Storage has been the story of the West Coast natural gas market this winter. The Pacific region (Washington, Oregon and California) ended November ’24 with 310 Bcf in storage, the highest inventory entering a winter since 2020, according to Energy Information Administration data. As a result, flows in the West are taking on new dynamics this season.
East Daley Analytics tracks the regional market in the West Coast Supply & Demand Report. In recent winters, Rockies Express Pipeline (REX) has been the key route to supply additional gas to the West.
REX played a pivotal market role following an explosion on Line 2000 of the El Paso Natural Gas system in August 2021. The incident took ~600 MMcf/d of capacity offline for nearly 18 months, leaving the West Coast market exposed during a cold 2022-23 heating season. Spot prices in California topped $50/MMBtu that winter as regional storage rapidly depleted, but the massive price spreads also drew gas westward on REX across the Rocky Mountains. The region has continued to rely on REX to meet peak winter demand, even after Line 2000 returned to service in 2023.
But this season, REX has been de-prioritized. After last year’s warmer-than-average winter and a push to restock inventory over the summer, Pacific region storage has been ample enough to meet demand without pushing prices to extremes.
Not surprisingly, the lower West Coast prices have failed to incentivize westward flows on REX this winter. The pipeline in January and February ’25 flowed nearly 350 MMcf/d eastward from Colorado into Wyoming, after flowing more than 600 MMcf/d westward over the same period last year (see the figure).
Entering March, the Pacific region still has about 60% of the working gas volumes from November in storage, which should be sufficient to get through the season without westward flows from REX. Basis prices, therefore, are likely to remain low to negative into the shoulder season.
The priority on storage gas has been in the works for several years. The West Coast has developed a pronounced summer bump in volumes as utilities work to refill storage. Rather than just using REX to move additional gas west during the winter peak, shippers also have leaned on the pipeline the last two years to refill storage in the summer, when prices and demand are lower.
See our West Coast Supply & Demand Report for more details. If the recent trend continues, REX will likely not flow westward in 2025 until the summer, when warmer weather should decrease demand and prices and encourage storage restocking. – Ian Heming.
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