Energy analysts have confirmed the possibility and said they could not recall a recent time when Pennsylvania has used all of its underground storage space for the fuel. The situation could be attributed to a mild winter or the boost in production. According to federal data, this happened about 10 years ago when the state had less underground storage space.
Whether the storage areas—listed at nearly 777 billion cubic feet statewide— will actually reach capacity is a serious question in the industry. The answer is based on many factors, the main one: the weather.
A hot summer will force electricity producers to rely more on natural gas, and that could help lessen the demand for gas storage space underground.
If the storage areas do reach capacity, the cost of natural gas could decrease even further, and production could decrease for a time as well.
According to the federal Energy Information Administration working natural gas inventories nationwide hit about 2.9 trillion cubic feet in May 2012, 31 percent higher than May 2011 levels.
Storage levels have been high since spring. This could be because of moderate winter temperatures that decreased heating fuel demands. Supply, however, has not decreased. EIA data show natural gas production in Pennsylvania has more than quadrupled since 2009. So, more gas is being produced than is being used. The issue of supply versus demand with natural gas is leaving companies with excess supply.
One thing to keep in mind is that storage capacity is likely to increase in the future. There is capacity that has been drilled, but those wells are not yet feeding pipelines.
Industry analysts say that if gas producers can hold out during the summer months, the price of natural gas could increase in the winter months. That should balance out the supply versus demand factor and should eliminate the concern of storage capacity.