fw : western energy markets stuggle along - cera monthly briefing latest western markets forecaset from cambridge energy .
lorna
- - - - - original message - - - - -
from : webmaster @ cera . com @ enron
sent : friday , january 26 , 2001 2 : 50 pm
to : insights @ cera . com
subject : western energy markets stuggle along - cera monthly briefing
title : western energy markets stuggle along
url : http : / / www 20 . cera . com / eprofile ? u = 35 indeed , the pressure is intensifying . the credit
crisis precipitated by the power market crisis is spilling over into gas
markets ; storage levels within california are again at critically low levels .
the mild weather during december and early january allowed some improvement in
the positions , but when pg some plants have simply
curtailed operations in response to the higher prices .
on the power side , plants within california are extremely limited in their
ability to burn alternative fuels because of emissions credits . however ,
plants
outside of california do have some backup capability . arizona public service
has purchased 400 , 000 barrels of 1 % sulfur residual fuel oil to burn as an
alternative to gas . given the intense pressure on gas , oil will absorb some of
growth in power loads .
california
in november an early strong draw on storage in california raised questions
about winter deliverability within the state . a combination of low storage
inventories , high gas demand for power generation , and continued high
utilization rates on import pipelines into the state will keep pressure on
california prices through february ( see table 6 ) . despite efforts by end users
to limit gas burns in the state in the face of extremely high gas prices , cera
expects demand during january in the state is up by 650 mmcf per day on a
year -
over - year basis . in february , loads should start to decline as residential and
commercial demand declines through the month . however , power loads will remain
strong and actually climb from january into february as hydroelectric
generation falls .
this demand support , continued strong capacity utilization rates in import
pipelines into california , and critically low storage inventories will keep
intense pressure on gas prices within the state through february . during
periods of high demand , prices will likely reach back up into the $ 15 . 00 to
$ 20 . 00 per mmbtu range . eventually , as heating loads settle and storage draws
slow toward the end of february , differentials should ease back into the $ 1 . 00
to $ 3 . 00 per mmbtu range . on balance , cera expects a topock differential for
february of $ 3 . 00 per mmbtu ( see table 7 ) .
pacific northwest
three factors have combined to strengthen malin prices over the past week , and
these forces should extend price strength at malin into february . first , the
return of colder winter weather after moderate temperatures during late
december and early january is increasing heating loads and power loads .
second ,
lower - than - normal hydroelectric generation is increasing the draw on gas for
power generation during a season when the pull is normally low . third , the
california power shortage is drawing on all regional supplies and supporting
the demand for gas for power generation .
pacific northwest demand is expected to hold flat relative to january levels
during february with slight increases in gas demand for power generation
offsetting declines in residential and commercial demand . the sustained high
demand levels  * despite relatively healthy northwest storage inventory levels  *
will keep malin prices well above henry hub prices . cera expects a malin to
henry hub differential of $ 1 . 00 per mmbtu during february .
a drop - off in demand of 200 mmcf per day is expected in march , as steep
declines in heating loads offset continued increases in gas demand for power
generation . however , prices at malin will likely remain unusually strong this
spring . part of the shortfall in hydroelectric generation continues to be
made
up by draining reservoirs . that early drawdown will limit the availability of
hydroelectric generation through the spring and early summer months . both low
hydroelectric generation and a challenging storage refill season in northern
california should sustain the malin premium to the henry hub even into the
spring .
rocky mountains
the volatility in rocky mountain differentials continues . differentials
continue to depend primarily on local heating loads ; cooler weather supports
loads and prices within the region , but periods of warm weather drive steep
declines in rocky mountain prices relative to prices at the henry hub . during
february , demand should drop off in the region . although declines in heating
loads in neighboring western regions will be offset by increases in gas demand
for power generation , the rockies remain primarily coal based . as a result ,
the
lower expected hydroelectric output will do little to support loads within the
region . increases in supply  * cera expects supply increases of 300 mmcf per day
during 2001 relative to 2000  * will overwhelm available pipeline capacity out of
the region .
demand during february in the rockies is expected to remain flat at 2 . 9 bcf
per
day ; however , within the month demand loads will drop substantially . this will
put pressure on differentials toward the end of the month , and cera expects
average basis differentials to the henry hub during february of $ 0 . 75 per
mmbtu . that widening trend should continue during march , with differentials to
the henry hub eventually reaching $ 2 . 00 per mmbtu this summer .
southwest
prices in the san juan basin have been following rocky mountain prices up and
down with regional demand loads . that dynamic will likely continue through
february . cera expects relatively flat demand during february within the
southwest . as in the west as a whole , a significant drop - off is expected
during
march as residential and commercial heating demand wanes . for february ,
continued strong demand loads within the rockies and southwest will support
prices in the san juan , barring unusually warm weather . cera expects a
differential to the henry hub of $ 0 . 65 per mmbtu .
as residential and commercial loads decline sharply during late february and
march , prices in the san juan will reflect ample supply . cera expects declines
in san juan production during 2001 , but declines will be limited by the
strongest drilling activity for conventional supplies in the basin in a
decade .
however , pressure on rocky mountain supplies will mean increased exports from
the north into the san juan , and those increased exports will more than offset
the declines in local production . pipeline capacity constraints out of the san
juan will again mean wide san juan - to - henry hub differentials , with pressure
on
prices developing during the spring and intensifying through the summer
months .
western canada : increasing supply
aeco differentials to the henry hub have ranged between $ 0 . 60 per mmbtu and
over $ 1 . 00 per mmbtu . given strong demand in the united states , export
pipelines have been running near capacity all winter . even the 1 . 3 bcf per day
alliance pipeline has been running full ; through the end of the winter ,
continued strong us demand should keep export pipeline flows near capacity .
given these flow levels , cera expects differentials to remain near the $ 0 . 60
to
$ 1 . 00 per mmbtu level , reflecting the cost of transport on transcanada , the
only available export capacity out of alberta . for february , cera expects a
differential between aeco and the henry hub of $ 0 . 65 per mmbtu .
storage inventories in western canada are running below historical average
levels , but the refill season should be manageable ; inventories are nowhere
near as low as us inventory levels . inventories in the west are expected to
fall slightly below historical average levels by the end of withdrawal season ,
and exports should decline relative to first quarter levels as injection
season
begins in the spring . cera expects differentials to henry hub prices to narrow
sometime in the late spring as the focus in alberta turns from filling us
winter demand to refilling canadian storage .
on the supply side , production has turned the corner in western canada , and
year - over - year increases in supply of nearly 300 mmcf per day are now evident .
after flat production levels for 2000 relative to 1999 , increases for the year
2001 should reach 350 mmcf per day . given strong expected demand from
california and the west coast , cera expects no declines in year - over - year
flows
into the west on pge gt nw . overall flows should reach 2 . 4 bcf per day for
2001 , an increase of 85 mmcf per day from 2000 levels .
* * end * *
follow above url for full report .
come shoot the rapids with us at ceraweek 2001 , " shooting the rapids :
strategies and risks for the energy future " in houston , february 12 - 16 , 2001 !
for more information and to register , please visit
http : / / www 20 . cera . com / ceraweek /
e - mail category : monthly briefing
cera knowledge area ( s ) : western energy ,
to make changes to your cera . com account go to :
forgot your username and password ? go to :
http : / / www 20 . cera . com / client / forgot
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 20 . cera . com / tos
questions / comments : webmaster @ cera . com
copyright 2000 . cambridge energy research associates
fw : western energy markets stuggle along - cera monthly briefing
latest western markets forecaset from cambridge energy .
lorna
- - - - - original message - - - - -
from : webmaster @ cera . com @ enron
sent : friday , january 26 , 2001 2 : 50 pm
to : insights @ cera . com
subject : western energy markets stuggle along - cera monthly briefing
title : western energy markets stuggle along
url : http : / / www 20 . cera . com / eprofile ? u = 35 indeed , the pressure is intensifying . the credit
crisis precipitated by the power market crisis is spilling over into gas
markets ; storage levels within california are again at critically low levels .
the mild weather during december and early january allowed some improvement in
the positions , but when pg some plants have simply
curtailed operations in response to the higher prices .
on the power side , plants within california are extremely limited in their
ability to burn alternative fuels because of emissions credits . however ,
plants
outside of california do have some backup capability . arizona public service
has purchased 400 , 000 barrels of 1 % sulfur residual fuel oil to burn as an
alternative to gas . given the intense pressure on gas , oil will absorb some of
growth in power loads .
california
in november an early strong draw on storage in california raised questions
about winter deliverability within the state . a combination of low storage
inventories , high gas demand for power generation , and continued high
utilization rates on import pipelines into the state will keep pressure on
california prices through february ( see table 6 ) . despite efforts by end users
to limit gas burns in the state in the face of extremely high gas prices , cera
expects demand during january in the state is up by 650 mmcf per day on a
year -
over - year basis . in february , loads should start to decline as residential and
commercial demand declines through the month . however , power loads will remain
strong and actually climb from january into february as hydroelectric
generation falls .
this demand support , continued strong capacity utilization rates in import
pipelines into california , and critically low storage inventories will keep
intense pressure on gas prices within the state through february . during
periods of high demand , prices will likely reach back up into the $ 15 . 00 to
$ 20 . 00 per mmbtu range . eventually , as heating loads settle and storage draws
slow toward the end of february , differentials should ease back into the $ 1 . 00
to $ 3 . 00 per mmbtu range . on balance , cera expects a topock differential for
february of $ 3 . 00 per mmbtu ( see table 7 ) .
pacific northwest
three factors have combined to strengthen malin prices over the past week , and
these forces should extend price strength at malin into february . first , the
return of colder winter weather after moderate temperatures during late
december and early january is increasing heating loads and power loads .
second ,
lower - than - normal hydroelectric generation is increasing the draw on gas for
power generation during a season when the pull is normally low . third , the
california power shortage is drawing on all regional supplies and supporting
the demand for gas for power generation .
pacific northwest demand is expected to hold flat relative to january levels
during february with slight increases in gas demand for power generation
offsetting declines in residential and commercial demand . the sustained high
demand levels  * despite relatively healthy northwest storage inventory levels  *
will keep malin prices well above henry hub prices . cera expects a malin to
henry hub differential of $ 1 . 00 per mmbtu during february .
a drop - off in demand of 200 mmcf per day is expected in march , as steep
declines in heating loads offset continued increases in gas demand for power
generation . however , prices at malin will likely remain unusually strong this
spring . part of the shortfall in hydroelectric generation continues to be
made
up by draining reservoirs . that early drawdown will limit the availability of
hydroelectric generation through the spring and early summer months . both low
hydroelectric generation and a challenging storage refill season in northern
california should sustain the malin premium to the henry hub even into the
spring .
rocky mountains
the volatility in rocky mountain differentials continues . differentials
continue to depend primarily on local heating loads ; cooler weather supports
loads and prices within the region , but periods of warm weather drive steep
declines in rocky mountain prices relative to prices at the henry hub . during
february , demand should drop off in the region . although declines in heating
loads in neighboring western regions will be offset by increases in gas demand
for power generation , the rockies remain primarily coal based . as a result ,
the
lower expected hydroelectric output will do little to support loads within the
region . increases in supply  * cera expects supply increases of 300 mmcf per day
during 2001 relative to 2000  * will overwhelm available pipeline capacity out of
the region .
demand during february in the rockies is expected to remain flat at 2 . 9 bcf
per
day ; however , within the month demand loads will drop substantially . this will
put pressure on differentials toward the end of the month , and cera expects
average basis differentials to the henry hub during february of $ 0 . 75 per
mmbtu . that widening trend should continue during march , with differentials to
the henry hub eventually reaching $ 2 . 00 per mmbtu this summer .
southwest
prices in the san juan basin have been following rocky mountain prices up and
down with regional demand loads . that dynamic will likely continue through
february . cera expects relatively flat demand during february within the
southwest . as in the west as a whole , a significant drop - off is expected
during
march as residential and commercial heating demand wanes . for february ,
continued strong demand loads within the rockies and southwest will support
prices in the san juan , barring unusually warm weather . cera expects a
differential to the henry hub of $ 0 . 65 per mmbtu .
as residential and commercial loads decline sharply during late february and
march , prices in the san juan will reflect ample supply . cera expects declines
in san juan production during 2001 , but declines will be limited by the
strongest drilling activity for conventional supplies in the basin in a
decade .
however , pressure on rocky mountain supplies will mean increased exports from
the north into the san juan , and those increased exports will more than offset
the declines in local production . pipeline capacity constraints out of the san
juan will again mean wide san juan - to - henry hub differentials , with pressure
on
prices developing during the spring and intensifying through the summer
months .
western canada : increasing supply
aeco differentials to the henry hub have ranged between $ 0 . 60 per mmbtu and
over $ 1 . 00 per mmbtu . given strong demand in the united states , export
pipelines have been running near capacity all winter . even the 1 . 3 bcf per day
alliance pipeline has been running full ; through the end of the winter ,
continued strong us demand should keep export pipeline flows near capacity .
given these flow levels , cera expects differentials to remain near the $ 0 . 60
to
$ 1 . 00 per mmbtu level , reflecting the cost of transport on transcanada , the
only available export capacity out of alberta . for february , cera expects a
differential between aeco and the henry hub of $ 0 . 65 per mmbtu .
storage inventories in western canada are running below historical average
levels , but the refill season should be manageable ; inventories are nowhere
near as low as us inventory levels . inventories in the west are expected to
fall slightly below historical average levels by the end of withdrawal season ,
and exports should decline relative to first quarter levels as injection
season
begins in the spring . cera expects differentials to henry hub prices to narrow
sometime in the late spring as the focus in alberta turns from filling us
winter demand to refilling canadian storage .
on the supply side , production has turned the corner in western canada , and
year - over - year increases in supply of nearly 300 mmcf per day are now evident .
after flat production levels for 2000 relative to 1999 , increases for the year
2001 should reach 350 mmcf per day . given strong expected demand from
california and the west coast , cera expects no declines in year - over - year
flows
into the west on pge gt nw . overall flows should reach 2 . 4 bcf per day for
2001 , an increase of 85 mmcf per day from 2000 levels .
* * end * *
follow above url for full report .
come shoot the rapids with us at ceraweek 2001 , " shooting the rapids :
strategies and risks for the energy future " in houston , february 12 - 16 , 2001 !
for more information and to register , please visit
http : / / www 20 . cera . com / ceraweek /
e - mail category : monthly briefing
cera knowledge area ( s ) : western energy ,
to make changes to your cera . com account go to :
forgot your username and password ? go to :
http : / / www 20 . cera . com / client / forgot
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 20 . cera . com / tos
questions / comments : webmaster @ cera . com
copyright 2000 . cambridge energy research associates