Western Price Survey
July 21, 2017
Natural gas prices in California rose after regulators gave Southern California Gas Co. the go-ahead to resume limited operations at its Aliso Canyon natural gas storage facility.
The state’s Division of Oil, Gas and Geothermal Resources and the California Public Utilities Commission on July 19 deemed the facility safe to operate at a reduced capacity; storage is restricted to roughly 28 percent of its maximum capacity.
Operations at Aliso Canyon have been restricted and monitored since an October 2015 leak. The return to service is warranted to ensure continued energy reliability, according to regulators.
Western natural gas prices gained between 12 and 38 cents between July 13 and 20. Stanfield natural gas gained the most, up 38 cents to $2.65/MMBtu in trading. PG&E CityGate natural gas gained 14 cents to trade at $3.37/MMBtu by Thursday, which was the highest price among Western hubs.
Alberta natural gas proved the exception, contracting 8 cents to $1.74/MMBtu.
Working natural gas in storage was 2,973 Bcf as of July 14, according to U.S. Energy Information Administration estimates. This is a net increase of 28 Bcf compared to the previous week.
Storage levels are now 9.1 percent less than a year ago and 5 percent greater than the five-year average.
Natural gas used for power generation reached its highest daily level for the year to date on July 19, when use exceeded 39 Bcf, according to the EIA. This is 5 percent greater than the five year average. Despite this, total natural gas consumption during the week was flat with an average of 74.1 Bcf/d used.
Henry Hub gas spot values rose 17 cents to end at $3.11/MMBtu by July 20.
Meanwhile, expected triple-digit weather sent most Western power prices higher by week’s end. Some prices started ticking up Wednesday, but jumped as much as $10 in Thursday-to-Friday trading. Between July 14 and 21, prices increased between 70 cents and $13.10; the greatest jump was at Mid-Columbia, which gained $13.10 to $40.30/MWh.
Temperatures across much of Northern California and Southern Oregon should reach triple digits starting July 21. The heat should last through July 24th, according to forecasters.
Off-peak power values added as much as $10.65 between July 7 and 14. Mid-C gained the most, ending at $30.10/MWh.
Palo Verde proved the exception. Daytime values at the hub were down $1.85, ending at $33.70/MWh. The hub saw its nighttime values erode $2.55 to $25.20/MWh.
CAISO demand peaked at 42,634 MW July 17, which should be the week’s high. Northwest Power Pool demand reached 64,192 MW July 18. –Linda Dailey Paulson.
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