Storage has long been a critically important balancing mechanism in the Lower 48 natural gas market. Now, after languishing for much of the Shale Era, storage values are coming out of the doldrums. The key driver behind this change is that, unlike in the old days, when the storage market was driven primarily by the intrinsic value of capacity — i.e., the need to sock away gas in the lower-demand summer months for use in the peak winter months — the value of storage is being driven almost exclusively by extrinsic economics — i.e., how flexible and responsive capacity allows market participants to manage supply and demand during short-term market swings. This flexibility and responsiveness have become increasingly important criteria for ensuring reliability as LNG export facilities and an increasingly renewables-heavy power sector navigate frequent demand fluctuations day to day, or even intraday, as well as during high-stakes, extreme weather events like 2021’s Winter Storm Uri. In today’s RBN blog, we delve into the fundamental shifts influencing today’s storage market.
Squeeze Box – Shifting Natural Gas and Power Market Fundamentals Driving Storage Values
