Declines

Economic declines, renewable energy and efficiency growth and ultimately greenhouse gas (GHG) emissions controls all are pushing down natural gas demand in the near term in California and further pushing back the need for liquefied natural gas (LNG) imports, according to a California Energy Commission (CEC) gas staff analyst reporting last Monday to a joint meeting of the CEC and California Public Utilities Commission (CPUC).

The worldwide economic slowdown continues to reduce global energy demand, leading to additional declines in energy prices, the Energy Information Administration (EIA) said in its Short-Term Energy Outlook for December.

Economic declines, renewable energy and efficiency growth and ultimately greenhouse gas (GHG) emissions controls all are pushing down natural gas demand in the near term in California and further pushing back the need for liquefied natural gas (LNG) imports, according to a California Energy Commission (CEC) gas staff analyst reporting Monday to a joint meeting of the CEC and California Public Utilities Commission (CPUC).

Energy price declines eventually will dampen the economics for various alternative energy projects, leaving the administration of President-elect Obama to rediscover natural gas as the “fuel of choice.” This was one of the insights Wednesday from a panel discussing “economical sources of supply” on the second day of the LDC Forum Rockies & West Conference in Irvine, CA.

After last week ended with two straight days of across the board declines, mixed price movement returned to the market Monday. Further drops dominated in the Gulf Coast and Northeast and to some degree in the Midwest. Quotes were mostly higher in the Midcontinent and West.

Even with the recent sharp price declines, U.S. natural gas prices should average around $10/MMBtu this year, the International Energy Agency (IEA) stated in its third annual Natural Gas Market Review. The review, which assessed projected changes in the global gas economy over the next five to seven years, studied 40 gas markets worldwide and found that rising demand for gas will enable liquefied natural gas (LNG) to further link markets on a global scale.

Even with the recent sharp price declines, U.S. natural gas prices should average around $10/MMBtu this year, the International Energy Agency (IEA) stated in its third annual Natural Gas Market Review. The review, which assessed projected changes in the global gas economy over the next five to seven years, studied 40 gas markets worldwide and found that rising demand for gas will enable liquefied natural gas (LNG) to further link markets on a global scale.

Cash prices were taking on a considerably more bearish tone Tuesday, with most points experiencing sizeable declines. The demand destruction from Hurricane Ike, along with generally mild to cool weather outside the interior West, was proving to have more influence on the market than the Gulf of Mexico shut-ins, which still totaled more than 6 Bcf/d.

Due to “dramatic” declines in wholesale gas prices for its Colorado combination utility operations, Minneapolis-based Xcel Energy Tuesday asked state regulators to approve a 14%, or $109 million, retail electric rate decrease effective Oct. 1. Xcel in August asked the Colorado Public Utilities Commission (PUC) to lower retail residential and small business gas utility rates by 54%.