The rate of gas storage site closures could increase in the coming years, storage operators said at the Flame conference in Amsterdam.
But a large number of facilities might have to close before lower overall storage capacity would expand summer-winter spreads at northwest European hubs, they said.
The "speed of closures will increase" further, Innogy Gas Storage NWE's managing director Michael Kohl said.
Erich Holzer, managing director at OMV Gas Storage, said operators have been "burning money for years" and that the situation is still "very bad".
Tight summer-winter spreads — partly as a result of increased European supply flexibility — have put pressure on operators' margins.
And numerous storage facilities were closed in recent months, including OMV's Austrian Thann site.
Around 1bn m³ of storage capacity was shut, Kohl said, but it might require another 2bn m³ to be closed "for summer-winter spreads to recover".
This would be six to eight facilities with similar working capacities to the most recently closed Thann, Krummhorn and Berlin Underground Storage sites.
There is still a substantial storage "overcapacity" in northwest Europe, Holzer said.
Site closures in previous years were more than offset by new facilities coming on line, such as the Netherlands' 4.1bn m³ Bergermeer.
It is surprising that there has not been more closures given that it has become difficult to run facilities in a profitable manner, the operators said. But some existing long-term storage contracts might have so far provided some support for operators, they said.
More positive outlook for low-calorie sites
The outlook for low-calorie storage sites is more positive, at least based on the experience of winter 2016-17, Kohl said.
Customers are willing to pay a higher premium for low-calorie capacity because of tighter supply, he added.
German low-calorie stocks were drawn down quickly early in winter during cold weather. This could have left supply tight in February-March, had colder weather persisted.
NCG low-calorie prices have become more volatile in recent years, which could provide opportunities for capacity holders and facility operators.
Reduced production from the Dutch Groningen field has cut low-calorie supply. And further output reductions — with the cap for the 2017-18 gas year to be lowered to 21.6bn m³ from 24bn m³ — could continue to limit flexibility in low-calorie supply, especially in periods when there are restrictions to Dutch quality conversion capacity.
Innogy Gas Storage NWE operates the Epe low-calorie facility, which has a working gas capacity of 184mn m³.
