Western Price Survey
November 15, 2013
The average spot price for Henry Hub natural gas should rise to an average of $3.68/MMBtu in 2013, according to the latest U.S. Energy Information Administration Short Term Energy Outlook, released Nov. 13.
This would be a sharp increase of 93 cents versus the 2012 average price of $2.75/MMBtu. For 2014, Henry Hub prices are expected to average $3.84/MMBtu.
Meanwhile, natural gas use by power generators should decline, based on higher prices. Electric power-sector use of natural gas is forecast to drop to 22.1 Bcf/d in 2013 and 21.9 Bcf/d in 2014, from 25.0 Bcf/d, on average, in 2012.
As natural gas use declines, the electric sector is using more renewable energy. Excluding hydropower, renewables account for about 6 percent of total U.S. power generation, according to the EIA. In some states -- California in particular -- renewables play a larger role, notes EIA Administrator Adam Sieminski. "During the first eight months of 2013, renewable energy, including hydropower, supplied 19.1 percent of total electricity generation in California compared with 12.2 percent during the same period five years ago." Driving factors include California's aggressive renewables portfolio standard, federal tax credits and the greenhouse gas emissions cap-and-trade program.
Windpower generation should increase 17 percent nationwide in 2013, with wind producing about 4 percent of total U.S. electricity generation by 2014, the EIA reported. Solar generation should grow 82 percent in 2013, with another 84 percent uptick in 2014. Utility-scale solar will remain a small part of total U.S. electric generation, however, at 1 percent, EIA said.
An additional 20 Bcf of natural gas went into storage for the week ending Nov. 8, the EIA reported, bringing total gas in storage to 3.834 Tcf, which is 2 percent less than year-ago levels but 1.5 percent above the five-year average. Henry Hub natural gas finished Nov. 15 at an average of $3.56/MMBtu, gaining 4 cents from the previous day. Malin gas reached the same level, a gain of 10 cents from the previous Friday.
Average peak-power prices were mixed in the Nov. 8 to Nov. 15 trading period, moving very little and averaging between $40 and $45/MWh at most hubs. Off-peak power prices were also mixed. SP15 led gainers, up $2.25 to $37.25 in Friday-to-Friday trading (see chart).
What's ahead: The National Weather Service forecasts an increased probability of above-normal temperatures in the West Nov. 20 through 28. Only Washington expects above-normal precipitation during the period [Linda Dailey Paulson].
Archives of the Western Price Survey for the past year are also available online.
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