This information is provided solely for informational purposes. Although Southern California Gas Co. (SoCalGas) and San Diego Gas & Electric (SDG&E) have used reasonable efforts to assure its accuracy, no representation is made that the contents are free from error or suitable for use for any particular purpose. SoCalGas and SDG&E assume no responsibility for use of, or reliance on, this information by any party, and specifically advise such parties to discuss any decisions or actions related hereto with their own advisors and experts.
Prices
According to the Dow Jones Report, May 10, natural gas prices have increased because of high crude oil prices and weather forecasts indicating warming in the Northeast and Midcontinent.
The Associated Press, May 10, reported that world oil prices rose strongly amid forecasts of higher global demand later this year that could outstrip supply despite increased output by the Organization of Petroleum Exporting Countries. Prices were winning support also from concern about supplies of gasoline, as the approaching American driving season put the spotlight on forthcoming US crude inventories data.
According to Department of Energy's Energy Information Administration (EIA), in April, high crude oil prices, combined with the unusually cold March weather for much of the nation, increased heating demand and boosted spot prices for natural gas to levels above $7.00.
The May 10 EIA Short-Term Energy Outlook says that although natural gas storage remains above the 5-year average, high world oil prices, continued strength in the economy, the expectation that Pacific Northwest hydroelectric resources will be well below normal through mid-summer, and limited prospects for growth in domestic natural gas production all support the natural gas price projections.
EIA projects that Henry Hub prices will remain relatively high, with averages of over $7.00 per mcf in 2005 and 2006.
The Dow Jones Report, May 9, reported that Western wholesale spot power prices remain high because of a rise in natural gas prices and nuclear plant outages. In addition, moderate weather prevailed through most of the West otherwise prices would have been higher to reflect normal weather.
The following tables and charts show the current prices and price trends:
Natural Gas Prices ($/mmbtu) California-Arizona border (closest trading hub to Southern California) Henry Hub (Major gas trading center in United States, located in Louisiana) San Juan (One of the producing areas feeding Southern California, located in New Mexico) Rockies (One of the producing areas feeding Southern California, located in Wyoming)
May 10 daily spot-cash gas price* $6.20 $6.69 $5.88 $5.99
Bidweek Gas Price for May** $6.61 $6.77 $6.30 $6.33
Apr. 2005 daily average spot price* $6.70 $7.19 $6.35 $6.49
May 2004 daily average spot price* $5.98 $6.33 $5.45 $5.40
June 2005 future gas price*** $6.28 $6.71 $5.95 $5.96
12-month future average gas price*** $6.94 $6.94 $6.65 $6.58
Sources:
/*Dow Jones, Btu's Daily Gas Wire
**Inside FERC; NGI for Rockies
***NYMEX and Prebon Energy, represents estimation of the market, 05/10/2005
Western Electricity Prices So. Cal. (SP15) On-peak Price ($/MWh) Equivalent gas price at 10,000 HR ($/mmbtu) No. Cal. (NP15) On-peak Price($/MWh) Equivalent gas price at 10,000 HR $/mmbtu)
May 9 daily spot-cash electricity price* $54.52 $5.45 $54.48 $5.45
Apr. 2005 daily average electricity price* $59.18 $5.92 $58.66 $5.87
May 2004 daily average electricity price* $59.43 $5.94 $59.71 $5.97
12 month average future wholesale electricity price** $74.63 $7.46 $71.54 $7.15
Sources:
*Dow Jones, BTU Daily
**Prebon Energy, represents estimation of the market, 05/09/2005
Oil Prices ($/Bbl) West Texas Intermediate (WTI) crude oil
May 9 daily WTI oil price* $52.01
Apr. 2005 daily average price* $53.04
May 2004 daily average price* $40.25
NYMEX crude contract for June** $54.45
Sources:
*Dow Jones
**NYMEX
Wholesale Natural Gas and Electricity Price Comparison
Natural Gas and Electricity Future Price Outlook
NYMEX Crude (Oil) Futures
Oil Prices vs. Natural Gas Prices
Natural gas
Gas demand
... in U.S.
(source: EIA's Short-Term Energy Outlook, May 10, 2005)
Natural gas demand in the U.S. is expected to exhibit an increase of 2.1 percent in 2005.
In 2006, natural gas demand is projected to rise by 2.3 percent due largely to weather-related factors and continued strength in gas-intensive industrial production.
... in Southern California
(source: SoCalGas Preliminary Daily Operating Sheet, as of May 9, 2005)
Southern California Gas Company’s (SoCalGas) May 1-9 daily average total demand is about 3% lower than April's daily average total demand and about the same as May, 2004 usage.
SoCalGas' May daily average demand for gas-fired electricity wholesale generation (EWG) and utility electricity generation (UEG) is about 7% higher than April's EWG/UEG demand and about 24% lower than May, 2004 usage.
Southern California Gas Company’s (SoCalGas) April daily average total demand was about 9% lower than March's daily average total demand and about 4% lower than April, 2004 usage.
SoCalGas' April daily average demand for gas-fired electricity wholesale generation (EWG) and utility electricity generation (UEG) was about 7% lower than March's EWG/UEG demand. SoCalGas' April daily average EWG and UEG demand was about 23% lower than April, 2004 usage mainly due to fewer nuclear plant outages.
Gas supply
National Storage 25.2% above five-year average
EIA's Weekly Natural Gas Storage Report for the week ending Friday, April 29, reported working gas in underground storage increased to 1,455 Bcf. Inventories now stand 25.2 percent above the 5-year average of 1,162 Bcf. Stocks are 238 Bcf higher than last year at this time.
Western storage 14.6% above the five-year average
The same EIA report pegged inventories in the West region at 227 Bcf or 14.6 percent above the 5-year average.
SoCalGas storage levels at 64-percent full
(source: SoCalGas Preliminary Daily Operating Sheet)
As of May 9, 2005, total SoCalGas system storage inventory was 76 Bcf. This is about 22 Bcf higher than storage at the same time last year and about 20 Bcf higher than the prior five-year average levels.
Transwestern Pipeline Expansion start-up
(source: CERA Report, April 25)
The San Juan expansion will provide about 375 million cubic feet per day of additional firm transportation capacity. Transwestern's expansion entails modifications at existing compressor stations and constructing 72.6 miles of underground pipeline from the Blanco Hub located in San Juan County, N.M., to the point of interconnection with Transwestern's mainline. The pipeline expansion went into service May 1.
Production outlook
(source: EIA's Short-Term Energy Outlook, May 10, 2005)
Baker Hughes Inc. announced that the North American rig count for the week ending May 6, 2005 was 1,518. This is 33 higher than the prior week and an increase of 180 from last year's count at the same time.
According to Lehman Brothers, as reported in Platts' Gas Daily, April 26, first-quarter production declined 0.3% from the previous quarter but was down a sharp 4.4% form the same period of 2004.
Domestic natural gas production in 2005 is expected to remain near the 2004 level, despite an expected 13-percent increase in gas-directed drilling.
Electricity
Electricity demand reported in California
On May 10, the CAISO projected the peak load at 28,188 MW. The CAISO calls for a Wednesday peak load of 28,828 MW.
California's electricity situation
This summer, southern California may have possible supply shortages and service disruptions under extreme weather conditions, according to a presentation to FERC by its staff on May 4. The presentation is consistent with the ISO and CEC assessments issued earlier this year.
On May 5, the WECC 2005 Summer Assessment of Loads and Resources said, "Although Southern California is an area of concern this summer, it appears that options are available to meet firm load needs during normal summer conditions, as well as unusually hot weather conditions".
Conservation will be very important this summer.
Projected Power Plant Development
According to the Platts' NewGen, April, 2005, since 2001, 41,300 MW of new plants have been built in the Western United States. 12,600 MW of new plants in the West are currently under construction. 7,300 MW of new plants are located in California.
In Southern California, some of the major new plants include:
Calpine's Pastoria Power Plant, 250 MW - started up in May, another 500 megawatts in June, located in Bakersfield.
SCE's Mountainview Power Plant, 1,100 MW, located in San Bernardino (expected in operation closer to year-end),
LADWP's Haynes Plant, 575 MW new unit, located in Seal Beach (started operation)
City of Burbank's Magnolia Plant, 328 MW, located in Burbank (expected to start up in end of June)
City of Vernon's Malburg Plant, 120 MW, located in City of Vernon (expected in early fall)
Sempra's Palomar Plant, 570 MW, located in Escondido (expected in mid-2006)
Projected Power Plant Development
Power Plant Development Charts...click here to see larger view -- in PowerPoint
[click here to see larger image (PowerPoint, size: 468kb)]
Electricity generation plants' outages reported
On May 10, the Western Electricity Coordinating Council (WECC) reported that 16% percent or 24,476 MW of total WECC electric generation capacity was off-line.
On May 10, the WECC reported that 23 percent or 12,573 MW of total California and Baja California electric generation capacity was off-line. About 12 percent of the capacity off-line (1,547 MW) is served by SoCalGas and San Diego (SDG&E).
Current outages reported by the CA ISO and NRC include:
Mohave coal-fired Unit 1 (130 MW outage) and 2 (60 MW outage), in Nevada, started an unplanned outage on March 8.
Four Corner coal-fired unit 5 (405 MW outage), in New Mexico, reported a planned outage on April 22.
Palo Verde nuclear Unit 2 (1,270 MW outage), in Arizona, started a planned refueling outage on April 2.
Intermountain Power Plant coal-fired Unit 1 (900 MW), in Utah, started a planned outage on May 7.
Columbia Generating nuclear Station (1,158 MW), in Washington started a refueling outage on May 7. The unit should return to service on May 11.
San Onofre nuclear Unit 3 (1,108 MW), in Southern California, was shut down for a maintenance outage on May 5. The unit is now expected to return to service on May 10. The unit will go on line at 20% power (55 MWG) and ramp up at 9% per hour reaching full power on May 11.
Future Nuclear Plant Outages
Unit Plant Location MW Offline Date Offline Date Expected Back Online
Palo Verde Unit 1 Arizona 1270 9/30/2005 11/9/2005
SONGS 2 California 1180 1/3/2006 3/4/2006
SONGS 3 California 1180 4/1/2006 5/1/2006
SONGS 3 California 1180 10/16/2006 12/25/2006
Diablo Canyon Unit 1 California 1100 1/10/2006 2/19/2006
Palo Verde Unit 3 Arizona 1270 3/15/2006 4/24/2006
Electricity transmission facilities out of service
or with limited service reported
On May 10, the Western Electricity Coordinating Council (WECC) reported the following electricity transmission facilities out of service or limited that impact California:
From 0000-1500 the California Oregon Intertie (Path 66 - COI), a major transmission line that moves power from the Northwest to California, is limited to 4,350 MW north to south and 2,450 MW south to north due to outage of the BPA area resources. From 0500-1900 the COI is further limited to 3,000 MW north to south due to the Round Mountain-Table Mountain #2 500-kV line outage.
From 0000-1500 Pacific DC Intertie (Path 65 - PDCI), a major transmission line that moves power from the Northwest to Southern California, is limited to 2,720 MW north to south and 1,904 MW south to north due to BPA area resources. From 0500-1900 Round Mountain-Table Mountain #2 500-kV line is out of service but there is no additional limitation on the PDCI.
From 0000-2400 the Path 44, to San Onofre nuclear plant, is limited to 1,650 MW north to south due to the Mission-Miguel/Miguel-Sycamore Canyon limits.
Oil
Oil prices expected to stay high
(source: EIA's Short-Term Energy Outlook, May 10, 2005)
Monthly average WTI prices are projected to remain above $50 per barrel for the rest of 2005 and 2006.
Several factors have contributed to the recent high crude oil prices and are likely to keep prices at or near present highs:
Worldwide petroleum demand growth is projected to remain robust, despite high oil prices.
Expected growth in non-Organization of Petroleum Exporting Countries (OPEC) supplies is not expected to accommodate worldwide demand growth.
Worldwide spare crude oil production capacity has recently diminished. Only Saudi Arabia has spare production capacity.
Downstream sectors such as refining and shipping are expected to remain tight.
Geo-political risks, such as the continued insurgency in Iraq and political unrest in Nigeria and Venezuela, are expected to keep the uncertainty premium high.
Market Impacts
Hydro
The weighted average runoff forecast for the Western U.S. for Water Year 2005 is 81% of normal. Although this forecast is below average, it is higher than last year's runoff and much higher than the 2001 runoff.
On May 6, the Northwest River Forecast Center's updated runoff forecast was 70% of normal at the Dalles in January through July. Beneficial rains continued during April with warm temperatures. The warm temperatures and rain depleted an already deficient snowpack.
On May 9, the California Department of Water Resources (CDWR) predicted the runoff to be at California rivers 117% of normal in April through July.
Winter storms and the healthy Sierra snowpack they produced should help with hydroelectric power generation in the state this summer, especially in Southern California, utilities say.
On May 1, the Colorado River Basin's inflow for water year 2005 was forecasted to be 134 percent of average by the Colorado Basin River Forecast Center.
Weather
According to the National Weather Service, May 10, 2005, the outlook for May 16-20 called for above normal temperatures for most of the Western states, and mostly normal temperatures for the rest of the nation.
The National Weather Service is forecasting above normal temperatures in the Western U.S. for the period of June to September.
April temperatures were above average for most of the U.S. Heating degrees in Southern California were almost 16% below normal in April.
Economy
Real gross domestic product--the output of goods and services produced by labor and property located in the United States--increased at an annual rate of 3.1 percent in the first quarter of 2005, according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.8 percent.
_____
Related Info:
Some of these links point to resources outside our control. Use them accordingly. These links (except SempraNet items) are set up to open a new browser window. Close it to return here.
California Independent System Operator (Internet)
DOE Energy Information Administration (Internet)
FERC (Internet)
National Petroleum Council (Internet)
10-Day Temperature Outlook for the U.S. (Internet)
SNOTEL - River Basin Snow Content (Internet)
Northwest River Forecast Center (Internet)
Western Energy Market Update - available only to Sempra utilities and Corporate Center employees (via the CandI intranet)
_____
AI
