Archive for Thursday, February 22, 2001

Natural gas storage levels at record low

February 22, 2001


— Supplies of stored natural gas are at record lows nationwide almost guaranteeing consumers more high prices next winter, particularly if another hot summer drives up electric demand, Kansas Geological Survey officials said.

"We are going to make it through this winter," Tim Carr, senior scientist for the KGS, said Wednesday. "It is going to be interesting to see if we can build it up through this summer."

The nation started this winter with 2.6 trillion cubic feet of natural gas in storage below the usual 3 trillion cubic feet stored away before cold weather hits, he said.

As of Feb. 2, supplies were down to 1.2 trillion cubic feet. By April 1, the nation's natural gas supplies are expected to bottom out at about 600 billion cubic feet of natural gas, he said.

Storage is less important during the summer because demand for natural gas is low enough that wells can produce enough to meet demand.

"We need to put gas underground in storage for our winter usage there is no way you can supply it all through the wellhead," Carr said.

With more gas-fired generators coming on line to meet growing demand for electricity, it's becoming more difficult to produce enough natural gas to also store for the coming winter particular if a hot summer fuels demand for air conditioning from all the gas-fired electric plants.

"That's a particularly important issue in Kansas, especially in southwestern Kansas, where we rely a great deal on locally produced natural gas to operate irrigation wells," Carr said.

The nation is also using more natural gas in the summer because of all the new gas-fired generating plants that have been coming on line in the past couple of years. It is cheaper, and far easier, to put up electric generation plants fired by natural gas than by coal or nuclear power because of the environmental and public relations problems with those types of fuels.

"We are burning it in the summertime for electrical power generation when we traditionally stick it away in the summer for use in the winter. That is the reason why, even though we are going to scrape by this winter, we need to worry about it this summer."

Tim Carr, senior scientist for the Kansas Geological Survey

The nation has not added many electric power plants since the 1970s and 1980s, when many of the coal and nuclear plants were built. But that has changed in the past couple of years with the blackouts and brownouts in the Midwest two summers ago, and the more recent power problems in California.

"We are burning it in the summertime for electrical power generation when we traditionally stick it away in the summer for use in the winter," Carr said. "That is the reason why, even though we are going to scrape by this winter, we need to worry about it this summer."

Growing reliance on natural gas was coupled with the fact that gas prices were so low for so long that no one was increasing their supplies, or looking for more natural gas fields.

Kansas was running as many as 200 drilling rigs in 1982. Last year it had four. This year, the state has 25 drilling rigs going. Much of the industry's infrastructure has been dismantled, Carr said.

Much of the nation's natural gas storage is beneath Kansas.

The salt cavern storage field in Hutchinson the site of last month's natural gas leak is so-called rapid response storage. Those storage fields are used when the nation has a cold snap because gas can be pulled out of the caverns quickly and shipped to where it is needed.

Carr said he could not predict what impact, if any, the loss of the Hutchinson storage fields would have on natural gas prices next winter if they were not refilled over the summer. But he said that type of quick retrieval storage is needed to meet peak demand during cold snaps.

The leaking cavern was among 160 that make up the Yaggy Field, which has a combined storage capacity of about 3.2 billion cubic feet. Yaggy Field is owned by ONEOK, of Tulsa, Okla., and Kansas Gas Service is a subsidiary of ONEOK.

As much as 70 million cubic feet of natural gas may have escaped before officials found and plugged the leak, the company said.

Most of the other natural gas storage in Kansas is north of Lawrence and around Kansas City.

Kansas produces more natural gas than it uses, largely because of the giant Hugoton natural gas field in southwestern Kansas.

Last year, the state produced 560 billion cubic feet of natural gas a slight increase from 1999 but half the annual production of the peak years in the 1970s, according to Kansas Geological Survey. The value of Kansas natural gas produced in 2000 was $2.05 billion.

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