Energy Prospectus

Working gas in storage was 2,871 Bcf as of Friday, August 27, 2021, according to EIA estimates. This represents a net increase of 20 Bcf from the previous week. Stocks were 579 Bcf less than last year at this time and 222 Bcf below the five-year average of 3,093 Bcf.
At 2,871 Bcf, total working gas is within the five-year historical range.

There is now ZERO chance of US natural gas in storage getting back to the 5-year average before the winter heating season. My WAG is that we begin the winter with 200 to 250 Bcf less gas in storage than the 5-year average. < This is DANGEROUSLY LOW considering the STRUCTURAL CHANGE in the US natural gas market.

Unless upstream companies quickly add 50 more drilling rigs in the Marcellus/Utica Shale plays in PA & Ohio and the Haynesville Shale play in Louisiana the chance of regional supply shortages of this critical home heating fuel are high during the winter. Propane inventories are also dangerously low.

The biggest "structural change" to the US gas market is more than a 10 Bcf per day increase in exports of US natural gas over the last five years, including a 5 Bcf per day increase in just the last year. Plus, US gas production is down YOY.

Recent comments from Kinder Morgan support my belief that LNG export are a significant structural change in the US gas market.

“As the global economy continues to recover from the pandemic, our company generated substantial Adjusted Earnings and robust coverage of this quarter’s dividend. Our shareholders continue to benefit from the philosophy that guides our decision-making: fund our expansion capital needs internally, maintain a healthy balance sheet, and return excess cash to our shareholders through dividend increases and/or share repurchases,” said KMI Executive Chairman Richard D. Kinder. “The fruits of that philosophy are clear, as we have internally funded expansion projects and steadily increased our dividend while at the same time reducing our Net Debt by more than $12 billion in the last six years.”

“Our diversified portfolio again proved its worth as we saw greater contributions relative to the second quarter of 2020 from three business segments: Natural Gas Pipelines, Products Pipelines and Terminals. The company’s performance continues to demonstrate that the need for our assets remains very strong,” said KMI Chief Executive Officer Steve Kean. “Our business segments are extremely well-positioned in markets throughout the United States, and our acquisition this quarter of the business of Stagecoach Gas Services LLC (Stagecoach) will enable us to provide even greater levels of service to our natural gas customers. With our strong participation in the liquefied natural gas (LNG) value chain, we will also increasingly benefit from growing global natural gas demand, as analysts project U.S. LNG exports will double within the coming decade. < US LNG export capacity will increase another 2 Bcfpd within six months.