monthly briefing : a shoulder month without shoulder prices - cera alert
september forecast
- - - - - - - - - - - - - - - - - - - - - - forwarded by lorna brennan / et & s / enron on 08 / 23 / 2000
06 : 52 am - - - - - - - - - - - - - - - - - - - - - - - - - - -
webmaster @ cera . com on 08 / 22 / 2000 10 : 28 : 10 pm
to : lorna . brennan @ enron . com
cc :
subject : monthly briefing : a shoulder month without shoulder prices - cera
alert
cera alert : sent tue , august 22 , 2000
title : monthly briefing : a shoulder month without shoulder prices
author : zenker , snyder , moritzburke
e - mail category : alert
product line : western energy ,
url : http : / / www . cera . com / cfm / track / eprofile . cfm ? u = 5526
total imports of 5 . 8 bcf per day eclipsed the previous high by 300 million
cubic feet ( mmcf ) per day ( see table 6 ) . pipeline capacity into the state
during the month ran at 83 percent utilization . so far in august , pipeline
capacity utilization is exceeding even that high rate , running at 85 percent .
these high rates of capacity utilization are putting pressure on gas prices
in southern california , and the pressure should continue during september .
total demand in california is expected to decline somewhat during september ,
but continued strong power loads and low seasonal hydroelectric generation
will provide support . total demand in the state should average 6 . 6 bcf per
day , down only slightly from august ' s total of 6 . 8 bcf per day . flows into
the state between august and september are not likely to change
significantly , but price pressure should decline somewhat with demand . the
topock differential to the henry hub should average approximately $ 0 . 50 per
mmbtu for september ( see table 7 ) .
storage inventories in the west are still healthy relative to levels in the
rest of the united states , but the storage surplus in the region has eroded .
in california , inventories are running lower than last year , and the deficit
in the state looks likely to widen during september . the end of injection
season storage inventories will determine the vulnerability of topock
differentials to winter price spikes .
pacific northwest
malin prices this summer have shown neither the strong premiums that topock
prices have shown nor the wide discounts that supplies in the rocky mountains
and san juan basins have shown . so far this month , prices at malin are
averaging a $ 0 . 25 per mmbtu discount to the henry hub . pipeline capacity into
the region from the rocky mountains is running nearly full ; flows on pgt out
of alberta have averaged nearly 2 . 2 bcf per day this month . export capacity
out of the region on pge gt nw is running close to capacity , and pipeline
constraints to the south combined with strong california demand are driving
the wide malin - to - topock differentials .
continuing strong demand in the south will likely keep topock prices strong ,
and the wide north - south differentials within the west will likely hold
through september . in the pacific northwest demand is expected to climb
through september to 1 . 5 bcf per day from 1 . 4 bcf per day in august . this
demand level should keep malin differentials from widening from current
levels . for september cera expects malin prices to average $ 0 . 10 per mmbtu
below the henry hub price .
southwest
prices in the san juan basin this summer have been left behind by rising
california demand . although the westward pull on supplies is strong ,
bottlenecks between california and the san juan have led to disconnects
between san juan prices and topock prices . pipeline capacity utilization
rates on transwestern and the northern leg of el paso reached 93 percent
during july , with less than 200 mmcf per day of excess pipeline capacity .
increased flows from the rockies on transcolorado and northwest are
contributing to downward pressure on san juan basin supply , and in general ,
the san juan has followed rocky mountain prices rather than following prices
at topock or the permian basin .
unlike in the past two summers , the bottleneck has not allowed power demand
on the west coast to support san juan prices relative to permian prices . the
differential between san juan and permian has averaged $ 0 . 50 per mmbtu so far
this month and $ 0 . 30 per mmbtu since june . additional imports from the
rockies into the san juan have increased supply by 200 mmcf per day relative
to last summer , but these higher flows do not fully explain the disconnect .
without much change in southwestern or rocky mountains local demand , the san
juan should continue to price at a wide discount during september . the san
juan - to - henry hub differential is expected to average $ 0 . 60 per mmbtu . as in
the rockies , differentials should narrow substantially in october .
rocky mountains
downward pressures on rocky mountain prices intensified over the past month
as utilization rates on pipelines out of the region continued to climb .
record heat and power generation levels have done little to boost gas demand
within the region ; generation is still largely coal - based , and the demand
impact on gas of the additional load is minimal . cera expects the heavy
discount - current rocky mountain - to - henry hub differentials are around $ 0 . 90
per mmbtu - to persist through september . local area demand is not expected to
change during september . substantial gain in local demand comes in october
with heating loads ; october demand should average 1 . 4 bcf per day , up from
august and september averages of around 1 . 2 bcf per day .
although the winter heating season will relieve pipeline pressures in the
rockies , winter differentials are expected to stay in the $ 0 . 25 to $ 0 . 40 per
mmbtu range . strong storage inventories will limit the connection with
broader north american markets this summer . next summer , pressures on rockies
supplies will likely intensify relative to this summer . although pipeline
expansion projects have been announced - trailblazer and williams announced
expansion plans this summer - the new capacity will not be online to relieve
constraints next summer . cera expects supplies within the rocky mountains to
increase by 300 mmcf per day next year .
western canada
after widening to over us $ 1 . 50 per mmbtu , the aeco - henry differential has
begun to narrow somewhat ; maintenance that has restricted flows has largely
been responsible for the jump from $ 0 . 84 per mmbtu in july . with current
supply able to fill the contracted pipe capacity and incremental volumes
having to pay full cost to flow , differentials are likely to persist in the
mid - us $ 0 . 70 s per mmbtu for september . aeco is expected to be us $ 3 . 25 per
mmbtu ( c $ 4 . 53 per gigajoule ) for september . even with the start - up of the
alliance project , the contract nonrenewal on transcanada is likely to
continue the two - tiered pricing dynamics of contracted versus uncontracted
pipeline costs . this will result in differentials that will range between
us $ 0 . 60 and us $ 0 . 75 per mmbtu throughout the winter .
supply build in western canada continues to languish behind last year ' s
levels . the pace of drilling ( over 9 , 000 gas wells are expected this year )
should provide growth in the fourth quarter and into 2001 . supply is expected
to be flat with 1999 on an annual basis for this year and up at least 350
mmcf per day in 2001 .
sumas prices have been quite volatile , driven by both weather in the pacific
northwest and maintenance on the westcoast system . for september , sumas is
expected to be slightly more stable and to price at a modest premium to aeco
of us $ 0 . 05 per mmbtu .
* * end * *
follow url for pdf version of this monthly briefing with associated graphic
and tables .
cera ' s autumn 2000 roundtable event dates and agendas are
now available at http : / / www . cera . com / event
account changes
to edit your personal account information , including your e - mail
address , etc . go to : http : / / eprofile . cera . com / cfm / edit / account . cfm
this electronic message and attachments , if any , contain information
from cambridge energy research associates , inc . ( cera ) which is
confidential and may be privileged . unauthorized disclosure , copying ,
distribution or use of the contents of this message or any attachments ,
in whole or in part , is strictly prohibited .
terms of use : http : / / www . cera . com / tos . html
questions / comments : webmaster @ cera . com
copyright 2000 . cambridge energy research associates
monthly briefing : a shoulder month without shoulder prices - cera
alert
september forecast
- - - - - - - - - - - - - - - - - - - - - - forwarded by lorna brennan / et & s / enron on 08 / 23 / 2000
06 : 52 am - - - - - - - - - - - - - - - - - - - - - - - - - - -
webmaster @ cera . com on 08 / 22 / 2000 10 : 28 : 10 pm
to : lorna . brennan @ enron . com
cc :
subject : monthly briefing : a shoulder month without shoulder prices - cera
alert
cera alert : sent tue , august 22 , 2000
title : monthly briefing : a shoulder month without shoulder prices
author : zenker , snyder , moritzburke
e - mail category : alert
product line : western energy ,
url : http : / / www . cera . com / cfm / track / eprofile . cfm ? u = 5526
total imports of 5 . 8 bcf per day eclipsed the previous high by 300 million
cubic feet ( mmcf ) per day ( see table 6 ) . pipeline capacity into the state
during the month ran at 83 percent utilization . so far in august , pipeline
capacity utilization is exceeding even that high rate , running at 85 percent .
these high rates of capacity utilization are putting pressure on gas prices
in southern california , and the pressure should continue during september .
total demand in california is expected to decline somewhat during september ,
but continued strong power loads and low seasonal hydroelectric generation
will provide support . total demand in the state should average 6 . 6 bcf per
day , down only slightly from august ' s total of 6 . 8 bcf per day . flows into
the state between august and september are not likely to change
significantly , but price pressure should decline somewhat with demand . the
topock differential to the henry hub should average approximately $ 0 . 50 per
mmbtu for september ( see table 7 ) .
storage inventories in the west are still healthy relative to levels in the
rest of the united states , but the storage surplus in the region has eroded .
in california , inventories are running lower than last year , and the deficit
in the state looks likely to widen during september . the end of injection
season storage inventories will determine the vulnerability of topock
differentials to winter price spikes .
pacific northwest
malin prices this summer have shown neither the strong premiums that topock
prices have shown nor the wide discounts that supplies in the rocky mountains
and san juan basins have shown . so far this month , prices at malin are
averaging a $ 0 . 25 per mmbtu discount to the henry hub . pipeline capacity into
the region from the rocky mountains is running nearly full ; flows on pgt out
of alberta have averaged nearly 2 . 2 bcf per day this month . export capacity
out of the region on pge gt nw is running close to capacity , and pipeline
constraints to the south combined with strong california demand are driving
the wide malin - to - topock differentials .
continuing strong demand in the south will likely keep topock prices strong ,
and the wide north - south differentials within the west will likely hold
through september . in the pacific northwest demand is expected to climb
through september to 1 . 5 bcf per day from 1 . 4 bcf per day in august . this
demand level should keep malin differentials from widening from current
levels . for september cera expects malin prices to average $ 0 . 10 per mmbtu
below the henry hub price .
southwest
prices in the san juan basin this summer have been left behind by rising
california demand . although the westward pull on supplies is strong ,
bottlenecks between california and the san juan have led to disconnects
between san juan prices and topock prices . pipeline capacity utilization
rates on transwestern and the northern leg of el paso reached 93 percent
during july , with less than 200 mmcf per day of excess pipeline capacity .
increased flows from the rockies on transcolorado and northwest are
contributing to downward pressure on san juan basin supply , and in general ,
the san juan has followed rocky mountain prices rather than following prices
at topock or the permian basin .
unlike in the past two summers , the bottleneck has not allowed power demand
on the west coast to support san juan prices relative to permian prices . the
differential between san juan and permian has averaged $ 0 . 50 per mmbtu so far
this month and $ 0 . 30 per mmbtu since june . additional imports from the
rockies into the san juan have increased supply by 200 mmcf per day relative
to last summer , but these higher flows do not fully explain the disconnect .
without much change in southwestern or rocky mountains local demand , the san
juan should continue to price at a wide discount during september . the san
juan - to - henry hub differential is expected to average $ 0 . 60 per mmbtu . as in
the rockies , differentials should narrow substantially in october .
rocky mountains
downward pressures on rocky mountain prices intensified over the past month
as utilization rates on pipelines out of the region continued to climb .
record heat and power generation levels have done little to boost gas demand
within the region ; generation is still largely coal - based , and the demand
impact on gas of the additional load is minimal . cera expects the heavy
discount - current rocky mountain - to - henry hub differentials are around $ 0 . 90
per mmbtu - to persist through september . local area demand is not expected to
change during september . substantial gain in local demand comes in october
with heating loads ; october demand should average 1 . 4 bcf per day , up from
august and september averages of around 1 . 2 bcf per day .
although the winter heating season will relieve pipeline pressures in the
rockies , winter differentials are expected to stay in the $ 0 . 25 to $ 0 . 40 per
mmbtu range . strong storage inventories will limit the connection with
broader north american markets this summer . next summer , pressures on rockies
supplies will likely intensify relative to this summer . although pipeline
expansion projects have been announced - trailblazer and williams announced
expansion plans this summer - the new capacity will not be online to relieve
constraints next summer . cera expects supplies within the rocky mountains to
increase by 300 mmcf per day next year .
western canada
after widening to over us $ 1 . 50 per mmbtu , the aeco - henry differential has
begun to narrow somewhat ; maintenance that has restricted flows has largely
been responsible for the jump from $ 0 . 84 per mmbtu in july . with current
supply able to fill the contracted pipe capacity and incremental volumes
having to pay full cost to flow , differentials are likely to persist in the
mid - us $ 0 . 70 s per mmbtu for september . aeco is expected to be us $ 3 . 25 per
mmbtu ( c $ 4 . 53 per gigajoule ) for september . even with the start - up of the
alliance project , the contract nonrenewal on transcanada is likely to
continue the two - tiered pricing dynamics of contracted versus uncontracted
pipeline costs . this will result in differentials that will range between
us $ 0 . 60 and us $ 0 . 75 per mmbtu throughout the winter .
supply build in western canada continues to languish behind last year ' s
levels . the pace of drilling ( over 9 , 000 gas wells are expected this year )
should provide growth in the fourth quarter and into 2001 . supply is expected
to be flat with 1999 on an annual basis for this year and up at least 350
mmcf per day in 2001 .
sumas prices have been quite volatile , driven by both weather in the pacific
northwest and maintenance on the westcoast system . for september , sumas is
expected to be slightly more stable and to price at a modest premium to aeco
of us $ 0 . 05 per mmbtu .
* * end * *
follow url for pdf version of this monthly briefing with associated graphic
and tables .
cera ' s autumn 2000 roundtable event dates and agendas are
now available at http : / / www . cera . com / event
account changes
to edit your personal account information , including your e - mail
address , etc . go to : http : / / eprofile . cera . com / cfm / edit / account . cfm
this electronic message and attachments , if any , contain information
from cambridge energy research associates , inc . ( cera ) which is
confidential and may be privileged . unauthorized disclosure , copying ,
distribution or use of the contents of this message or any attachments ,
in whole or in part , is strictly prohibited .
terms of use : http : / / www . cera . com / tos . html
questions / comments : webmaster @ cera . com
copyright 2000 . cambridge energy research associates