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Western Price Survey

July 19, 2019
Natural Gas Used Nationwide for Power Production Reaches Record

The amount of natural gas used across the United States to meet power demand reached an all-time high of 43.8 Bcf per day July 17.

The U.S. Energy Information Administration attributed the 6 percent week-over-week increase to the start of extreme heat across the East Coast and Midwest, but adds that “thus far it has had a limited effect on prices.”

Despite the increased gas usage, Hurricane Barry triggered a 2 percent reduction in both supply and production. Roughly half of production in the Gulf of Mexico was shuttered during the storm.

Western natural gas prices fell by between 10 cents and 37 cents in July 11 to July 18 trading. El Paso-Permian Basin lost the most value, down 37 cents to end at 74 cents/MMBtu. Both SoCal Border and SoCal CityGate natural gas lost 36 cents, ending at $2.37/MMBtu and $2.39/MMBtu, respectively.

Southern California Gas Co. pushed back the estimated return-to-service date for Line 235-2 yet again—this time, by another month.

In a July 18 pipeline status report, the utility said the line might be back in service by Aug. 29. Once returned to service, it will be inspected again. Line 235-2 has been out of service since Oct. 1, 2017. In continuing to restore the line to full pressure, crews have found additional leaks in remote locations.

Line 4000 work is set to begin once Line 235-2 is back in service; however, no progress was reported on repairs to Line 3000. There have been no changes on Line 3000 reported since the initial status report was released Jan. 28. It had been out since July 2016 and is now back in service at reduced pressure, which does not increase system capacity due to the bottleneck created by the outages on Lines 235-2 and 4000, but does increase redundancy, according to the California Public Utilities Commission (see CEM No. 1526 [8]).

Henry Hub gas spot prices tumbled 12 cents, ending at $2.36/MMBtu.

Working national natural gas in storage was 2,533 Bcf as of July 12, according to the EIA. This is a net increase of 62 Bcf compared with the previous week.

Meanwhile, Western daytime power prices fell, with most hubs dropping $5. California-Oregon Border tumbled $2.25 to end at $28.25/MWh. Palo Verde lost the most, down $5.50 to $37.50/MWh.

Western off-peak prices eroded by between 5 cents and almost $2. North of Path 15 lost $1.90 to end at $27.60/MWh.

California Independent System Operator demand reached 39,639 MW July 15, which should be the week’s high.
–Linda Dailey Paulson

Archives of the Western Price Survey for the past year are also available online.

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