Markets

Hoping to take advantage of future volatility in the California gas and power markets, Aquila Inc. has formed a partnership with ArcLight Energy Partners Fund to purchase Houston-based Western Hub Properties LLC for $220 million. Western Hub is a natural gas storage development company that owns the proposed Lodi Gas Storage facility near Sacramento as well as rights to other potential storage sites. The acquisition is subject to the approval of the California Public Utilities Commission.

With the record levels of rig activity finally realizing an increase in natural gas supply, it is possible if the trend continues to see “a prolonged period of ‘weak’ natural gas prices” in the $2-3 range, according to Thomas Driscoll of Lehman Brothers. Supply growth, the current natural gas storage overhang, and weak demand could also lead to “lackluster” exploration and production share-price performance, the analyst warned.

California electricity costs and volumes in the spot market dropped dramatically in June and the first two weeks of this month, according to state officials releasing figures during a conference call last week initiated by the governor’s press secretary. The percentage of daily and hourly spot market purchases by the state has dropped to less than 10%, compared to 45% in May.

Most eastern markets drifted mildly lower Monday, with most declines in single digits and only a few barely surpassing a dime. The West tended to range from flat to moderately higher in the Rockies and Southwest basins, accompanied by larger California gains. It wasn’t that the West was so strong, sources said, but rather that the region was climbing back out of the deep price holes it had dug for itself Friday.

California electricity costs and volumes in the spot market dropped dramatically in June and the first two weeks of this month, according to state officials releasing figures Sunday during a conference call initiated by the governor’s press secretary. The percentage of daily and hourly spot market purchases by the state has dropped to less than 10%, compared to 45% in May.

The New York Independent System Operator (NYISO) is asking FERC to approve a market design in New York electricity markets based on an unforced capacity (UCAP) methodology, which it says will offer an incentive for generators to improve the efficiency of their generating assets. More broadly, the ISO expects the UCAP proposal to bring it one step closer to the development of a common installed capability (ICAP) market design among the various Northeastern ISOs.

More than one trader was more than a bit surprised at the price run-up in most markets Tuesday in two-day deals covering the Fourth of July holiday, which normally is considered one of the lowest demand periods of the year. Only Rockies/San Juan/Pacific Northwest points and a few Northeast citygates softened, in contrast with numbers elsewhere that ranged from flat to about 15 cents higher outside California and gains at California points that exceeded half a dollar.

High natural gas prices in the United States have energized spot trading in LNG shipments, with over half the cargoes received in the U.S. recently coming from spot sales, BP’s regional manager for the Americas and the Atlantic Basin said last week.

High natural gas prices in the U.S. have energized spot trading in LNG shipments, with over half the cargoes received in the U.S. recently coming from spot sales, BP’s regional manager for the Americas and the Atlantic Basin said last week.