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Western Price Survey

Week's End Edition
February 3, 2012
Natural Gas Prices Edge Down Again

ExxonMobil, the country's largest natural gas producer, said this week it would continue producing gas, a sharp divergence from smaller rivals that last week announced plans to curtail production in the face of historically low gas prices.

Exxon's announcement helped push gas futures down 8 percent on Wednesday, Feb. 1, to $2.50/MMBtu. Futures remained at that level at the close of the week.

As for spot natural gas prices, Western hubs lost a few cents with Malin posting an average price of $2.56/MMBtu Friday, down 4 cents compared with last Friday, Jan. 27. Over the same period, SoCal Border gas dropped about 10 cents to an average of $2.67 and Henry Hub spot fell 18 cents to around $2.40/MMBtu.

Working gas in storage reached 2,966 Bcf as of Jan. 27, according to U.S. Energy Information Administration estimates, a net decrease of 132 Bcf from the previous week. Stocks were 586 Bcf more than last year at this time and 601 Bcf above the five-year average. The greater-than-anticipated withdrawal helped send Canadian natural gas prices higher. Alberta futures earmarked for March delivery increased 18 cents to trade at $2.05/MMBtu Thursday on NGX, a Canadian online market. By Friday, futures were up to $2.16/MMBtu. Bloomberg also noted that NGX gas, shipped to users in Canada and the U.S., is priced on TransCanada Corp.'s Alberta system, where volume was below target.

Although storage additions have continued at a record-setting pace, the EIA said that with the end of the heating season approaching, "storage levels could fall at a more rapid pace, as some inventory owners bring stocks down to required end-of-season balances."

Western peak-power prices were relatively static for yet another week (see chart). Over the trading period, only SP15 experienced a modest gain, no doubt tied to reduced nuclear generation in the region as San Onofre Nuclear Generating Station Unit No. 3 went off line after a steam-generator leak. Since last Friday, SP15's average price gained $3.70, ending at $31.91/MWh.

There has been no indication of how long the SONGS repair might take. SONGS No. 2 is also currently off line for planned maintenance and refueling; plant operator Southern California Edison said it has ample reserve power to meet customer needs. At peak capacity, each San Onofre unit supplies 1,100 MW.

Over the trading period, average nighttime prices ranged from about $21.50 to $24.85/MWh (see chart). Peak use on the Cal-ISO grid and Northwest Power Pool has been tame (see graph).

What's ahead: No end remains immediately in sight for a nearly waterless winter in California. The state's latest snow survey, taken Feb. 1, found that snowpack water content is 37 percent of normal to date. Water content in two measurement locations was the second-lowest on record. "We have good reservoir storage thanks to wet conditions last year, but we also need more rain and snow this winter," Department of Water Resources Director Mark Cowin said in a press release. In the week ahead, a high-pressure system off the West Coast should result in warmer temperatures. The system may edge Seattle temperatures to 53 °F Thursday, Feb. 9. Southern California should see cooler weather starting Monday [Linda Dailey Paulson].

Western Electricity Prices
Week's End: Jan. 30 - Feb. 3, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 16.26-380.58 13.40-86.97
Mid-Columbia 22.25-25.50 20.55-24
COB 25.75-28.25 20.75-23
NP 15* 27.50-30 21.25-22.25
SP 15* 27.10-32.50 19.40-25
Palo Verde 24-27 17.25-22.50

* Prices represent both day-ahead locational marginal prices (financial swaps, or EZ Gen DA LMPs) and quasi-swap prices (EZ Gen) as reported by ICE.

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 Chris Raphael, editor with questions regarding Price Survey Content.

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