May 7—American natural gas producers have been having to store a lot of their product because of the shutdown of the Freeport Liquefied Natural Gas Export Terminal and other factors, but the gas will be used because the need for it will only grow.

That's according to Odessa oilman Kirk Edwards, who is one of the biggest gas producers in the Panhandle, and Southern Gas Association President-CEO Suzanne Ogle of Dallas.

"The Freeport LNG Facility was down for almost nine months, adding in some two billion cubic feet per day to the storage numbers," Edwards said. "That going to storage along with an abnormally warm winter created a huge surplus to normal storage years and thus a tremendous downward pressure on natural gas prices to the lower $2 range.

"Until some event happens that gets storage numbers more in balance with the five-year norms, which could be warm summer days ahead or hurricane events in the Gulf of Mexico, the natural gas price will remain dampened down in the lower $2-3 range ahead," he said.

"This in itself will shutter natural gas drilling in basins such as the Haynesville and Marcellus as those areas require much higher pricing to break even based on the dramatically higher cost to drill from a year ago due to inflated steel and drilling and completion prices."

The Haynesville Shale is in East Texas and Western Louisiana and the Marcellus Shale in parts of Pennsylvania, New York, West Virginia, Ohio, Maryland, and Virginia.

Ogle said the volume of natural gas in storage and the flow of gas into and out of storage "provides significant insight into the supply-demand balance and resulting gas price trends.

"U.S. gas storage balances seasonal swings in demand and acts as insurance against unforeseen supply disruptions, including extreme weather," she said.

"Two increasingly important storage uses are shoring up grid flexibility, which is a need created by the growth of gas-fired power generation, the increased use of gas for commercial and industrial purposes and the grid's increasing reliance on renewables.

"In addition, as the U.S. grid increasingly relies on wind and solar, there will be an increased need for on-demand natural gas supply for reliable and responsive delivery to fuel power generation," Ogle said. "Therefore, there will be an increased need for quickly accessible storage facilities near the demand market."

She said the second critically important use of storage is for the increasing number of LNG export terminals along the Gulf Coast.

"In early April, U.S. Secretary of State Antony Blinken prioritized energy security cooperation at the European Union capital," Ogle said. "He pledged that the U.S. would send at least 50 bcm to Europe this year to aid the continent as they move from their reliance on Russian gas.

"LNG export is an essential energy source for global energy security because it allows the energy-deprived world to capitalize on natural gas, which is a clean and low-cost fuel source. The role of adequate storage capacity in fulfilling this promise is essential. Storage enables the coordination of the delivery of feed gas to LNG facilities and rapid loading onto LNG carriers. There are approximately 400 active storage facilities in 30 states."

With sustained high dry gas production and the increasing importance of storage as a primary tool to mitigate price risk, maintain operational flexibility and system balance "and as an energy source for our friends abroad, a unified energy policy prioritizing infrastructure including pipelines, plants and storage is warranted," the Southern Gas Association leader said.