Projections calling for below-normal water levels in the Pacific Northwest create the prospect for higher natural gas loads this year to make up for the smaller amounts of hydropower expected in the region, according to a Barclays report on the region’s prospects.

The report said even if the region experiences an incremental increase in gas demand for power generation compared to last year, it will not have a “meaningful” impact on low gas prices.

After two near-record years for water levels in 2011 and 2012, the outlook for the Northwest this year is for below-normal levels. Water accumulation at the Dalles Dam on the Columbia River, for example, is expected to be about 89% of historic normal levels, compared to 143% in 2011 and 134% last year.

Spokane, WA-based Avista Corp. CEO Scott Morris last Tuesday said Avista’s hydroelectric system was about 87% of normal currently, but he cautioned that much could change in the next six weeks before early April when the levels for the year are more accurately forecast.

However, if current forecasts prove out, 2013 could be the 12th driest year in the region during the past 53 years, the Barclays report said.

Barclays said that in 2010 when water levels in the Northwest were 89% of normal, the average summer natural gas load throughout the region was 530 MMcf/d, compared to an average of 300 MMcf/d in the region last summer.

Thus, year-over-year changes could result in an additional 200-250 MMcf/d of gas demand this summer if the water levels stay around 85%-90% of normal, Barclays said.

“While not significant enough to cause a meaningful uptick in gas prices, the incremental demand in the Pacific Northwest will marginally alleviate the need for gas to displace coal in the East,” Barclays said.

Officials at the Northwest Power and Conservation Council (NWPCC) point out that different forecasts at this point can be made, depending on what part of the sprawling Columbia River Basin is being analyzed. The area where Avista’s hydro system is centered in the east-central part of the basin is among the farthest below normal, while northern areas and all of the basin in British Columbia is close to or less than 5-8% below normal.

“If projected hydro generation for a particular year is low, we will expect all resources, including gas-fired plants, to be operated more,” a NWPCC power analyst told NGI. “If the system is inadequate, we would not be able to build a new resource in that time frame but would depend more on market supplies to the extent that they are available.”

NWPCC relies on the Northwest River Forecast Center’s work, and in its latest report Feb. 12 most of the Columbia River Basin is colored green, meaning water levels are between 90% and 110% of normal, based on more than 50 different reporting stations.

“When you look immediately north of Avista’s area in Canada and northern Idaho and northwest Montana — the area we are most concerned about because it is the upper basin where there is the most potential value for the water coming down — they are all solidly in green,” said John Harrison, a spokesperson for NWPCC, who said the council’s planning work is focused on the Columbia River Basin exclusively.

“The upper basin looks very close to normal at this point, and that is the highest-value water for power generation because it will run through every dam. That looks good; southern Oregon, eastern Oregon and southern-eastern Idaho all look bad, but we don’t get a lot of water from there for power generation.”

After a relatively dry January, the rain and snow has picked up in the region this month, said Harrison, noting that it is still early for his organization to assess natural gas, efficiency and renewable needs to complement the hydroelectric supplies.

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