Cold

Fueled by growing industrial and power demand for natural gas and the prospects for a cold winter, the Energy Information Administration (EIA) said it expects total gas consumption for the 2002-2003 heating season to rise 12% from a year ago to average 73 Bcf/d. This will prop up spot gas prices during the fourth quarter of the year and into the early part of 2003, but “severe price spikes are not likely” due to the gas cushion in storage, the agency reported.

Pushed by growing industrial and power demand for natural gas and the prospects for a cold winter, the Energy Information Administration (EIA) said it expects total gas consumption for the 2002-2003 heating season to rise 12% from a year ago to average 73 Bcf/d. This will prop up spot gas prices during the fourth quarter of the year and into the early part of 2003, but “severe price spikes are not likely” due to the gas cushion in storage, the agency reported.

All of the climate trends pointed to this past winter as being especially cold, and the warm weather completely “baffled” one of the leading meteorologists in the country. However, the warm outcome only pointed to how difficult long-term seasonal forecasting is and how much is still being learned in making predictions, said Jon Davis, the chief meteorologist for Salomon Smith Barney on Wednesday at the GasMart/Power 2002 conference in Reno.

Citing the “extremely cold weather” forecast for its market area, CIG declared a Strained Operating Condition that took effect Friday until further notice. The pipeline anticipated “very limited ability to handle imbalances caused by variations between scheduled receipts and deliveries and actual gas flow,” especially during the weather conditions that had been predicted for Friday and Saturday. As of Friday CIG did not anticipate any need to issue an OFO as long as receipt shortage or delivery overage imbalances did not occur.

Xcel Energy’s board has signed off on plans to commence an exchange offer under which Xcel Energy would acquire all of the outstanding publicly held shares of its subsidiary, NRG Energy Inc. Xcel Energy already owns 74% of NRG. More broadly, Xcel Energy laid out an ambitious plan for NRG this year, including the unloading of approximately $1.9 billion of existing assets, most of which are based in the international arena.

On the heels of a statewide cold snap fostering near-record natural gas send-outs late last month, Pacifiic Gas and Electric Co. last week reported that its retail natural gas rates are down by 64% from their record high a year ago in the midst of California’s energy price/supply crisis. The average retail bill expected this month is about $41, based on a 27 cents/therm wholesale cost, compared to average bills for February 2001 of $113, based a $1.28/therm wholesale cost.

On the heels of a statewide cold snap fostering near-record natural gas send-outs last week, Pacifiic Gas and Electric Co. Monday reported that its retail natural gas rates are down by 64% from their record high a year ago in the midst of California’s energy price/supply crisis. The average retail bill expected this month is about $41, based on a 27 cents/therm wholesale cost, compared to average bills for February 2001 of $113, based a $1.28/therm wholesale cost.

WSI Corp.’s weather forecast for February to April calls for warmer-than-normal temperatures in most of the western half of the country (e.g., Phoenix, Seattle, Denver, Minneapolis, Dallas, Kansas City) and the Southeast (e.g., Atlanta, Raleigh, Miami), but cooler-than-normal temperatures are expected in the Northeast and Great Lakes regions (e.g., Chicago, Cleveland, New York, Boston, Philadelphia, Washington), and the major cities along the California coast (e.g., Los Angeles, San Francisco).

With winter finally arriving after a string of eight weeks of warmer than normal weather, gas demand is on the rise but probably not enough to put a dent in the storage surplus compared to levels last year, according to experts. Withdrawals during this period last year were substantial and continue to be difficult to match.