Western Price Survey
June 29, 2018
“Price volatility” is now the catchphrase used in conjunction with Western natural gas prices, and this week was no different. Infrastructure issues continue to trigger sharp upticks and declines, but mild weather is also tempering demand—as seen at Sumas, where gas prices fell $1.08 to end at 97 cents/MMBtu in June 21 to June 28 trading.
Western temperatures have been mild all month, said Jeff Richter, principal/owner at Energy GPS. Plentiful wind and hydro generation in the Pacific Northwest, coupled with warmer weather and end-of-the-month balancing, served to suppress Sumas natural gas values as well as power prices.
The only Western natural gas hub that gained value in trading was Southern California CityGate, which added 65 cents. It also posted the highest price, at $3.16/MMBtu. PG&E CityGate also broke above the $3 mark at $3.05/MMBtu, a 5-cent loss.
The U.S. Energy Information Administration continues characterizing Southern California prices as volatile in light of ongoing storage and pipeline limitations.
Northern California storage is now a concern as well. According to Energy GPS, natural gas storage in Pacific Gas & Electric’s system is well below previous years’ volumes. Currently there is 168 Bcf in the ground in PG&E’s storage fields, 43 Bcf less than last year, Energy GPS analysts said in a June 26 newsletter, and they do not expect the fields to be filled by the end of the season.
“The storage woes in Northern California only add to the ongoing natural gas supply concerns throughout the state,” Energy GPS said.
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Working natural gas in storage was 2,074 Bcf as of June 22, according to EIA estimates. This is a net increase of 66 Bcf over the previous week. June 15 storage figures were revised from 2,004 Bcf to 2,008 Bcf.
Natural gas storage levels are now 26.2 percent less than a year ago and 19.5 percent less than the five-year average.
National natural gas use rose 1 percent week over week, according to the EIA. Natural gas use for power generation decreased 3 percent.
Henry Hub gas spot prices lost 4 cents, ending at $2.97/MMBtu in trading.
California Independent System Operator power demand peaked June 22 at 37,803 MW. That same day, thermal generation reached 14,777 MW. Total renewables on the CAISO grid reached 16,019 MW June 28.
Western peak power prices uniformly lost value in Thursday-to-Thursday trading, dropping between $2.25 and $8.50. California-Oregon Border posted the greatest loss, down $8.50 to $14.50/MWh. Prices traded in a range from $9.70 at Mid-Columbia to $34.25/MWh at Palo Verde.
Western nighttime power prices generally followed suit. Mid-Columbia prices plummeted $12.05, ending underwater at -$3.80/MWh, while Palo Verde proved the exception, adding a quarter to reach $22/MWh. –Linda Dailey Paulson.
Archives of the Western Price Survey for the past year are also available online.
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