Polar Vortex & Cold Weather Constrain Natural Gas Supplies [Charts] [Graphs]

  @David_Kashi on

With temperatures reaching record lows across the U.S. caused by the polar vortex, the increased demand for natural gas to heat homes and commercial spaces has constrained gas inventories across North America, according to a Bank of America Merrill Lynch note.

bank of america pic In mid-December, temperatures dropped sharply throughout the entire Lower 48 region.

“These unprecedented weather conditions left a big mark on the U.S. natural gas market,” Sabine Schels, the author of the note, said. “High heating-related power loads delivered a strong call on gas-fired peaking plants, boosting natural gas demand for power generation.”

Gas demand in December rose to a record high of  94.3 billion cubic feet (bcf), 1.2 percent above the previous record set in January 2011.

bank of america 23 This year’s winter started off unusually cold with most of the US seeing frigid weather conditions since late November.

Additionally, some of the shortages can be attributed to production freeze-offs, which happen when liquids in the natural-gas stream freeze and clog the flow of gas at the wellhead.

Power outages and transportation constraints have also affected the supply of natural gas. It is estimated that 25-30 bcf. of production has been lost since early December.

25-30 bcf of production has been lost since early December 25-30 bcf of production has been lost since because of production freeze-offs and weather in early December.


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