Sempra Energy (SRE)

[eFinanceMarkets]

Heat wave to test Southern California natural gas supplies

The heat wave sweeping the western U.S. will offer the first big test of the summer for the natural gas market in Southern California, where supplies have been limited since the leak at the massive Aliso Canyon storage field.

Regulators have been warning for months that Southern California could be at risk of energy shortages with Sempra Energy’s (SRE -0.3%) Aliso Canyon field largely offline following a leak that was plugged there last year.

Higher prices will be needed to attract gas flows into California as the heat will also boost demand by generators serving customers from west Texas to Arizona, says Genscape's director of its west coast power desk, which is "going to cause some problems with getting gas to units out in Southern California."

The premium for wholesale gas in the Los Angeles area relative to the U.S. benchmark Henry Hub in Louisiana yesterday reached the highest since December 2015.