SoCal Gas storage fields reach highest inventory levels since late 2015

Mild weather has allowed Southern California Gas Company to take advantage of its recently expanded capacity at Aliso Canyon as the storage system reaches its highest inventory levels since 2015, the year a massive gas leak occurred at the facility.

Temperatures in Los Angeles have averaged more than 5 degrees Fahrenheit warmer year on year so far in November, dropping SoCal Gas demand 159 MMcf/d year on year to 2.5 Bcf/d in the month to date, according to S&P Global Platts Analytics.

This allowed a ramp-up in injections, rising to 310 MMcf/d, 335 MMcf/d above this time in November 2020. This would have pushed SoCal inventories to its 84 Bcf capacity about 10 days ago. Instead, earlier this month, the California Public Utilities Commission voted to expand capacity at Aliso Canyon by 7 Bcf, pushing total capacity in the SoCal Gas system to more than 91 Bcf. This allowed the ramp-up in injections amid warmer temperatures.

While the SoCal Gas system entered November with 82 Bcf in capacity, roughly 2.4 Bcf above 2020, inventories stand at over 88.3 Bcf as of Nov. 22, 9.5 Bcf above 2020. This is the most inventories have been up year on year since early February. It is also highest total inventories in the system since Dec. 31, 2015, according to Platts Analytics.

Los Angeles temperatures are expected to slightly dip 1.4 degrees from their month-to-date average, suggesting the stronger than normal injections could continue. At the month-to-date injection rate, SoCal Gas would reach its new capacity by the end of November. While this sudden expansion in available injection demand likely provided some upside risk to SoCal prices, strong storage supply is likely to help weaken prices this winter.

SoCal Gas, city-gate spot prices have declined over the month on the weak demand an uptick in storage inventory. After cresting $7/MMBtu on Nov. 7, it has fallen to $5.50/MMBtu as of Nov. 22. Despite the decline, spot prices are still $2.61 more than this time last year.

The SoCal Gas storage system is located in the US Energy Information Administration's Pacific storage region. The Pacific and South Central are the only regions still posting injections.

The Pacific region is expected to report a net injection for the week ended Nov. 19 due to the recently expanded storage capacity at the Aliso Canyon facility in California. Platts Analytics' storage model calls for a 1 Bcf injection into the region as a whole. The South Central is likely going to see another net injection, 11 Bcf, for the storage week ended Nov. 19 as well.