Western Price Survey
Week's End Edition
National nuclear-power outages could influence natural gas use in the months ahead, according to a newly released analysis by Barclays, though any increase in gas use might be offset by record storage.
In a Nov. 16 report, Barclays analysts said November nuclear outages have been 12 GW greater, on average, than in 2011, representing an increased gas burn of 2 Bcf/day, assuming the lost nuclear generation is all replaced by natural gas power. They expect the year-over-year loss in nuclear generation to fall in December to 2.6 GW, which would represent roughly 0.47 Bcf/d of incremental year-to-year gas burn.
Most of the outages are due to Hurricane Sandy, though in the West, both units of the San Onofre Nuclear Generating Station have been off line since January because of problems with steam-generator tubes, and there is no set schedule for a return to service. Unit No. 2 of the 1,118 MW Diablo Canyon nuclear plant continues powering down for intake-valve cleaning, which is expected to take several days to complete. The Nuclear Regulatory Commission reported that the plant was operating at 53 percent capacity Friday.
Despite the nuclear outages, gas in storage remains at high levels. Working gas in storage reached 3,911 Bcf as of Friday, Nov. 9, according to U.S. Energy Information Administration estimates, a net decrease of 18 Bcf from the previous week. The East Region removed 23 Bcf, while the producing and West regions made a total net addition of 5 Bcf to storage. Storage levels are 1.8 percent greater than a year ago and 5.6 percent above the five-year average.
"While the report was roughly in line with analysts' estimates," noted Enerfax in its Nov. 16 report, "many investors were anticipating a bigger drop due to cold weather that raised heating demand. The storage number shows that levels really haven't dropped off yet. Even with the withdrawal, the amount of natural gas in storage stands at historically high levels."
Going forward, Barclays expects "unrelenting supply" plus decreased power generation to offset winter heating-demand increases. And by next year, Barclays estimates U.S. nuclear generation should increase 5 GW year over year between February and June, a development that they expect to decrease natural gas use by about 0.9 Bcf/day year over year.
Henry Hub spot natural gas values gained 12 cents since last Friday, trading Nov. 16 at $3.45/MMBtu. Western prices also increased, with Southern California Border up 16 cents to $3.58/MMBtu and PG&E CityGate gaining 14 cents to $3.84.
Meanwhile, Western daytime power prices varied a few dollars during the Nov. 9 to Nov. 16 trading period. South of Path 15 posted the only gains, up roughly $2.10 to $39.60/MWh.
Here's how Western hubs' peak-power values fared since last Friday:
Western off-peak power prices diverged. SP15 gained more than $6 since last Friday, while Northwest hubs' prices remained relatively static. Nighttime average prices Friday ranged from about $26.25/MWh at Mid-C to $34/MWh at SP15 [Linda Dailey Paulson].
* 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.
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