Recent Warm Temperatures in the Pacific Northwest Might Affect Hydro Supply in the Summer.
Warmer-than-normal temperatures in the Pacific Northwest this week, as well as a warmer-than-normal forecast over the next two weeks, might shorten this year’s peak hydropower season in the Pacific Northwest, according to recent analysis by BENTEK Energy LLC (Bentek). While the most recent forecast from the Northwest River Forecast Center for hydro levels are well above normal (although still less than last year’s extremely strong hydro season), the warm temperatures might cause snowpack in the region to melt off more quickly than it otherwise would.
Hydropower makes up the majority of generation in the Pacific Northwest. Hydropower levels are typically stronger during the spring, when snowpack melts off. Last year, abundant supplies led the Bonneville Power Administration to issue curtailments on thermal and wind generation in order to use excess supplies of hydropower. (If excess water is not used, and instead runs off into dam spillways, it may damage ecosystems.)
(For the Week Ending Wednesday, May 16, 2012)
- Natural gas prices remained above $2.30 per million British thermal units (MMBtu) over the report week (Wednesday to Wednesday) at most of the country’s trading locations. The Henry Hub price moved within a 5-cent range for much of the week before rising sharply, closing at $2.50 per MMBtu yesterday (up 14 cents for the week).
- The natural gas futures market trended higher over the week. At the New York Mercantile Exchange (NYMEX), the June 2012 natural gas contract gained 15.3 cents per MMBtu to close at $2.618 per MMBtu yesterday.
- Working natural gas in storage rose last week to 2,667 billion cubic feet (Bcf) as of Friday, May 11, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 61 Bcf for the week positioned storage volumes 774 Bcf above year-ago levels.
- The natural gas rotary rig count, as reported by Baker Hughes Incorporated on May 11, fell by 8 to 598 active units, the first week since April 2002 that the count dipped below 600. Meanwhile, oil-directed rigs increased by 17 to 1,372 units.
The Henry Hub day-ahead price generally rose during the week, dipping modestly on Tuesday before climbing sharply yesterday to close the week at $2.50 per MMBtu, up 5.9 percent. The fairly narrow trading range over most of the week reflected a relatively flat cash market, with the price fluctuating between $2.36 and $2.41 per MMBtu. Yesterday’s price represents the first $2.50 or higher close since late February, and is 68 cents higher (37.4 percent) than the year’s low of $1.82, recorded on April 20.