Learning from past winter storms that raised gas supply concerns in different parts of the US, gas utilities are using more firm transportation contracts on pipelines and adopting more risk-averse supply plans heading into the coming winter, officials with the American Gas Association said Oct. 24.
Increases in gas demand from LNG exports, industrial use and heating during what is forecast to be a colder winter than the winter of 2023-2024 are expected to be met with higher gas production and a robust gas storage inventory, AGA leaders said.
Amid forecasts for record production and gas use, local distribution companies are using fewer interruptible transportation contracts on pipelines and focusing on more secure supply and transportation arrangements, said Lauren Scott, market and regulatory analyst at AGA.
Experiences with the December 2022 winter storm that resulted in rolling power blackouts in the Southeast and large drops in Appalachian gas production factored into the responses of 37 gas utilities that were surveyed about their winter gas supply planning, Scott said. The survey for the 2022-2023 winter heating season covered utilities with peak winter gas deliveries of 26.5 Bcf, Scott said during a media briefing.
Some gas and electric utilities are turning to aboveground LNG peak storage facilities to help with gas supply planning and fuel certainty for gas-fired generation assets, and AGA is trying to gain more data on the trend, Richard Meyer, the group's vice president, energy markets, analysis and standards, said.
"We're in a period of growing gas demand" following record gas usage of 32.6 Tcf in 2023 and record production of 37.8 Tcf last year, Meyer said.
With low and relatively stable spot gas prices across the US, households using gas for heating are expected to see winter heating bills about the same as last winter - which was one of the warmest on record - and 16% lower than the winter of 2022-2023, AGA officials said. The US National Oceanic and Atmospheric Administration is forecasting temperatures in the coming winter to be 5% lower than last winter, they noted.
The low gas prices in much of the US are expected to offset any increased usage during the coming winter compared with the previous winter, Meyer said.
AGA, which represents investor-owned gas utilities, pointed to recent US Energy Information Administration data on winter heating fuels showing households using gas are expected to spend an average of $602 this coming winter, compared with $1,037 for households using electricity.
Meyer disagreed with EIA expectations for a decline in gas-fired generation in the coming year. In its September Short Term Energy Outlook, the EIA expected gas-fired generation to drop in 2025 in some parts of the country as gas prices rise and renewable resources show large gains. The EIA has forecast a drop in gas-fired generation in the past but "it hasn't materialized," Meyer said, questioning the agency's projections.
"I see gas playing a more prominent role in power generation for some time to come," he said, as coal-fired power plants are retired and gas-fired units are used to help balance the power grid using more intermittent resources such as wind and solar power.
Briefly addressing the increased reliance on gas-fired generation, which reached a record level of 48% of US generation in August, Meyer said efforts to improve coordination among the two sectors will continue, with enhanced communications and information sharing. AGA members are "working with our partners to be ready for the heating season" and address shifting gas usage patterns, he said.