fw western energy markets stuggle along cera monthly briefing latest western markets forecaset cambridge energy lorna original message webmaster cera com enron sent friday january 26 2001 2 50 pm 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 pressure intensifying credit crisis precipitated power market crisis spilling gas markets storage levels within california critically low levels mild weather december early january allowed improvement positions pg plants simply curtailed operations response higher prices power side plants within california extremely limited ability burn alternative fuels emissions credits however plants outside california backup capability arizona public service purchased 400 000 barrels 1 sulfur residual fuel oil burn alternative gas given intense pressure gas oil absorb growth power loads california november early strong draw storage california raised questions winter deliverability within state combination low storage inventories high gas demand power generation continued high utilization rates import pipelines state keep pressure california prices february see table 6 despite efforts end users limit gas burns state face extremely high gas prices cera expects demand january state 650 mmcf per day year year basis february loads start decline residential commercial demand declines month however power loads remain strong actually climb january february hydroelectric generation falls demand support continued strong capacity utilization rates import pipelines california critically low storage inventories keep intense pressure gas prices within state february periods high demand prices likely reach back 15 00 20 00 per mmbtu range eventually heating loads settle storage draws slow toward end february differentials ease back 1 00 3 00 per mmbtu range balance cera expects topock differential february 3 00 per mmbtu see table 7 pacific northwest three factors combined strengthen malin prices past week forces extend price strength malin february first return colder winter weather moderate temperatures late december early january increasing heating loads power loads second lower normal hydroelectric generation increasing draw gas power generation season pull normally low third california power shortage drawing regional supplies supporting demand gas power generation pacific northwest demand expected hold flat relative january levels february slight increases gas demand power generation offsetting declines residential commercial demand sustained high demand levels despite relatively healthy northwest storage inventory levels keep malin prices well henry hub prices cera expects malin henry hub differential 1 00 per mmbtu february drop demand 200 mmcf per day expected march steep declines heating loads offset continued increases gas demand power generation however prices malin likely remain unusually strong spring part shortfall hydroelectric generation continues made draining reservoirs early drawdown limit availability hydroelectric generation spring early summer months low hydroelectric generation challenging storage refill season northern california sustain malin premium henry hub even spring rocky mountains volatility rocky mountain differentials continues differentials continue depend primarily local heating loads cooler weather supports loads prices within region periods warm weather drive steep declines rocky mountain prices relative prices henry hub february demand drop region although declines heating loads neighboring western regions offset increases gas demand power generation rockies remain primarily coal based result lower expected hydroelectric output little support loads within region increases supply cera expects supply increases 300 mmcf per day 2001 relative 2000 overwhelm available pipeline capacity region demand february rockies expected remain flat 2 9 bcf per day however within month demand loads drop substantially put pressure differentials toward end month cera expects average basis differentials henry hub february 0 75 per mmbtu widening trend continue march differentials henry hub eventually reaching 2 00 per mmbtu summer southwest prices san juan basin following rocky mountain prices regional demand loads dynamic likely continue february cera expects relatively flat demand february within southwest west whole significant drop expected march residential commercial heating demand wanes february continued strong demand loads within rockies southwest support prices san juan barring unusually warm weather cera expects differential henry hub 0 65 per mmbtu residential commercial loads decline sharply late february march prices san juan reflect ample supply cera expects declines san juan production 2001 declines limited strongest drilling activity conventional supplies basin decade however pressure rocky mountain supplies mean increased exports north san juan increased exports offset declines local production pipeline capacity constraints san juan mean wide san juan henry hub differentials pressure prices developing spring intensifying summer months western canada increasing supply aeco differentials henry hub ranged 0 60 per mmbtu 1 00 per mmbtu given strong demand united states export pipelines running near capacity winter even 1 3 bcf per day alliance pipeline running full end winter continued strong us demand keep export pipeline flows near capacity given flow levels cera expects differentials remain near 0 60 1 00 per mmbtu level reflecting cost transport transcanada available export capacity alberta february cera expects differential aeco henry hub 0 65 per mmbtu storage inventories western canada running historical average levels refill season manageable inventories nowhere near low us inventory levels inventories west expected fall slightly historical average levels end withdrawal season exports decline relative first quarter levels injection season begins spring cera expects differentials henry hub prices narrow sometime late spring focus alberta turns filling us winter demand refilling canadian storage supply side production turned corner western canada year year increases supply nearly 300 mmcf per day evident flat production levels 2000 relative 1999 increases year 2001 reach 350 mmcf per day given strong expected demand california west coast cera expects declines year year flows west pge gt nw overall flows reach 2 4 bcf per day 2001 increase 85 mmcf per day 2000 levels end follow url full report come shoot rapids us ceraweek 2001 shooting rapids strategies risks energy future houston february 12 16 2001 information register please visit http www 20 cera com ceraweek e mail category monthly briefing cera knowledge area western energy make changes cera com account go forgot username password go http www 20 cera com client forgot electronic message attachments contain information 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