west keeping fingers crossed cera alert forwarded lorna brennan et enron 07 27 2000 01 07 pm webmaster cera com 07 26 2000 10 57 49 pm lorna brennan enron com cc subject west keeping fingers crossed cera alert cera alert sent wed july 26 2000 title west keeping fingers crossed author zenker moritzburke snyder e mail category alert product line western energy url http www cera com cfm track eprofile cfm u 5526 strong western demand gas power generation extend rockies generation within region remains nearly coal fired regional pressures remain feature western gas markets september moderate summer weather reassuring injection rates nationwide recent weeks allowed easing prices henry hub however summer yet absolute storage inventories still critical levels higher gas prices likely resurface regional power market drivers august demand normal weather expected rise additional 7 percent nearly 5 500 amw average june levels see table 1 peak demand levels exceed june well coincident peak whole western systems coordinating council wscc 118 600 mw expected normal weather conditions 2000 2 7 percent increase weather muted 1999 peak california alone experience peak loads approximately 3 600 mw higher peak levels june available generation capacity west normal levels time year although coal fired plants responding record production year repeated short lived outages steady decline hydroelectric generation remove 3 900 amw west resource base compared july levels 6 800 amw since june although reservoir refilling operations temporarily removed significant quantities hydroelectric generation portions june given hydro operators economic interest maximizing peak production expense peak production loss capacity peak period lower levels august critical month heavily import dependent state california state drawing approximately 7 000 amw imports august meet demands peak periods cera expects level imports exceed 8 200 mw peak demand conditions southwest need supply native demand first limit ability export california lower year year hydroelectric production pacific northwest limit exports region pacific northwest cera expects pacific northwest demand august climb nearly 1 300 amw compared june levels water supply pacific northwest declined 91 percent normal levels lower columbia owing warmer normal weather june addition normal seasonal decline runoff levels drop 6 000 amw resource base compared levels june see table 2 generation plant operators responded growing native demand robust export market running coal gas fired generation high levels although less 4 000 mw gas fired generation currently available region running high utilization rates high energy demand california pacific northwest energy keep differentials low regions june pacific northwest prices respond kind volatility cera expects occur california august addition hot weather pacific northwest pressures regional energy reserves local prices rise keep energy region potentially causing prices pacific northwest move higher south california california entering peak load season relatively little generating capacity maintenance although hydroelectric output continues decline statewide reservoir storage levels remain high roughly 118 percent normal nevertheless declining hydroelectric production expected remove 730 amw compared hydroelectric production levels june normal summer weather push demand state 3 600 amw june levels high see table 3 california peak load expected exceed 57 000 mw compared peak load june approximately 53 500 mw 43 447 mw state iso system alone according estimate assuming normal plant outage rates demand level necessitate import 8 200 mw energy meet statewide peak even curtailing approximately 2 800 mw interruptible load available tight supply situations state precarious 6 percent capacity margin system peak extreme hot weather event could push state loads additional 3 000 mw outages likely additional imports available capacity limit 4 600 mw place summer energy exports pacific northwest northern california import limit pacific northwest southern california 3 100 mw rockies southwest august demand levels combined rockies southwest region increase slightly levels august 1999 climbing approximately 275 amw loads region unlike rest average wscc near normal last august even august loads increase demand 1 250 amw compared levels june year last year june supplies region sufficient meet peak demand conditions normal weather although growing loads rockies southwest region reduced ability supply neighboring regions energy peak demand conditions high loads driven hot weather keep region prices high differentials region california tight california tighter supply demand balances need price premium attract energy high capacity transmission ties rockies southwest california market 150 percent size rockies southwest market ensure prices rockies southwest stay close behind california prices whenever loads high california regional gas market drivers evidence pipeline bottlenecks emerged across west supply demand forces next year look likely intensify pressures since northern border expansion late 1998 narrow north south east west differentials across pricing points defined market summer continuing supply growth rocky mountains widened differentials rockies rest west topock increasing gas demand california high utilization rates resulted high premiums overall north american gas markets strong storage injection rates recent weeks allowed easing prices early july henry hub price 4 50 per mmbtu 4 00 per mmbtu however despite high injection rates supply demand balance absolute level storage inventories remain precarious summer higher nationwide power loads weeks come likely cut storage injections boost prices ongoing competition power storage supply support average henry hub price 4 20 per mmbtu august end summer differentials west hold near current levels pressure growing rocky mountain supply continue heating loads start climbing fall california high seasonal power loads continue august hot weather continued declines hydroelectric generation demand strength expected continue across west august demand gas climb 9 8 billion cubic feet bcf per day june 10 4 bcf per day buoyed increase gas demand power generation see table 4 california high gas demand power generation within california continue august cera expects increase state june demand levels 5 6 bcf per day 6 2 bcf per day august increase stems declines hydroelectric generation increases overall power loads total demand expected exceed last year demand level 1 2 bcf per day increase flows pipelines california reduce state storage surplus sustain high prices cera expects pipeline utilization rates august average 95 percent see table 5 cera expects august topock henry hub differential 0 45 per mmbtu see table 6 pacific northwest despite extremely high prices topock high demand california recently gas malin priced slight discount henry hub prices averaging 0 17 per mmbtu henry hub third quarter last year differential far third quarter year 0 15 per mmbtu hub week malin pricing 0 25 per mmbtu premium relative henry hub topock malin differential swelled 0 60 per mmbtu signaling intra california pipeline capacity constraints two factors pressured malin differentials early summer pressure rocky mountain aeco differentials prices two areas supplying pacific northwest pressure increasing supplies rockies beginning reach limits export capacity put downward pressure rockies prices limiting external market access aeco although export capacity province available almost excess capacity accesses eastern canada transcanada pipeline pipelines united states running near capacity transcanada limited ability discount interruptible transport available space expensive therefore last filled low early summer regional demand gas demand pacific northwest limited late spring early summer declines heating loads strong hydroelectric output even normal dry hydroelectric year seasonal runoff holds gas demand power generation may june even gas demand power generation begins climbing california increasing power loads already evident first factor likely endure heating season begins late fall regional demand rockies western canada begins climbing however gas demand power generation pacific northwest increased already summer continue climb end july august hydroelectric generation wanes added demand 200 million cubic feet mmcf per day june demand levels provide support malin prices limited support rockies aeco prices malin henry hub differentials expected average 0 05 per mmbtu henry hub price august rocky mountains pressure regional supplies within rockies continues exports region reach new highs differentials henry hub widened 0 70 per mmbtu although prices rest west gain support high power loads regional demand rockies expected remain near low seasonal levels august august demand expected average 1 2 bcf per day region approximately equal june 1 1 bcf per day total demand demand begins build september heating season begins october rocky mountain prices lag well prices rest west cera expects rocky mountain henry hub differential 0 60 per mmbtu august although narrowing rocky mountain differentials looks likely seasonal demand increases fall rapid build supply region likely keep differentials wide 2001 cera expects supply build year nearly 300 mmcf per day followed build 350 mmcf per day 2001 currently approximately 300 mmcf per day excess pipeline export exists region largest increment transcolorado san juan basin next summer capacity likely run close full export pipelines expand first likely expansion trailblazer differentials remain wide 2001 cera expects average annual differential henry hub 0 65 per mmbtu southwest differentials san juan permian basins gained considerable strength relative henry hub prices amid recent hot weather texas permian supplies pricing slight premium henry hub price san juan basin prices narrowed early july differential 0 35 per mmbtu differential less 0 20 per mmbtu cera expects demand southwest august 1 4 bcf per day increase june level 1 3 bcf per day larger texas market determine relative strength differentials two basins cera expects san juan differential 0 30 per mmbtu august permian basin differential 0 06 per mmbtu differentials rocky mountains san juan basin widened substantially past two months supply increases rocky mountains flows transcolorado increased monthly average 20 mmcf per day 100 mmcf per day june supply two regions following opposite paths rockies supply climbing rapidly san juan supply likely peaked decline slowly beginning year cera expects decline supply 30 mmcf per day 2000 relative 1999 additional decline 150 mmcf per day 2001 different outlooks wider rockies san juan differentials persist end follow url pdf version monthly briefing associated tables note url work please use following account changes edit personal account information including e mail address 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