Injections into active US natural gas storage in the Lower 48 states that during the 2022 injection period (April to October) have returned storage levels to near historic levels. The overall increase in natural gas inventories was driven primarily by three consecutive five-digit increases in September and early October. US natural gas injections reached 427 billion cubic feet (Bcf) in September—a month that included the second largest weekly injection on record for the week ending September 30 (129 Bcf), according to our data. Natural Gas Storage Weekly Report (WNGSR), reporting back to 1993. In September, reduced annual demand and strong natural gas production led to more natural gas injections into underground storage and lower natural gas spot prices.
Over the past five injection periods, an average of 18% of natural gas injections into storage during refilling occurred in September. Currently we estimate that this September, the injection of natural gas in storage accounts for 21% of the total, according to WNGSR and ours. Short Term Energy Outlook (STEO).
US natural gas production has increased to meet the growing demand for US liquefied natural gas (LNG) exports throughout the year. In 2019, dry natural gas production averaged 92.9 billion barrels per day (Bcf/d) in the United States before declining in 2020, mainly due to the economic impact of the COVID-19 pandemic. US natural gas production is set to increase in 2021 and 2022. Until now in 2022, the production of dry natural gas has a record average value (more than 96 Bcf / d), 4% from the previous year and 2.2% from the production of the year 2019. In September, daily US dry natural gas production exceeded 97 Bcf/d every day in September and exceeded 100 Bcf/d in seven days, according to data from PointLogic.
Increased natural gas production from the shale play has driven growth in US natural gas production this year and, year to date, shale natural gas production has accounted for 78% of all US dry natural gas production. The Permian Basin and Haynesville plays in the US Gulf region have led to production growth, and they reached record high production this summer.
In September, dry natural gas production for the Haynesville play increased 51% from September 2019, averaging 13.7 Bcf/d. Permian Basin production increased 40% from September 2019, averaging 15.4 Bcf/d. These facilities and proximity to US Gulf Coast LNG export terminals are attracting new users, especially with high summer rates at the US benchmark Henry Hub.
Domestic demand for natural gas and natural gas electricity fell in September as lower temperatures for the year reduced demand for heating and cooling in buildings. These factors, along with higher production, have allowed more natural gas to be put into operational storage.
The Henry Hub natural gas spot price fell more than 30% throughout September, averaging 9.38 million British thermal units (MMBtu) on September 1 and $6.40/MMBtu on September 30. In early October, the price of natural gas fell below $ 6.00 / MMBtu. Additional analysis is available in our upcoming STEO, scheduled for release on November 8.
Main contributor: Kirby Lawrence