WASHINGTON, May 16 (UPI) -- Energy industry leaders Friday were summoned to an emergency summit next month to formulate a plan to deal with the nation's paltry supply of natural gas before utilities find themselves caught in a supply-and-price squeeze during the dog days of summer.
Energy Secretary Spencer Abraham told an audience in Washington that the June session of the National Petroleum Council (NPC) was a necessary step in dealing with gas storage levels that frustratingly remain at less than half of what they were last spring.
"The ideas and suggestions that emerge from that meeting can then be implemented during the critical summer period," Abraham told the NPC, an advisory group that consists of oil-and-gas companies, academics and other stakeholders in the energy industry.
"I understand that June is just around the corner, and I am requesting this meeting on short notice, but I think these challenges require us to act today," he said.
Abraham said he wanted the NPC to explore steps that could be taken immediately to keep large volumes of gas flowing into underground storage for use in air conditioning during the summer and for heating in the winter.
The energy industry has blamed the inventory lag on rapid use of gas in storage due to hot summer and cold winter weather, and on the increasing difficulty of squeezing more gas out of maturing fields in both the United States and Canada.
According to the National Gas Supply Association, 40 percent of the United States' gas reserves are on government-controlled lands and offshore areas that are restricted by environmental regulations.
Abraham didn't suggest any specific steps that could be taken in order to spur gas production in the short term; however he said it would take "much more" than the current 60 billion cubic feet per week storage rate in order to reach what the Energy Department considers its desired pre-winter inventory of more than 3 trillion cubic feet tucked away in storage by October.
"Our current stocks of natural gas in underground storage are unusually low due to a combination of cold weather in the Northeast and Mid-Atlantic regions this past winter, and declines in both domestic production and net imports," Abraham pointed out. "We had 696 billion cubic feet of gas in storage at the end of March, the lowest level since 1976, when the Energy Information Agency began keeping records."
Injections into storage facilities have surged in the past few weeks, although the current inventory of around 72 billion cubic feet is still half of what they were last year and 42-percent of the 5-year average. As a result, front-month gas futures prices on the New York Mercantile Exchange have been on a gradual upward trend this spring to around $6.10 per million British thermal units (MMBtu) compared to around $5.75 MMBtu in mid May 2002.
June NYMEX gas ended the week up slightly at $6.12 MMBtu as the National Weather Service predicted a late-spring heat wave next week in Texas and the South that could divert gas from storage for use in generating power for air conditioning.
"The exceptionally large shortfall in natural gas storage relative to normal levels continues to place unusually strong upward pressure on near-term gas prices because companies need to obtain large amounts of natural gas to refill storage for the next heating season, which will compete with other uses," the Energy Information Administration warned this week. "Moreover, if abnormally warm weather prevails this summer, the market demand may surge, particularly in the western and southern United States, where natural gas is heavily used for power generation."
