14 Apr 2022 | 21:30 UTC

Competition for gas amid winter storm pushes Rockies spot prices up to two-month highs

Highlights

CIG, Rockies spot gas climbs above $6.70/MMBtu on April 14

Demand for Rockies gas could remain elevated in near term

Spot natural gas prices in the Rockies hurtled up to two-month highs in April 14 trading for next-day flows, as an ongoing late winter storm in the western half of the country has pushed regions to compete for supply.

Cash CIG, Rockies gained 30.50 cents to reach $6.77/MMBtu in April 14 trading, preliminary settlement data from S&P Global Commodity Insights shows. The pricing location has seen 98 cents of upward movement over five consecutive trade days of gains. Prior to this price rally, CIG, Rockies had only crossed the $6/MMBtu threshold once in the last 14 months.

Other Rockies locations have seen similar gains in recent trading sessions, with Northwest, Wyoming pool reaching $6.85/MMBtu and Cheyenne Hub climbing to $6.74/MMBtu in April 14 preliminary settlement.

Winter storm

A late winter storm swept across the western half of the United States April 10-14, boosting heating demand in the Pacific Northwest, Southwest, and Rockies simultaneously.

The National Weather Service issued winter weather advisories for large swaths of California, Oregon, Colorado, Wyoming, Idaho, Nevada and Montana April 10-12, with warnings still in place for parts of California, Oregon, Nevada, Idah, and Wyoming as of April 14.

Data from S&P Global shows that the average Rockies temperature has come in three- to 10-degrees below normal for April 10-14, while the average Pacific Northwest temperature has been observed at seven- to 11-degrees colder than average. The cold snap was less pronounced in California and the Southwest, which saw temperatures dip one to three degrees below normal.

Deliveries of Rockies gas to the Southwest jumped to 1.86 Bcf on April 13 and 1.69 Bcf on April 14, up from 1.2 Bcf on April 9. Similarly, Rockies-to-Pacific Northwest flows rose to average 871 MMcf/d for April 11-14, up from just 343 MMcf on April 8.

Prior to the winter storm, the bulk of Rockies deliveries flowed to the Midcon Market, in sharp contrast to year-ago dynamics when the Rockies flowed a majority of its gas to the Southwest.

Outlook

Even as temperatures in the Rockies, Pacific Northwest, and Southwest are expected to rise over the next seven days, a combination of planned field inventory shut-ins in SoCalGas and multiple pipeline maintenance projects could keep inter-regional demand for Rockies gas elevated.

Southern California sources gas primarily from the Permian, Canada by way of the Pacific Northwest, the Rockies, and storage. All but the Rockies is expected to see new limits over the next several weeks, which could lead to higher demand for Rockies gas.

With regard to storage, SoCalGas will restrict injections into and withdrawals from Aliso Canyon, the utility's largest gas storage field, for April 18-May 14.

Transwestern Pipeline, which transports gas into Southern California from the Permian, will have West of Thoreau capacity limited to 1 Bcf/d on April 19 and April 21, down from 1.24 Bcf/d. In addition to that maintenance work, El Paso Natural Gas continues to undergo repair work on Line 2000, which limits westbound deliveries out of the Permian on that pipeline system

Turning to Canadian inflows, Gas Transmission Northwest will limit Flow Past Kingsgate to 2.405 Bcf April 19-20, to 2.598 Bcf/d April 21-26, and 2.117 Bcf/d April 27-May 27. Kingsgate is one of the two main corridors for gas to flow south from Western Canada and into the Western United States.


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