Western Price Survey
December 16, 2005
While the middle of the country is experiencing seasonal temperatures, winter's chill has the mercury in the Northwest hovering a good 10 degrees below normal. The combination of natural gas prices, low winter hydro flows and the weather conspired to keep peak-time power costs well above the century mark throughout the West this week.
At the Mid-Columbia hub, daytime power moved for between 127 mills and 130 mills/KWh at the start of the week. After edging up to a high of 135 mills/KWh in Tuesday's trading session, the commodity hit another high on Friday, moving for as much as 137 mills/KWh. Nighttime power at the hub attracted a high of 127 mills/KWh the same day, driven up from a range of 105 mills to 110 mills/KWh recorded earlier in the week.
California-Oregon border power costs edged out the Mid-C price by a few mills, closing on Tuesday at a high of 138 mills/KWh. Thursday saw the price slip down to between 123.75 mills and 129 mills/KWh. The dip corresponded to a drop in the price of natural gas. Low-demand power at COB changed hands for between a low of 105 mills/KWh on Monday and a high of 124 mills/KWh recorded on Friday.
In the Golden State, North of Path 15 peak power traded for between 129 mills and 132.50 mills/KWh at the beginning of the week before tacking on another 5 mills in Tuesday trading. By the end of the week peak power moved for a low of 119 mills/KWh. Off-peak power prices hovered just below 100 mills/KWh on Monday before weighing in at 106 mills/KWh the following day. That high was exceeded on Friday, when the price hit 112 mills/KWh.
South of Path 15 power costs mirrored those recorded in the northern half of the state this week. After opening on Monday at 128.25 mills/KWh, SP15 peak-time power hit a high of 138.50 mills/KWh on Tuesday. By the time Friday rolled around, the value of daytime power at the hub had slid down to between 118.25 mills and 123 mills/KWh. Off-peak power closed the week at between 102 mills and 109 mills/KWh [Shauna O'Donnell].
Gas Feels No Gain from Withdrawal
Last week's frigid weather in the Midwest and East Coast led to a whopping 202 Bcf of natural gas being removed from underground storage. The Energy Information Administration reported the large withdrawal in Thursday's storage report. The take-out dropped the total stored gas amount in the mainland United States to just under 3,000 Bcf.
Still, the large withdrawal did nothing to stave off a late-week slump in the price of natural gas. The New York Mercantile Exchange saw a drop of nearly $1 in the cost of January gas on Thursday, bringing the price down to $13.78/MMBtu. Over on the next-day market, gas prices dropped as well.
Southern California border deliveries at Topock cost between $13.25 and $13.55/MMBtu on Monday. Values gained some ground on Tuesday, hitting a week's high of $14.04/MMBtu before steadily sliding downward the rest of the week. On Friday Topock gas was moving for between $11.85 and $12.15/MMBtu.
Northern California deliveries at Malin managed to hit the $14/MMBtu mark on Tuesday, but quickly shed as much as $1 during the next two days of trading. Malin gas changed hands for between $11.60 and $12/MMBtu at the end of the week.
Producing-basin gas fared no better. Permian Basin gas attracted just under $13/MMBtu at the start of the week before tacking on two bits or so during Tuesday's trading session. Gas at the producing basin dropped down to a spread of $11.47 to $11.69/MMBtu on Friday.
In a statement released late last Friday, Huntsman Corporation Chair Jon Huntsman called the high price of gas a "disaster for American industry, the American farmer and for the 55 percent of Americans who heat their homes with natural gas." Huntsman, who was responding to the NYMEX price for gas reaching a record-setting $15/MMBtu, charged that the escalation was "not an issue of supply and demand. It is an issue of traders and speculators on the NYMEX hurting America on every front while they pocket outlandish profits. There is no need for this. It is outrageous and greedy."
El Paso Natural Gas Company filed a request this week with the Federal Energy Regulatory Commission to commence service of its Line No.1903 project. El Paso's December 14 written request asks the commission to respond as promptly as possible in that service could begin as early as December 30 of this year [CP05-2].
The Line No.1903 project will move gas between El Paso's northern and southern pipelines and allows for a bi-directional flow throughout the Mojave system. The project is located on the cusp of California and Arizona. The project entailed the conversion of an 88-mile crude-oil pipeline to a natural gas line. Line 1903 connects with the Mojave line at Cadiz by a 6.4-mile crossover pipeline that has 502,000 Mcfd of capacity. The Daggett compressor was converted where the Kern River and Mojave pipelines connect [Shauna O'Donnell and Samantha Yugler].
Archives of the Western Price Survey for the past year are also available online.
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