Natural Gas Storage Report - August 28

[dan_s]

Working gas in storage was 2,630 Bcf as of Friday, August 22, 2014, according to EIA estimates. This represents a net increase of 75 Bcf from the previous week. Stocks were 490 Bcf less than last year at this time and 518 Bcf below the 5-year average of 3,148 Bcf. We are still on-track to begin next winter with ~3,500 Bcf in storage, which is more than 300 Bcf below where we were in November, 2013.

There are just 13 weeks remaining before draws from storage will begin.

Barclays Forecasts Increased Demand for Gas in 2015: COAL PLANT CLOSURES TO BOOST NATURAL GAS DEMAND IN 2015

Separately, Barclays analysts from its natural gas team said demand growth in 2015 should be driven by the electricity and industrial sectors, offsetting expected declines in residential and commercial demand.

By far the largest demand growth factor in 2015 is the increase in underlying power demand since a large slew of coal-fired plants are due to retire as a result of upcoming environmental regulations, the analysts said.

According to Barclays, from a peak of 57% in 1988, coal generation as a percentage of total hit 37% in 2012, with many of the coal plants that have remained in operation severely underused.

"The country's coal fleet is about to be hit by another round of cuts, and this time much more permanent," Barclays said, referring to the Environmental Protection Agency's Mercury and Air Toxics Standards Act/Hazardous Air Pollutant Rule, scheduled to come into effect in April 2015.

Barclays estimates that 45 GW of coal-fired capacity is set for retirement from 2015-2017 due to the upcoming MATS rule, including 30 GW in 2015. Overall, Barclays expects gas demand for power generation in 2015 to increase by an average of 1.66 Bcf/d.

Industrial demand is expected to grow at an annual rate of 570,000 Mcf/d in 2015.