Western Price Survey
December 15, 2017
Southern California CityGate natural gas prices calmed this week following weeks of volatility. The hub lost $3.64 between Dec. 7 and Dec. 14, ending at $3.86/MMBtu, making it the only Western gas hub trading above $3.
Storage and pipeline constraints, along with wildfires in the region, served to fuel SoCal CityGate’s prices for several months. It reached an all-time high of $9.65/MMBtu Oct. 24. The hub traded at more than $1/MMBtu above the Henry Hub natural gas spot price between Oct. 25 and Dec. 4, despite lower demand compared to 2016, according to the U.S. Energy Information Administration.
Working natural gas in storage was 3,626 Bcf as of Dec. 8, according to EIA estimates. This is a net decrease of 69 Bcf compared to the previous week. Storage levels are now 5.3 percent less than a year ago and 0.7 percent less than the five-year average.
Nationally, total natural gas use increased 27 percent week over week, according to the EIA. Natural gas used for power generation increased 18 percent week over week. Residential and commercial-sector use was the greatest, jumping 50 percent based on cold and snowy weather in some regions.
Henry Hub gas spot values dropped 12 cents to $2.67/MMBtu between Dec. 7 and 14.
In Thursday-to-Thursday trading, Western prices varied. Alberta gas gained the most among Western hubs, adding 16 cents to reach $1.39/MMBtu. SoCal CityGate gas lost the most.
Meanwhile, Western daytime power prices flagged. South of Path 15 dropped the most value in Dec. 8 to 15 trading, down $8.65 to $43/MWh.
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Off-peak values varied. Palo Verde nighttime power added $3 to reach $25.20/MWh, while Mid-Columbia values eroded $2.25 to end Dec. 15 at $21.80/MWh.
Power demand on the California Independent System Operator grid reached 30,781 MW Dec. 11, the week’s high. Total renewables reached 9,592 MW Dec. 14, while thermal generation was 13,818 MW Dec. 12.
The Bonneville Power Administration reported negligible wind generation between Dec. 8 and 14 from a lack of wind.
National natural gas prices should increase in 2018, with the Henry Hub average spot price moving from $3.01/MMBtu this year to $3.12/MMBtu in 2018, according to the latest EIA Short-Term Energy Outlook, released Dec. 12. Growth will be driven by exports plus greater domestic consumption, according to the analysis.
The amount of power generated from natural gas is forecast to decrease, which the EIA bases on higher gas prices and more renewable-energy availability. Generation from renewables sources other than hydropower is projected to increase from roughly 8 percent in 2016 to almost 10 percent in 2018.
Archives of the Western Price Survey for the past year are also available online.
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