdictional lines, Europe’s networks are more regional or even local in nature, and only recently has the EU been taking steps to link the continent’s markets. Oh, by the way, U.S. producers and LNG exporters should care about all this, because if Europe gets its act together, it could become an even larger and longer-term recipient of gas originating from the Permian, Haynesville, Marcellus/Utica and other shale plays. In today’s RBN blog, we discuss the prospects for tying together the EU’s gas pipelines, gas storage facilities, LNG import terminals and gas markets.

We’ve seen this movie one too many times. Just when natural gas prices are rallying across the world to multi-year or historic highs, another monkey wrench gets thrown into the workings of the Western Canadian gas market, imploding its suite of price markers. Last week, gas prices in Western Canada collapsed to mere pennies and even went negative for a time due to an unfortunate combination of pipeline restrictions and record-high production — a situation that will cost the region’s gas industry billions if left unchecked. In today’s RBN blog, we examine the root cause of the latest price collapse and when a turnaround might be expected.

The Russian war against Ukraine has focused Europe on the issue of energy security, especially as it relates to natural gas. The continent has previously relied on Russia for more than 40% of its gas, but it now must scramble for new suppliers and alternative forms of energy. The matter is particularly urgent in a few countries along or very near the Russian border, including Lithuania, Poland and Ukraine itself. Fortunately, almost two years ago the three countries formed the “Lublin Triangle,” an alliance of sorts with the aim of enhancing military, cultural and economic cooperation while also supporting Ukraine’s prospective integration into the European Union and NATO. In today’s RBN blog, we discuss the potential for developing a “New Gas Order” in Europe.

Pandemic. Deep freeze. Decarbonization. Stymied production growth. Sky-high prices. 2021 was definitely one for the record books. But thank goodness we made it and can look forward to a New Year! That means it is time for our annual Top 10 Energy Prognostications, the long-standing RBN tradition where we consider what’s coming next to energy markets. Say what? Surely it would be foolhardy to make predictions now. After all, we’re in the midst of a chaotic energy transition, a pandemic that’s becoming endemic, and political shenanigans in Washington and across the globe. Foolhardy? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2022 has in store for us. 

Pandemic. Deep freeze. Decarbonization. Stymied production growth. Sky-high prices. 2021 was definitely one for the record books. But thank goodness we made it and can look forward to a New Year! That means it is time for our annual Top 10 Energy Prognostications, the long-standing RBN tradition where we consider what’s coming next to energy markets. Say what? Surely it would be foolhardy to make predictions now. After all, we’re in the midst of a chaotic energy transition, a pandemic that’s becoming endemic, and political shenanigans in Washington and across the globe. Foolhardy? Nah. All we need to do is stick out our collective RBN necks one more time, peer into our crystal ball, and see what 2022 has in store for us. 

The volume of natural gas in storage and the flow of gas into and out of it are among the most closely watched indicators in the U.S. gas market. That makes sense, given that these numbers provide important weekly insights into the supply-demand balance, gas price trends, the impact of LNG exports, and any number of other market drivers. However, what’s often ignored by those not involved in the day-to-day physical gas market are the mechanics and economics of storage itself. Who uses gas storage, and for what purposes? What are the value drivers for a storage facility? Why are there different types of gas storage contracts? How much does storage cost, and what do storage rates reflect? Today, we explore these and other questions.