Michigan residents unlikely to see natural gas prices soar as high as elsewhere, experts say - MLive.com

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Michigan residents face plenty of variables in this furnace-running season, both from the weather and the power bills they’ll face to heat their homes – but the odds may be in their favor.

National energy officials this week said winter heating bills are expected to skyrocket, for some homes by more than 50 percent. However, experts said Michigan’s natural gas storage capacity, market practices and even untapped reserves position the state better than most others, even heading into a forecasted rollercoaster La Ninã winter.

Environmental advocates nationwide and in Michigan said they hope painfully high natural gas prices becomes motivation homeowners need to replace gas furnaces and other appliances with electric versions. That would reduce overall residential use of the fossil fuel, encourage faster renewable energy development and better confront greenhouse gas emissions and climate change, they argue.

“We really need to push a lot of the natural gas people that are on it to electric, so this might actually be doing it,” said Jan O’Connell of Sierra Club’s Michigan Chapter.

However, natural gas prices in the Great Lakes state may not crescendo quite as much as predicted elsewhere.

That’s largely because Michigan boasts more natural gas storage capacity than anywhere else in the nation, which state officials said allows utilities to physically hedge against national prices. It’s the unique geological features of the state that allow companies to store underground natural gas which can be released when demand spikes during cold snaps.

“Michigan has the most storage in the United States for natural gas. So, we are really well positioned to be insulated from any price spike due to weather or supply shortages,” said Nora Quilico, sales forecasting manager for the Michigan Public Service Commission.

“Our two major utilities – which serve like 90 percent of the customers in Michigan – DTE and Consumers Energy, get over 50 percent of their winter requirements from storage.”

That means the reserves can absorb the financial shock of spiked demand when extremely cold weather lures homeowners to crank up their thermostats. Utilities in Michigan just open up the gates to meet the need, officials said.

Both Consumers and DTE Energy officials said they will insulate their customers from market-fueled price increases through reliance on vast reserves held in storage facilities, among other measures.

“We purchase natural gas in the summer when it’s cheap, store it in our 15 storage fields, and then utilize that for winter demand during the winter heating season,” said Katie Carey, Consumers’ external relations director.

It’s a unique and valuable asset that allows utilities in Michigan to better prepare for what can often be bitterly cold conditions during winter months, said Dan Brudzynski, DTE’s vice-president of gas sales and supply.

He said there also are long-running financial tools at play to help keep natural gas prices in check. He said purchasing decisions the company made months ago will benefit their customers this winter.

“We take a very conservative approach to planning. We want to be able to safely, reliably deliver energy to our customers. So, as of today, we have 90 percent of our expected supply need locked in. The prices were locked in well before the run up in prices,” he said. “So, customers should see stable gas costs through the winter.”

And Michigan has yet one more advantage in the natural gas realm, should immense storage capacity and guaranteed market prices inked during less volatile economic times not be enough to stabilize the consumer market.

Production companies could return to the oil and gas fields of northern Lower Michigan, where thousands of wellheads remain ready to draw out more of the fracked hydrocarbon gases. That activity across the Antrim shale peaked in the early 1990s with no new well permits since 2015 amid low natural gas prices.

“For our members there’s not a lot of incentive to drill for natural gas with the low prices,” said Jason Geer, president and chief executive officer for the Michigan Oil and Gas Association, an industry agency.

“But now I think that’s starting to change.”

A portion of the natural gas already going to Michigan consumers comes from within the state, between 10 and 15 percent. Geer said that portion could increase with the higher global market prices.

Read more on MLive:

U.S. heating bills expected to jump as much as 54% compared to last winter, government says

La Niña has redeveloped; Cold water lurking below means at least moderate La Niña

Ann Arbor wants residents to get rid of gas furnaces to fight climate change

Expect to pay more for gasoline, electricity, natural gas this summer

Michigan has most underground natural gas storage in U.S.

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