text_combined: midmonth report early warning cera alert note following sent cera short term forecast prices alternate fuel pricing note price differential forecasts basin cera alert sent wed november 15 2000 title midmonth report early warning author n american gas team e mail category alert product line north american gas url http www cera com cfm track eprofile cfm u 5526 likewise 5 percent warmer normal scenario could decrease demand 1 7 bcf per day relative normal weather fuel switching natural gas markets tight significant pressure demand backed market residential commercial demand inelastic price short run leaves industrial demand power demand relief valve market winter expect plants capable burning residual fuel oil alternative gas loss 700 million cubic feet mmcf per day demand power generation relative last winter industrial consumers switch equivalent 500 mmcf per day gas gas prices act ceiling residual fuel oil prices much resid act floor gas december cera expects overall demand increase 4 5 bcf per day relative last december 14 4 bcf per day increase demand relative november increasing heating load offset somewhat fuel switching supply rebound pressure increasing demand lower storage inventories intense us supply beginning rebound recent steep decline us lower 48 capacity expected reverse late 2000 given soaring gas related rig count success reversing decline gulf mexico related combination ramp hickory tanzanite subsalt discoveries shelf adding recent startup muni field fields could add 0 5 bcf per day later 2001 response shallow water strong late 1999 turnaround drilling activity important capacity additions occurring deepwater gulf mexico 0 5 bcf per day 2000 2001 onshore led bossier sand play freestone county texas barnett shale play wise county texas powder river basin coal seam play increases drilling likely slow new deep land rigs construction shallow rigs refurbished cannibalized parts older rigs producers experiencing delays obtaining rigs supply quality rigs depletes drilling companies struggle round drilling crews regional markets wild winter west extremely cold weather west brought rockies prices close parity henry hub prices triggered early season spikes sumas north topock south pipeline maintenance el paso exacerbating regional demand pressure contributed topock differentials 2 00 per mmbtu tight pricing relationships henry hub san juan rocky mountains hold february significant widening differentials heating loads decline winter arrived earnest across north america start firm transportation service alliance delayed time december 1 nonetheless flows pipeline way cera estimates flows october averaged 450 mmcf per day november total climb 750 mmcf per day despite later published start date without alliance flows weather driven rebound midwestern demand relative november december last year keep prices chicago significant premium henry hub prices northeast differentials remain extremely strong exposed spikes throughout winter despite greater flows region atlantic canada year see table 3 cera outlook region follows rockies cold weather within region brought rocky mountain prices near parity henry hub prices break cold cold snap east likely widen differentials strong heating demand region keep differentials within 0 25 per mmbtu henry hub price cera expects december average differential 0 25 per mmbtu however differential expected show significant volatility based regional weather warm week rockies could still push differentials toward 0 50 per mmbtu san juan san juan prices continue hold close rockies prices winter significant pipeline capacity two regions heating loads rockies determine san juan henry hub differential extended cold weather rockies pulling prices close henry hub price cera expects december differential san juan basin average 0 20 per mmbtu permian mid continent unlike prices within rest west differentials henry hub mid continent permian basins likely trade within relatively narrow range winter supplies basins pulled either east west depending regional weather cera expects permian henry hub differential 0 11 per mmbtu mid continent differential 0 08 per mmbtu december chicago alliance flows chicago market running close 750 mmcf per day however onset heating season offset increased flows pushed chicago differentials near 0 15 per mmbtu relative henry hub despite delays completion vector pipeline cera expects strong pricing chicago continue december differentials average 0 25 per mmbtu northeast markets assuming normal weather expect see december basis new york relative henry hub 1 03 per mmbtu new england likely see prices 0 05 0 15 higher depending pipeline much increased basis differential caused fuel costs example 9 percent retention rate gulf coast new england last december would seen retention costs approximately 0 22 5 70 retention equates 0 50 despite additional volumes gas deliverable northeast atlantic canadian fields additional regional pipeline facilities deliver gas local markets additional 166 000 mmbtu per day potential demand compete capacity tightness month weather colder normal could see severe spikes basis similar seen january 2000 spikes could even exceed highs seen january depending severity cold snaps extent new electric loads realized canadian markets winter begins colder normal weather increased demand western canada felt east storage peaked west early october approximately 225 bcf last year level 6 bcf five year average even modest withdrawals since time storage inventories still estimated adequate meet winter needs easter canadian storage continued grow pushing levels 245 bcf 11 bcf last year well five year average eastward movement colder weather withdrawals likely begin higher level eastern storage useful expected reduction flows transcanada good news resulting cold normal freeze bodes well longer winter drilling season gas well completions expected reach 8 500 2000 likely even higher next year delays alliance commercial service date alliance delayed december 1 result combination problems clearing line delays completion aux sable liquids extraction plant delay vector lack supply pipeline flowing gas however volumes building since september estimated flows november average 750 mmcf per day transcanada taken full brunt alliance flows far northern border pgt remaining strong december see alliance flows build 900 1 000 mmcf per day modest reductions flows northern border pgt storage withdrawals likely keep transcanada reductions close 350 mmcf per day year year vector begins service eastern canada high prices strong pull west high demand pacific northwest also provided strength aeco aeco henry differential dropped high 0 30 low 0 40 result increased pull december differential expected average 0 50 per mmbtu resulting aeco average c 6 97 per gigajoule us 5 10 per mmbtu end follow url pdf version message associated tables cera autumn 2000 roundtable event dates agendas available http www cera com event account changes edit personal account information including e mail address etc go http eprofile cera com cfm edit account cfm electronic message attachments contain information cambridge energy research associates inc cera confidential may privileged unauthorized disclosure copying distribution use contents message attachments whole part strictly prohibited terms use http www cera com tos html questions comments webmaster cera com copyright 2000 cambridge energy research associates