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EIA-AGA Comparison
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COMPARATIVE ASSESSMENT OF EIA and AGA WEEKLY STORAGE ESTIMATES

This report was released on May 9, 2002, and reflects weekly storage estimates that were current as of that date.

Natural gas stocks are an important indicator of natural gas supply and demand conditions. Working gas in storage is one of the few timely indicators of the relative scarcity or abundance of gas in the market. Therefore, industry and market participants, as well as policymakers, watch stock movements closely.

The American Gas Association (AGA) began publishing weekly natural gas storage data in 1994. In October 2001, the AGA announced plans to discontinue its survey due to resource considerations. The Secretary of Energy announced in October 2001 that the Energy Information Administration (EIA) would undertake a weekly survey of natural gas storage operators and would begin publishing weekly regional and national estimates of natural gas in storage. The EIA already publishes monthly and annual natural gas storage data.

The EIA has collected survey data and produced weekly estimates since mid March. This report is intended to aid data users by examining differences between the EIA and AGA weekly surveys and comparing the results of the two surveys for the brief period of time in which they overlapped.

Comparison of AGA and EIA Weekly Storage Surveys and Procedures:

EIA's survey instrument, the form EIA-912, "Weekly Underground Natural Gas Storage Report," was developed to collect information on weekly inventories of working gas in underground storage facilities. As was true for the AGA survey, the purpose of EIA's survey is to compute and publish weekly estimates of working gas in storage for three regions of the United States, and the total for the United States. The AGA originally established a set of three regions based on similarities in the way companies tend to utilize their storage facilities in meeting the demands of their gas customers. The Consuming Region East includes many high gas-consuming states, has the largest proportion of storage capacity, and has the bulk of the nation's storage activity. The EIA adopted the same regional framework to maintain a useful comparability in the two series.

The two survey systems group the following states with storage facilities into three geographic regions (Figure 1).

Producing Region: Alabama, Arkansas, Kansas, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas;

Consuming Region East: Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, Nebraska, New York, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia;

Consuming Region West: California, Colorado, Minnesota, Montana, Oregon, Utah, Washington, and Wyoming.

The two survey systems have a number of similarities in the primary characteristics and procedures (Table 1). The key differences between the two surveys involve: (1) survey sampling and reporting procedures, and (2) the methodology for estimating regional working gas volumes.

Table 1.Comparison of Selected Characteristics for the AGA and EIA Weekly Storage Data Systems.
Characteristic AGA EIA
Basis for survey Self-selected sample of AGA member firms and nonmember storage operators Statistically-based sample from the EIA-identified population of all underground natural gas storage operators
Basis for reporting Voluntary Mandatory
Measurement point for storage data collected as of 9:00 AM Friday as of 9:00 AM Friday
Data elements requested from respondents 1. various company identifying information
2. working gas in storage by geographic region
3. working gas in storage as of Friday of same week one year ago
4. maximum working gas in reservoirs included in the report over the period 1992-2001 		1. various company identifying information
2. working gas in storage by geographic (i.e., AGA) region
3. Check Box to indicate that data submitted are revisions
4. Comments (e.g., changes in number and/or capacity of storage facilities reported; reclassifications of base or working gas; or explanations of unusual data reports)
Method of response Facsimile transmission, telephone Facsimile transmission, e-mail, telephone
Due date/time of response Unspecified (in practice, telefaxes usually received sometime between Friday and Tuesday) 5 PM Eastern Time on Monday following the Friday of the previous week
Publication revision policy 1. If revised data resulted in a change of more than 1 Bcf per day at either a regional or national level, a revision to the subject week's estimates was published 1. If total effect of any changes during the week exceeds 7 Bcf for a week at either a regional or national level, a revision to the subject week's estimates will be published

Survey Respondents and Procedures:

EIA-912 survey respondents were selected from the list of respondents to Form EIA-191, "Monthly Underground Natural Gas Storage Report." All operators of underground natural gas storage fields in the United States complete the Form EIA-191. To prepare the sampling frame for the EIA-912 for each region, reported volumes of working gas in storage as reported on the Form EIA-191 for the end of October 2001 were aggregated by storage operator and AGA region. A stratified sample of companies was selected from the list of operators to achieve a target standard error of the estimate of working gas in storage that was no greater than 5 percent of the estimate for each region. (Two operators in the Eastern Region and three in the Producing Region were removed from the frame for sampling purposes because they showed no variation in inventories for the preceding two years. They will be represented in estimation by constants. See the estimation section of this report.) (See the EIA report, Methodology for EIA Weekly Underground Natural Gas Storage Estimates, for further discussion of the sample selection process.) The respondents to the AGA survey were volunteers from among AGA members and other non-member storage operators.

Both EIA and AGA have measures of survey coverage statistics for their respective samples. The table below shows the sample survey coverage estimates for the two surveys. The overall coverage is higher for the EIA survey compared to that of the AGA. The coverage is highest in the Consuming Region East and lowest in the Consuming Region West for both EIA and AGA.

Table 2. Sample Coverage for the EIA and AGA Surveys for the Seven Report Weeks, March 15-April 26, 2002
REGION EIA AGA
East 92% 97%
West 86% 75%
Producing 91% 77%
Total 91% 84%
Source: EIA, Office of Oil and Gas derived from EIA-912, "Weekly Underground Natural Gas Storage Report," and from AGA reports, Weekly American Gas Storage Survey, selected issues.

    









Estimation Methodology:

AGA and EIA survey data employ different computation methodologies. (For more detailed descriptions of these methodologies, see each organization's methodology report:
AGA: American Gas Storage Survey Procedures and Methodology 2001 Update
EIA: Methodology for EIA Weekly Underground Natural Gas Storage Estimates

From the description provided in AGA's Issue Brief 2001-03, one can derive the following AGA formula for estimated working gas volumes in a given region in a particular week:

AGA Regional Estimate = formula graphic

Where:
    N= all companies in the region
    n = number of respondent companies in the region who reported for the collection week
    wwg= volumes of working gas in storage reported by respondent companies in the region for the collection week
    xwg= maximum working gas held in storage by respondent companies in the region anytime in the period 1992-2001
    XWG= maximum working gas held in storage by companies in the region anytime in the period 1992-2001

EIA's methodology report includes the following formula for computing the current week's regional working gas volumes:
EIA Regional Estimate= formula graphic

Where:
    MWG=working gas in storage for operators in the sample frame in the region for the reference month
    mwg= working gas in storage for operators in the sample in the region for the reference month
    wwg= working gas in storage in the region for the collection week reported by sampled operators
    K= constant volumes of working gas for operators in the region excluded from the sample frame because they showed no variation in inventories for the preceding two years
    N= number of companies in the sample frame
    n= number of operators in the sample in the region who reported for the collection week

In the AGA methodology, the volume that represented an estimate of "full" for storage reservoirs in a given region (the sum of XWG for all N companies) for a given week was multiplied by a number that represented "percent full" for the region for the given week (the sum of wwg divided by the sum of xwg-both sums over all n respondent companies). In the EIA methodology, the weekly measure of working gas in storage for the sample respondents (the sum of wwg for all n respondent companies) is scaled up by the "sample expansion ratio" using the most current EIA-191 monthly data (the sum of MWG for all N companies divided by the sum of mwg for all n respondent companies) to estimate the regional total volume.

The two methodologies embody different philosophies in approach: the AGA utilizes the concept of "percent full," while the EIA relies on scaling up reported information to account for companies who are not in the sample. However, a comparison of the two equations above shows that, except for the constant adjustment factor, the calculation methods of EIA and AGA are quite similar. Nevertheless, because the implementation depends heavily on the respective ratios by which the reported data are adjusted in the two methodologies, the results are likely to be different.

Some key differences between the two methodologies are as follows:

    1. In the AGA methodology, both the estimate of full for the region, and the sample percent full for the week, were based on the maximum amount of working gas held in storage at any time in the past ten years (1992-2001). AGA updated its measure of the volume of working gas that represented "full" for a region roughly once per year, to incorporate various adjustments stemming from the addition or expansion of storage facilities, abandonment of facilities, etc. In EIA's method, the sample expansion ratio is based on the relationship between the most recent end-of-month storage volumes of all storage operators and of the sample operators reported on the EIA-191 survey. Thus, the ratio is updated monthly, and implicitly includes the effects of capacity changes.

    2. AGA's sample represented companies who volunteered to participate. Changes to the sample occurred as participation patterns changed. The EIA-912 sample will be reviewed annually, and changes will be introduced based on formal statistical sampling considerations. Further, response to the EIA-912 survey is mandatory.

    3. The AGA methodology did not provide a measure of the relative accuracy or level of confidence of its estimated regional volumes. EIA will calculate and publish a standard statistical measure (the "standard error of the estimate") of the probable range of variation due to sampling for each region. (The standard error applies only to that part of each region's estimate attributable to its noncertainty stratum.)

Comparison of EIA and AGA Working Gas in Storage Estimates:

The EIA began collecting weekly underground storage data on March 18, 2002, requesting stocks as of 9:00 AM Friday, March 15. The overlap in EIA and AGA operations provides an opportunity to compare estimates directly. This assessment indicates that the two weekly data series are similar. Differences in the series and their possible causes are discussed below.

The EIA and AGA systems provided estimates for 7 weeks in common for the same 3 regions. The working gas estimates for the total U.S. indicate that the EIA values exceeded the AGA values by a slight amount-on average, 22 Bcf per week, which is a difference of 1.5 percent. This pattern is similar for the Consuming Region East, or East Region, where the average difference in volume is 13 Bcf, which is 1.7 percent. A comparison of stock estimates for the other 2 regions show larger differences. The average difference for the Producing Region is 65 Bcf, or 11.5 percent, while that for the Consuming Region West, or West Region, measures 56 Bcf, which is a relative difference of -25.4 percent (Figure 2).

The correlations between the EIA and AGA weekly storage series are quite high. The correlation coefficients are virtually 1.0 for both the total U.S. and the East Region. The lowest correlation value is 0.939 for the Producing Region, with the West Region at 0.967. These very high correlations indicate that the estimates in the EIA and AGA series tend to move closely.

The close movements between the 2 sets of storage estimates can also be seen in the changes between successive weeks recorded by the two weekly systems (Figure 3). The net changes in stocks for the total U.S. and the East Region are very close. In the Producing and West Regions, the direction of change for each series matches with one exception involving the Producing Region for the week ending April 5. In that week, the EIA series showed an increase of 4 Bcf for the Producing Region, while the AGA series had a slight decrease of 2 Bcf.

The high degree of similarity in the net change values based on the very high correlations and graphical comparisons is an important finding in light of the keen market interest in this weekly measure. While gas stocks have important implications for market conditions in the future, the net change in stocks is the primary volumetric indicator of very recent relative supply and demand conditions. It is those conditions that drive price movements and have implications for refinements to subsequent storage acquisition strategies.

Until EIA initiated its weekly survey, there had been no data series that is directly comparable to AGA's weekly data series. Prior to the EIA-912, EIA's storage data were collected only monthly via the EIA-191 survey. To compare EIA's monthly data series and AGA's weekly data series EIA analysts derived estimates for the end-of-month based on AGA estimates. These estimates were based on AGA weekly data and were produced by a linear interpolation technique whenever the end of a month did not coincide with the end of an AGA reporting week.

Based on the interpolated values for the AGA series, one finds that the EIA end-of-month data and the AGA-based end-of-month estimates for the U. S. as a whole over the period 1998-2001 differ on average by 4.4 percent (using EIA values as the base). The East Region and the Producing Region exhibited average percentage differences of 11.5 and 2.2 percent in the period from 1998-2001, respectively. The average difference for the West Region was -20.2 percent for the period. The comparison over time shows that prior differences between the series for the West Region were much smaller, with a larger difference developing in early 1998 (Figure 4). This large difference in the West Region is reflected also in the comparison of the two weekly series, which has been -20.2 percent. The specific causes for differences between the EIA and AGA estimates cannot be definitively established because confidentiality requirements preclude the disclosure of respondent information by either organization. Thus, a detailed comparative analysis of data is not possible.

Summary:

The period of performance for the new EIA weekly underground storage series overlapped with the recently completed AGA series from mid March to the end of April. The two systems produced similar estimates of U.S. working gas storage levels with a high degree of correlation between them.

The differences between the regional and national stocks estimated by EIA and AGA are minimal for the U.S. as a whole and the East Region, where the bulk of storage activity is located. Some differences are present in the series for the West and Producing Regions. A key finding, however, is that the general pattern of weekly net stock changes are quite similar.

Factors behind differences between the EIA and AGA systems include sampling differences and non-sampling factors. Non-sampling factors include a slightly different formula for expansion of weekly sample reports and the fact that the EIA survey is collected on a mandatory basis.

Figure 1. Regions for the Weekly Underground Natural Gas Storage Report System.

Figure 2. Weekly Underground Natural Gas Storage Levels for Total U.S. and Three Regions. (Billion Cubic Feet)
Total U.S. Figure 2.
East Region Figure 2.
West Region Figure 2.
Producing Region Figure 2.

Figure 3. Net Change in Weekly Underground Natural Gas Storage Levels for Total U.S. and Three Regions. (Billion Cubic Feet)
Total U.S. Figure 3.
East Region Figure 3.
West Region Figure 3.
Producing Region Figure 3.
Figure 4. Comparison of Monthly Working Gas in Underground Storage Facilities for Total U.S. and Three Regions, 1994-2001
Total U.S. Figure 4.
East Region Figure 4.
West Region Figure 4.
Producing Region Figure 4.