The current flow dynamics into the US Northwest (USNW) and price spreads between its suppliers are driven by contracts signed in previous years, many in 2011 when the price spread between the Rocky Mountain region (CIG ROX) and Alberta (AECO) averaged just 10 cents and West Canada production was not driving AECO to historically low levels. In 2015, gas pipeline flows through Sumas are at capacity with Westcoast Pipeline flowing a YTD average of just under 1.1 Bcf/d to Northwest Pipeline. Kingsgate has been flowing at 1.9 Bcf/d YTD, but has a listed capacity of 2.8 Bcf/d. Kingsgate’s primary competition into the USNW is Ruby Pipeline, which brings in gas from the Rockies. GTN via Kingsgate and Ruby have volumes contracted at 1.9 Bcf/d and 1.1 Bcf/d respectively. Low prices at AECO have led to Kingsgate’s contracted volumes getting prioritized over those on Ruby. Ruby is essentially the marginal supplier for any additional demand in the Northwest beyond Kingsgate’s contracted volumes and Sumas’ capacity. This will work to drive the spread between West Canada and the Rockies apart for most of this winter.
The 220-MW Port Westward 2 is the only major natural gas fired power plant to come online in the past year in the PNW, and has provided reliable peaking power in its first ten months of operation. The facility generated 59 GWh/month, or 1.9 GWh/d, from May through July this year, based on EIA 923 data. This reflects an average utilization of 36%, peaking as high as 45% in July. Natural gas deliveries to the facility off Kelso Beaver indicate the facility operated on 70 days during May through July, or 76% of days, with deliveries averaging 15 MMcf/d on operating days and peaking at 30 MMcf/d. Assuming a heat rate of 8.5, a daily consumption of 30 MMcf/d indicates the facility has operated at 67% of capacity on peak days. Port Westward 2 was intended to provide peaking power to compensate for the variability in solar and wind, and likely provided peak power this summer to also fill in the power deficit from hydroelectric generation.
Northeast production declined nearly 0.5 Bcf/d from yesterday's gas day of 20.4 Bcf/d, the first time below 20 Bcf/d since 8/14, a 60-day period. Declines were seen on Dominion at the Natrium processing plant for 196 MMcf/d in West Virginia, several gathering and production meters on Tennessee Gas Pipeline in Northeast PA Dry by 132 MMcf/d, and lastly on National Fuel's system in Southwest PA for 212 MMcf/d decline. National Fuel's decline can likely be attributed to a three-day construction starting on Line N that shut-in several production meters and interconnect supply sources.