Canadian, US natural gas storage inventories below average heading into summer season – NEB

Source: Canadian Enerdata; U.S. Energy Information Administration’s Weekly Natural Gas Storage Report. Description: The first graph shows monthly natural gas storage inventories in Canada, as well as the 5-year average for January 2015 to December 2018. The second graph shows combined monthly natural gas storage inventories in Canada and the U.S., as well as the 5-year average for January 2015 to December 2018.

Combined Canadian and U.S. storage inventories totaled 1 964 billion cubic feet in May, 22% below 5-year average

Due to a cold winter this year, natural gas inventories remain below the 5-year average heading into the summer season, according to the National Energy Board. Generally, production of natural gas is steady throughout the year, while demand fluctuates with the seasons. Storage is used to help balance natural gas markets.

Natural gas storage activity is divided into 2 seasons: injection, when gas is put into storage; and withdrawal, when gas is taken out of storage.

Gas is typically injected into storage between April 1 and Oct. 31 when demand is lower. Gas is withdrawn as needed between Nov. and March to help meet higher demand in the winter months.

Winter natural gas demand in Canada is approximately twice as high as the demand in the fall and spring (also known as the shoulder seasons).

Demand in Canada increases in the winter for space heating requirements as cold temperatures arrive. Demand also increases slightly in the summer, to levels higher than in the shoulder seasons, but not nearly as high as in the winter.

During the hottest months of the year, there is typically increased gas demand for electricity generation specifically to meet air conditioning demand.

According to the Canadian Gas Association, there were more heating degree days (HDDs) in North America during the winter of 2017/2018 than in 2016/2017.

A heating degree day is a measurement designed to quantify the demand for energy needed to heat an average building. The heating requirements for a building at a specific location is considered to be directly proportional to the number of HDDs at that same location.

HDDs are calculated by subtracting 18°C from a day’s average temperature. In Canada, 18°C is considered a temperature below which buildings need to be heated. Total HDDs for a month is the sum of daily HDDs.

The winter was colder, for longer, resulting in higher natural gas demand and more reliance on storage to meet this demand. Despite steady production of natural gas in Canada and record high production in the United States (U.S.), cold temperatures contributed to maintaining storage inventories in Canada slightly below the 5-year average.

With the start of the injection season on 1 April 2018, Canadian natural gas storage inventories totaled approximately 315 billion cubic feet, approximately 4% below the 5-year average. Due to below average temperatures in April, natural gas storage injections rates were below average.

By mid-May, storage inventories in Canada totaled 336 billion cubic feet, 13% below average. Canadian inventories receded below the five-year average in April 2018, breaking a trend of above-average inventories held since Oct. 2015.

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