With the Fourth of July holiday behind us, most of us have fully embraced the summer time staples of barbeques, suntan lotion and swimming pools. Winter is the furthest thing from our minds. The natural gas industry, however, is still reeling from last winter’s touch.
The last cold season has taken an unusually large bite out of the country’s natural gas storage. Unless Mother Nature is kinder this year, serious price spikes could be on the way. The system can handle normal seasonal fluctuations just fine, but when we have a long, harsh winter like last season, there is an increased risk that there is not enough supply to get to end-users in the time that it needs to be there.
However with the recent advent of the shale has boom, the U.S. has unlocked decades, or even more, in natural gas resources. Gas is plainly seizing new roles in power, industry and transportation. Nevertheless, despite large and growing supplies, brief imbalances in supply and demand continue to appear. When they do, they work themselves out through price. Myriad factors go into that price and storage is just one of them as it doesn’t often take center stage.
It did in early 2012, when markets saw storage levels nearly maxed out by prodigious supplies of shale gas. With this oversupply – the possibility of gas with nowhere to go – natural gas prices crashed below $2 per million British thermal units (MMbtu).
This year, the question is whether gas supply stocks can recover from last winter’s deep drawdowns. The EIA currently estimate the U.S. has 1.93 trillion cubic feet (tcf) of working gas in storage. That’s nearly 26% less than this time a year ago and 29% below the five-year average.
A course correction is currently underway, with market observers already seeing large, even record-setting injection numbers. Most are forecasting 3.3 to 3.5 tcf in storage by the end of injection season. This is still less than average but will help alleviate market shivers and help keep gas supplier costs down.
It used to be that you had only one choice when it came to your energy supplier. Current laws have introduced deregulation, which means you now have options other than the local utility company when choosing your natural gas supply. Homes and businesses in deregulated states may now get there energy from suppliers who work within a competitive market to offer different options for your energy needs. There are plenty of choices out there. Here at Cripe our Energy + Facilities team helps clients make informed decisions and take advantage of deregulation to control energy costs.
The more suppliers involved that compete for your business, the better your rates.
Our Energy + Facilities team has had notable success in the natural gas procurement field and bringing significant savings to our clients. This process typically results in quick and early success, forming a great starting point to build an ongoing relationship, with Cripe acting as a trusted advisor and consultant on energy and facilities related endeavors.
- For a large school corporation in southern Indiana, Cripe Energy + Facilities facilitated a competitive bid of natural gas transportation. With no change in operations or capital investment and without complex hedging strategies, the equivalent of nearly two teacher’s annual salaries, approximately $70,000 annually was saved by this simple measure. This was just the first step in a larger initiative in which Cripe Energy + Facilities has so far been able to orchestrate a combined total annual savings of $340,000 for the school corporation.
- For a sizeable poultry processing plant and feed mill, the Cripe team orchestrated the use of a natural gas marketer over the typical “bundled” rate through the local utility and managed a 20% savings or approximately $100,000 annually.
- Most recently, for a statewide healthcare system in Kentucky, Cripe was able to consolidate existing natural gas contracts for multiple facilities and orchestrate a competitive bidding process which brought multiple facilities under a unified contract and consistent transport cost. Again, without any major change in operations or capital investment and without complex hedging strategies, with this simple measure Cripe is on track to bring over $300,000 in savings over a multi-year contract.
For most of these clients, after the initial success of the gas procurement process and the realization of the savings that our Energy + Facilities team can leverage, more in-depth, holistic programs are entered into encompassing other aspects of energy management. These aspects include energy auditing, demand-side management or behavior modification, measurement & verification and capital projects. In other words, natural gas procurement is not the only energy management service Cripe can provide, it is just the start.
We pride ourselves on coupling the social aspects of energy management with real bottom-line savings. Implementing true sustainability in a facility is an ongoing process. Cripe believes in real returns on investment and significant energy reduction to put clients on the path to responsible stewardship and true sustainability.
-Written By Adam Oak-