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Western Price Survey

January 26, 2018
Natural Gas Demand, Prices Up

California natural gas prices have hinged on supply constraints and weather more than usual in recent months; however, an end to some infrastructure repairs appears to have allayed trader concerns, returning values to a relatively normal range.

Regional demand “has been generally increasing,” according to U.S. Energy Information Administration analysts in a Jan. 25 report.

Southern California Gas Co. has completed repair and maintenance work on a key corridor of its Northern service zone, and with work on that conduit completed greater gas flows in the zone are forecast through Jan. 26.

Throughout late last year, SoCal Gas was plagued with several pipeline outages and was also dealing with storage limitations at its Aliso Canyon facility—a combination that pushed Southern California CityGate prices into the stratosphere. Hub prices reached $12.57/MMBtu Oct. 23—its highest daily average on record, according to the EIA.

This week, SoCal CityGate had the highest price among Western hubs. Prices at the hub closed at $3.40/MMBtu after adding 7 cents over the trading period.

Working national natural gas in storage was 2,296 Bcf as of Jan. 19, according to EIA estimates. This is a net decrease of 288 Bcf compared to the previous week; the drawdown ties the record for the second-greatest net withdrawal reported in the agency’s Weekly Natural Gas Storage Report.

Storage levels are now 18.4 percent less than a year ago and 17.5 percent less than the five-year average. Should natural gas withdrawals keep pace with the five-year average, the EIA estimates there will be 1,216 Bcf in storage by March 31, the traditional end of the heating season. This would be 29 percent less than the five-year average.

Domestic natural gas use decreased 10 percent compared to the previous week, according to the EIA. Natural gas used for power generation dropped 18 percent week over week.

Henry Hub gas spot values rose 21 cents in Jan. 18 to 25 trading, ending at $3.59/MMBtu.

Western natural gas prices gained between 7 and 31 cents in Thursday-to-Thursday trading. Alberta gas added the most value among Western hubs, up 31 cents to $1.77/MMBtu.

Meanwhile, Palo Verde peak power fell $6.25 on average to $23.50/MWh in the trading week, while Pacific Northwest hubs added roughly 75 cents.

Palo Verde off-peak power also saw the greatest drop among Western hubs, down $6.25 to $22.75/MWh. Mid-Columbia gained the most, up $4.65 to $20/MWh.

California Independent System Operator power demand reached 29,086 MW Jan. 22, the week’s high. Thermal generation reached 11,158 MW Jan. 23.California natural gas prices have hinged on supply constraints and weather more than usual in recent months; however, an end to some infrastructure repairs appears to have allayed trader concerns, returning values to a relatively normal range.

Regional demand “has been generally increasing,” according to U.S. Energy Information Administration analysts in a Jan. 25 report.

Southern California Gas Co. has completed repair and maintenance work on a key corridor of its Northern service zone, and with work on that conduit completed greater gas flows in the zone are forecast through Jan. 26.

Throughout late last year, SoCal Gas was plagued with several pipeline outages and was also dealing with storage limitations at its Aliso Canyon facility—a combination that pushed Southern California CityGate prices into the stratosphere. Hub prices reached $12.57/MMBtu Oct. 23—its highest daily average on record, according to the EIA.

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This week, SoCal CityGate had the highest price among Western hubs. Prices at the hub closed at $3.40/MMBtu after adding 7 cents over the trading period.

Working national natural gas in storage was 2,296 Bcf as of Jan. 19, according to EIA estimates. This is a net decrease of 288 Bcf compared to the previous week; the drawdown ties the record for the second-greatest net withdrawal reported in the agency’s Weekly Natural Gas Storage Report.

Storage levels are now 18.4 percent less than a year ago and 17.5 percent less than the five-year average. Should natural gas withdrawals keep pace with the five-year average, the EIA estimates there will be 1,216 Bcf in storage by March 31, the traditional end of the heating season. This would be 29 percent less than the five-year average.

Domestic natural gas use decreased 10 percent compared to the previous week, according to the EIA. Natural gas used for power generation dropped 18 percent week over week.

Henry Hub gas spot values rose 21 cents in Jan. 18 to 25 trading, ending at $3.59/MMBtu.

Western natural gas prices gained between 7 and 31 cents in Thursday-to-Thursday trading. Alberta gas added the most value among Western hubs, up 31 cents to $1.77/MMBtu.

Meanwhile, Palo Verde peak power fell $6.25 on average to $23.50/MWh in the trading week, while Pacific Northwest hubs added roughly 75 cents.

Palo Verde off-peak power also saw the greatest drop among Western hubs, down $6.25 to $22.75/MWh. Mid-Columbia gained the most, up $4.65 to $20/MWh.

California Independent System Operator power demand reached 29,086 MW Jan. 22, the week’s high. Thermal generation reached 11,158 MW Jan. 23. –Linda Dailey Paulson.

Archives of the Western Price Survey for the past year are also available online.


The Western Price Survey is excerpted from Energy NewsData's comprehensive regional news services. See for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of either or both California Energy Markets and Clearing Up.

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Contact Mavis Scanlon, editor with questions regarding Price Survey content.

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