Total Demand in the Northeast increased 900 MMcf/d to 18 Bcf/d for Wednesday’s gas day, with cold weather dropping temperatures to 7 degrees F below normal in the region. This change was mostly a result of ResComm increasing 500 MMcf/d to 13.2 Bcf/d, with power burn demand mostly flat day-on-day, contributing very little to the demand gains. While demand is expected to drop 1.6 Bcf/d to 16.4 Bcf/d Thursday, prices at many Northeast hubs still saw some uplift. Algonquin city-gates rose 25 cents to settle at $3.30 for Thursday, likely due to Boston temperatures expected to stay in the low 40’s F despite other parts of the Northeast region seeing relief from the cold.
Net flows on Northwest pipeline have averaged minus 100 MMcf/d over the past week, hitting a peak of minus 205 MMcf/d on October 27. A negative value indicates that flows are still moving north-to-south. PNW power burn has slowly been climbing back up ever since the massive storm that rolled through in mid-October. Power in the northwest has more than doubled from a low of 235 MMcf/d on October 14 to 458 MMcf/d October 27. The uptick in gas consumption is likely a result of wind generation sharply falling 70 GWh/d over the same timeframe, which could translate into as much as 580 MMcf/d of gas equivalent consumption. Cooler weather is forecast to blanket the northwest during the first week of November, with population-weighted temperatures anticipated to reach a low of 47.7 degrees Fahrenheit on November 5. Rescomm demand is set to gain by around 300 MMcf/d, which may cause reduce backhaul flows on NWPL as gas remains in the region to meet demand.
Dawn is just over a month away from gaining an extra 650 MMcf/d of demand due to the TransCanada’s longhaul to shorthaul contract conversions. Vector Pipeline utilization last winter indicates that, if needed, the pipe should be able to the flow additional gas into Dawn this winter. Vector’s utilization to send gas from Michigan into Dawn at the US-Canada border averaged only 58% last winter, assuming a 1.76 Bcf/d capacity (the highest level of imports on Vector since the start of 2015). On March 6, 2016, Vector imported 1.5 Bcf into Eastern Canada, the highest level of the winter. This put Vector’s utilization at 84%. Utilization on the pipe dropped as low at 18% on December 17 -- the day utilization was at its lowest, Dawn traded at a discount of 18 cents to Chicago CG, compared to a 4 cent average premium over the summer. When imports were at the highest, Dawn was at just a 3-cent premium and demand was not particularly strong. This suggests that another factor, possibly contracts, drove imports so high this day. Given average Vector imports last winter of 1 Bcf/d, this would suggest the pipeline has the potential to deliver over 750 MMcf/d of additional volumes this winter over last, 100 MMcf/d over the expected new Dawn demand.