Two rigs up, drilling six wells for Spire Storage expansion

Construction to expand our Wyoming storage facility is on schedule and well underway, with two rigs focused on the drilling of six new wells. Construction also continues at the tank pad, with all major equipment installed and fabrication and installation of associated piping in progress.

We are forming and pouring foundations for the control building, compressor building and H2S treatment vessels. And we’ve installed and backfilled the 20-inch pipeline (approximately 7 miles). 

Mid-continent market outlook

El Niño is expected to continue into 2024 and bring with it a warmer winter in the Midcon/Midwest. Despite this, Dec-Feb winter basis is still valued at ~$1.05 and ~$0.50 for Southern Star and Panhandle, respectively (as of 10/11/23).

This should draw plenty of attention, as Southern Star and Panhandle’s Dec-Feb basis have only traded at a premium once in the last five years. An exception was last winter when the Southern Star price in December landed at $1.23 for the monthly midpoint average.

Other trends for winter include:

• Midcon rigs are down almost 50% from last year’s highs
• Per the Oct. 5, 2023, EIA report, there is 80 additional Bcf in storage compared to this time last year; the report forecasts entering winter with the highest storage levels in the last five years
• There are currently no major planned service outages scheduled on Southern Star, Panhandle or OneOk intrastate for the remainder of the calendar year

West market outlook

All eyes are on Aliso Canyon and the California gas market, as the California Public Utilities Commission (CPUC) voted to temporarily increase working gas capacity from 41.16 Bcf to 68.6 Bcf (the max level deemed safe by the California Geologic Energy Management Division) for the winter of 2023. SoCalGas has gone to work to fill this incremental capacity and has contracted an additional ~9 Bcf for withdrawal this winter (as of 10/11/23).

However, expect Aliso Canyon to go into November with additional space as it would take 51 days to fill the incremental capacity at max injection, and based on the latest data from SoCalGas, they’ve only injected at ~50% of capacity during the first four weeks since the CPUC approval was granted. 

While the Aliso Canyon working gas decision should have a major impact on the winter curve, the more overlooked decision from the CPUC came on Sept. 15, when the commission voted to remove the “Withdrawal Protocol.” The CPUC letter states, “currently limits the use of Aliso Canyon storage to days when certain conditions are met. The system must be under some strain and gas customers may reach the point where they are subject to financial penalties for not delivering sufficient gas before Aliso Canyon can be used.”

As El Niño continues into 2024, the Pacific Northwest is expected to see a mild to warm winter while Southern California seems to fall in line with the average. The Aliso Canyon outlook as well as the temperature forecast should have an effect on the winter curve and potential impacts on cash and prompt prices as more gas is able to find a home in storage. Despite these signals, NWP basis for Dec-Feb is at a ~$4.50 premium (as of 10/11/23).  

NERC report calls out five emerging risks to grid reliability, highlights reliability of natural gas 

A new report from the North American Electric Reliability Corporation (NERC) identifies five risks that could impact grid reliability: energy policy, grid transformation, resilience to extreme events, security risks and critical infrastructure interdependencies. The 2023 ERO Reliability Risk Priorities Report reviews each of these risks while providing recommendations for mitigation. When it comes to addressing risks associated with grid transformation, the report calls out the role natural gas storage can continue to play in helping maintain reliability of supply. 

Read the full report >

The Spire Storage Wyoming team recently participated in its annual Day for Good at the Uinta County Senior Center, with employees delivering 114 meals, and serving 52 meals in-house.

Spire’s Day for Good provides employees with paid time off to volunteer at a nonprofit of their choice.  

In August and September, Spire Storage sponsored and participated in the Uinta County Fair and Evanston Cowboy Days. We had a great time connecting with the local community at these events!

Spire’s community giving efforts are part of Spire Serves, a company initiative that connects charitable giving with employees’ interests and Spire’s values. Our team’s participation in these events brings this important component to life.