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Western Price Survey

Week's End Edition
October 12, 2012
Natural Gas Prices Trend Higher

Gas and power prices rose after the U.S. Energy Information Administration reported a smaller than expected addition to natural gas storage. Working gas in storage grew by 72 Bcf for the week ending Oct. 5, according to EIA estimates.

Henry Hub natural gas values gained 11 cents since last Friday, trading Oct. 12 at $3.37/MMBtu. Western prices rose a bit more, with Malin natural gas up 28 cents to $3.52/MMBtu. PG&E CityGate added 23 cents to $4.06 and Southern California Border gas added 24 cents to $3.62/MMBtu.

After the injection, EIA's working gas in storage reached 3,725 Bcf.. Storage levels are now 6.8 percent higher than a year ago and 7.8 percent above the five-year average. Nevertheless, prices rose.

Natural gas futures increased "beyond previous yearly highs," noted Barclays analyst Shiyang Wang in Barclay's Oct. 12 Commodities Weekly report to clients. On Thursday, following the storage report, the prompt contract ran past $3.50/MMBtu while calendar 2013 traded above $4 for the first time since the end of 2011, according to Wang. The natural gas injection figures imply "that demand is much higher than our estimates," Wang said

The EIA, in its Short-Term Energy Outlook released Oct. 10, predicts 2012 natural gas consumption should rise to an average of 69.8 Bcf/day, driven by a projected 22 percent increase in the electric power sector's natural gas use for generation.

"A return to more normal temperatures this winter compared with last winter's exceptionally warm weather in many parts of the country means U.S. consumers will use more natural gas, electricity, heating oil and propane for heating their homes this winter, " stated Adam Sieminski, the agency's administrator, in comments released with the report.

Enerfax, meanwhile, cited Morgan Stanley estimates predicting an average price for natural gas of $4.20/MMBtu between Nov. 2012 and March 2013.

Here's how Western peak-power values fared since last Friday:

  • Mid-Columbia: Up about $4.35 to almost $34.95/MWh;
  • California-Oregon Border: Jumped $7 to $38.80/MWh;
  • North of Path 15: Traded at about $42.80/MWh, posted no trades the prior Friday;
  • Palo Verde: Rose roughly $5.45 to about $35.65/MWh.
  • South of Path 15: Added $8.05 to $43.60/MWh

Off-peak prices gained since Oct. 5, led by NP15, which rose roughly $4.15. Average prices today ranged from about $28.35/MWh at Palo Verde to almost $32.25/MWh at NP15.

Unit 2 of the Diablo Canyon Power Plant became the latest Western nuclear generation facility to go offline. The plant was safely shut down shortly after noon Thursday after an electrical disturbance in equipment that moves power to grid, according to operator Pacific Gas and Electric. The utility is trying to determine the cause before restoring the 1,149 MW unit to full operation.

The 1,335 MW Unit No. 2 of the Palo Verde nuclear plant went offline Sat., Oct. 6 for scheduled refueling and maintenance, and both units of the San Onofre Nuclear Generating Station remain offline [Linda Dailey Paulson].

Western Electricity Prices
Week of October 8-12, 2012
Hub Peak (heavy) Off-peak (light)
Alberta Pool (C$) 19.30-381.70 12.30-91.60
Mid-Columbia 27.75-37 26.10-31.50
COB 33-40 26.75-31
NP 15* 36.50-45 27.25-33.50
SP 15* 35-45 25.90-31.50
Palo Verde 30-36 23-28.75

* 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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