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Western Price Survey

December 22, 2017
SoCal Natural Gas Price Volatility Continues; Power Values Up

Natural gas price volatility continues in Southern California, as maintenance issues and a forecast for colder weather in the region shot prices up by more than a dollar.

Southern California Gas Co., owner and operator of the Aliso Canyon gas storage facility, reported a new leak at the facility on Dec. 18 due to a flange gasket malfunction during routine maintenance. Gas leaked for approximately 50 minutes. That same day, the utility issued an advisory based on “severe cold weather conditions” it predicted might trigger natural gas and electricity shortages. Both issues pushed prices higher, according to the U.S. Energy Information Administration.

In Dec. 14 to Dec. 21 trading, SoCal Border natural gas gained $1.45 to reach $4.35/MMBtu, while SoCal CityGate gas jumped $1.38, ending at $5.24/MMBtu.

While the gain at the SoCal Border hub was the highest among Western hubs, prices were varied at other hubs in the West. Sumas natural gas lost the most in trading, down 22 cents to $2.47/MMBtu by Dec. 21.

Working natural gas in storage was 3,444 Bcf as of Dec. 15, according to EIA estimates. This is a higher-than-normal net decrease of 182 Bcf compared to the previous week. Storage levels are now 5 percent less than a year ago and 2.4 percent less than the five-year average.

The current lower storage levels compared to the five-year average are directly attributed to Pacific region storage levels, which were 39 Bcf less than the five-year average.

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Total national natural gas use decreased 8 percent week over week, according to the EIA. Gas used for power generation dropped 8 percent week over week.

Henry Hub natural gas spot values shed 6 cents to $2.61/MMBtu between Dec. 14 and 21.

Meanwhile, Western daytime power prices posted gains of between 50 cents and as much as $4.65. Mid-Columbia gained the most in the Dec. 15 to 22 trading period, up $4.65 to $29.15/MWh. By Dec. 22, prices traded in a range from $29.15/MWh at Mid-Columbia to $43.50/MWh at South of Path 15.

Off-peak price movement followed suit, with prices up between 70 cents and $1.85 by Dec. 22. Mid-C nighttime power added $1.85 to end at $23.65/MWh

Power demand on the California Independent System Operator grid reached 30,892 MW Dec. 21, which was the week’s high. Total renewables reached 10,969 MW Dec. 21, while thermal generation was 12,981 MW Dec. 19.

Drought may return to Southern California in the first quarter of 2018, according to the Dec. 21 Climate Prediction Center Seasonal Drought Outlook. The region has seen little rainfall in the rainy season so far, and the dry conditions intensified a series of wildfires this month that are among the largest in the state’s history. –Linda Dailey Paulson

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 Mavis Scanlon, editor with questions regarding Price Survey content.

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