THE SOURCE - Spring 2018 - 19

injection season in late October or early November. Storage is
slightly down from last year's 3.98 Tcf, but similar enough to have
little impact on prices. Interestingly, the storage peak is now a
moving target, peaking as late as mid to late-November. NGSA
attributes this to the enhanced flexibility that shale gas offers.
The 2017-2018 Winter Outlook also predicted a moderately-sized,
but important, contribution to supply from Canadian imports of
5.5 Bcf/day, same as last year.
NGSA emphasized that surging U.S. production compared
to last winter, the abundance and dynamism of natural gas in
storage combined with the industry's ability to tap into Canadian
imports and LNG when needed means that overall winter
supply should be more than adequate to meet record demand.
Remembering that this is a winter-over-winter comparison,
NGSA predicted that taken together, supply factors would place
negative pressure on wholesale winter natural gas prices.
But supply factors only tell half the story. To round out the
forecast, NGSA also examined demand trends for the coming
winter. And that's where a very interesting story emerges, with
demand growing from almost all customer sectors, each for
different reasons.

To understand winter demand trends, it's important to
understand that the first and perhaps most significant factor
influencing winter demand, particularly demand from the
residential and commercial sector, is the weather. Last winter's
heating season was the sixth warmest on record, which was
reflected in lagging demand for natural gas from the residential
and commercial sector. To determine what Mother Nature has on
tap for us in the winter of 2017-18, NGSA turned to the weather
prediction center at the National Oceanic and Atmospheric
Administration (NOAA). NOAA's forecast called for the 2017-18
winter to be 13 percent colder than last winter - although still
1 percent warmer than the 30-year average. When taken as a
whole, the prediction for 13 percent more heating degree days
(HDDs) led to the conclusion that colder weather will place
upward pressure on 2017-18 winter natural gas prices.
Moving on to the next major demand factor, customer
demand, NGSA relied on data on each of four customer sectors
(residential, industrial, electric and exports) from Energy
Ventures Analysis (EVA). Based on the forecast for colder weather,
EVA's data called for colder weather to spur a solid increase in

demand of 2.8 Bcf/day from the residential/commercial sector,
representing an increase of 8 percent from that sector compared
to last winter. EVA also predicted winter-over-winter growth
- albeit slight - from the industrial sector of 0.3 Bcf/day.
Although only a small increase, nevertheless overall industrial
demand for natural gas is expected to set a new record this
winter. The growth is linked to the construction of 70 major
industrial projects from 2016 to 2022 and capacity expansions in
the petro-chemical and fertilizer industries. EVA predicts electric
sector demand to grow by 1.6 Bcf/day. This can be attributed
to natural gas' increased use in generation nation-wide. The
electric sector's long-term shift to natural gas-fired power plants
continues at an energetic pace and this year is no different.

Finally, this winter's demand scenario includes a small,
yet growing export market, both by pipeline to Mexico and
liquefied natural gas (LNG). Mexican pipeline exports continued
to grow by 0.4 Bcf/day to 4.4 Bcf/day, fueled by demand from
its growing economy. This year was a big year for LNG exports,
which are projected to more than double from 1.2 Bcf/day last
winter to a projected 2.8 Bcf/day this winter. This is attributed to
a fully functioning export facility at Sabine Pass and the soon to
come online Cove Point facility in Maryland, an East Coast first.
When customer demand from exports, the electric, industrial,
and residential/commercial sectors are combined, overall
customer demand averages 96.8 Bcf/day - about 8 percent -
more than last winter. This increase in demand is predicted to
put upward pressure on winter prices.
The final influence that NGSA considered for its winter
prediction was the economy, which affects all sectors but is
most evident in its impact on manufacturing. This winter, the
experts at IHS Economics anticipate an economy that will grow,
but only incrementally compared to last winter. The Gross
Domestic Product (GDP) is expected to increase 2.5 percent
compared to the winter of 2016-2017, when GDP expanded by
1.9 percent. While any GDP growth is welcome, this amount
is not enough to influence natural gas prices. Based on IHS
Economics analysis, NGSA anticipates the economy will place
neutral winter-over-winter pressure on natural gas prices.
In conclusion, based on a forecast for colder weather,
increased customer demand, and surging supply, NGSA
continued on page 28



Table of Contents for the Digital Edition of THE SOURCE - Spring 2018

First Person
APGA Events
Disasters Bring Challenges and Opportunities
Furnace Rule Update
APGA Strategic Planning
Conversation with an APGA member: Tallahassee
NGSA’s Winter Natural Gas Outlook Projects Record Demand, Matched by Robust Storage and Production
Promoting Gas Market Growth
New White Paper Offers Guidance to Natural Gas Utilities on Thriving in a Changing Landscape
Legislative Outlook
Marketing Matters
At Last
Advertiser's Index/
THE SOURCE - Spring 2018 - Intro
THE SOURCE - Spring 2018 - ebelly1
THE SOURCE - Spring 2018 - ebelly2
THE SOURCE - Spring 2018 - cover1
THE SOURCE - Spring 2018 - cover2
THE SOURCE - Spring 2018 - 3
THE SOURCE - Spring 2018 - 4
THE SOURCE - Spring 2018 - 5
THE SOURCE - Spring 2018 - 6
THE SOURCE - Spring 2018 - 7
THE SOURCE - Spring 2018 - First Person
THE SOURCE - Spring 2018 - 9
THE SOURCE - Spring 2018 - APGA Events
THE SOURCE - Spring 2018 - Disasters Bring Challenges and Opportunities
THE SOURCE - Spring 2018 - 12
THE SOURCE - Spring 2018 - Furnace Rule Update
THE SOURCE - Spring 2018 - APGA Strategic Planning
THE SOURCE - Spring 2018 - 15
THE SOURCE - Spring 2018 - Conversation with an APGA member: Tallahassee
THE SOURCE - Spring 2018 - 17
THE SOURCE - Spring 2018 - NGSA’s Winter Natural Gas Outlook Projects Record Demand, Matched by Robust Storage and Production
THE SOURCE - Spring 2018 - 19
THE SOURCE - Spring 2018 - Promoting Gas Market Growth
THE SOURCE - Spring 2018 - 21
THE SOURCE - Spring 2018 - New White Paper Offers Guidance to Natural Gas Utilities on Thriving in a Changing Landscape
THE SOURCE - Spring 2018 - 23
THE SOURCE - Spring 2018 - Legislative Outlook
THE SOURCE - Spring 2018 - 25
THE SOURCE - Spring 2018 - Marketing Matters
THE SOURCE - Spring 2018 - 27
THE SOURCE - Spring 2018 - 28
THE SOURCE - Spring 2018 - At Last
THE SOURCE - Spring 2018 - Advertiser's Index/
THE SOURCE - Spring 2018 - cover3
THE SOURCE - Spring 2018 - cover4
THE SOURCE - Spring 2018 - outsert1
THE SOURCE - Spring 2018 - outsert2
THE SOURCE - Spring 2018 - outsert3
THE SOURCE - Spring 2018 - outsert4