Natural Gas Transportation and Storage

Vincent Kaminski

This chapter will discuss the transportation and storage of natural gas – ie, the midstream segment – a critical link between the producers and consumers of natural gas. The details covered here may seem technical at first glance, but they are critical to both trading natural gas in the short run and to understanding long-term location price differentials. Some of the data used by the traders to make decisions are related to storage and pipeline grid operations. The Weekly US storage report available from the EIA can be compared, in its impact on the gas market, to the impact a monthly non-farm payroll report has on the financial markets. The reason why storage reports have been such an important source of information is that they provide in condensed form information about the balance between supply and demand. Weekly storage data has to be adjusted for the short-term impact of weather conditions, and this creates a great opportunity for fundamental analysts who compete for the title of the best storage forecaster. Several news organisations run weekly scorecards and tabulations ranking different forecasters.¹¹For example, a weekly summary of storage forecasts and commentary is