Western Price Survey
July 28, 2017
Natural gas prices for California in July have been closely tracking temperatures, according to a new report from the U.S. Energy Information Administration. Although a few days remain in the month, the agency expects this to be the warmest July on record since 2006.
Between July 6 and 8, the state tied or exceeded the daily records for measured cooling degree days—a measure of how warm a location is over a period of time relative to a base temperature—reaching back to 1981. Peak power generation from natural gas was also the highest during those three days, and deliveries of natural gas to state power plants were greater than the five-year maximum between July 6 and 10.
Despite this, the overall scheduled capacity for natural gas deliveries to California power plants between July 1 and 21 was 270 MMcfd less than the five-year average for the same period. The EIA attributes this to increased solar and “improved conditions” for hydro generation.
Working natural gas in storage was 2,990 Bcf as of July 21, according to EIA estimates. This is a net increase of 17 Bcf compared to the previous week.
Storage levels are now 9.2 percent less than a year ago and 3.9 percent greater than the five-year average.
Henry Hub gas spot values fell 19 cents to end at $2.92/MMBtu between July 20 and 27.
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Western gas prices followed suit, dropping between 3 and as much as 73 cents in Thursday-to-Thursday trading. Stanfield and Southern California Border gas prices eroded 3 cents, ending at $2.62/MMBtu and $2.86/MMBtu, respectively, in trading. Alberta natural gas dropped 73 cents to $1.01/MMBtu by July 27.
Western peak power prices, however, increased. By week’s end, hubs around the region saw gains of between $3.30 and $5.25. Mid-Columbia posted the greatest increase, up $5.25 to $45.50/MWh.
Off-peak prices varied. Pacific Northwest hubs lost a couple of dollars in Friday-to-Friday trading, while Palo Verde ticked up $1.50, ending at $26.70/MWh.
CAISO demand peaked at 42,533 MW July 27, which should be the week’s high. Northwest Power Pool demand reached 65,223 MW July 26.
Total renewables generation on the CAISO grid during the week reached 12,522 MW July 21. Solar generation reached 9,736 MW July 27 and thermal generation peaked at 18,073 MW that same day.
A strong high-pressure system is locking in heat over much of the West Coast. Daytime temperatures in the greater Sacramento area, for example, should be roughly 10 degrees above average, with many areas in triple digits. Overnight lows should be warmer than normal as well.
Elsewhere, Portland should see 97 degrees Aug. 1. The Antelope Valley is expected to reach 105 degrees Aug. 2. The heat should last through at least Aug. 3, according to forecasters.
Archives of the Western Price Survey for the past year are also available online.
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