Pacific Northwest water supply forecast to be near or below normal for 2012

The Northwest River Forecast Center's latest forecasts for 2012 show near- or below-normal water supply for April to September (the typical high hydro season). The map above shows observation stations in the watershed region of the Pacific Northwest with forecasts for the percent of normal water supply for that station. The colors of the stations represent forecasted water supply levels above normal (blue), near normal (green and yellow), or below normal (orange and red).

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Northwest hydroelectric output above five-year range for much of 2011

The 2011 hydro season began earlier and lasted significantly longer than in recent years, well into the summer months (see chart above). Hydroelectric generation in the Pacific Northwest is typically highest in the late winter and spring when river flows are high because of snowpack melt. This low-cost energy contributed to an average 18% decline in wholesale electricity prices compared to prices in 2010 at Mid-Columbia, a major Northwest wholesale pricing hub near the Washington-Oregon border (see chart below).

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Natural gas pipeline capacity additions in 2011

The U.S. Energy Information Administration estimates that U.S. natural gas pipeline companies added about 2,400 miles of new pipe to the grid as part of over 25 projects in 2011. New pipeline projects entered service in parts of the U.S. natural gas grid that can be congested: California, Florida, and parts of the Northeast (see map above). Only a portion of this capacity serves incremental natural gas use; most of these projects facilitate better linkages across the existing natural gas grid.

By convention, the industry expresses annual capacity additions as the sum of the capacities of all the projects completed in that year. By this measure, the industry added 13.7 billion cubic feet per day (Bcf/d) of new capacity to the grid in 2011. The six largest projects put into service in 2011 added 1,553 miles and about 8.2 Bcf/d of new capacity to the system. Much of this new capacity is for transporting natural gas between states rather than within states. Golden Pass, Ruby Pipeline, FGT Phase VIII, Pascagoula Expansion, and Bison Pipeline projects added 6.1 Bcf/d, or about 80%, of new state-to-state capacity.

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Ohio's fuel mix for power generation is changing

Although coal remains the dominant fuel for Ohio's electric power generation, accounting for 81% of total statewide generation during the first 9 months of 2011, the amount of natural gas-fired electric generation in Ohio is up markedly over the past decade (see chart above). Natural gas fueled 8% of Ohio's total generation during the first 9 months of 2011, up from only 1% during the 2001-2004 period.

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Warm weather, low natural gas prices hold down wholesale power prices this winter

Average daily power prices in the Northeast and Midwest from the beginning of November 2011 through the first week of February have been unusually low. The driving factor is warm weather. Warm winter weather decreases the demand for electricity, which puts downward pressure on prices. The warm weather also cuts demand for natural gas, both as a heating fuel and as a fuel for power generation. This acts to hold down natural gas spot prices, which in turn decreases the cost of generating power.

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Retail gasoline prices in the Rocky Mountains fall as U.S. average prices rise

The average price for a gallon of regular gasoline in the Rocky Mountain region fell from $3.35 per gallon just after Thanksgiving to $3.03 per gallon at the end of January, a drop of 32 cents. Over the same period, the average gasoline price for the United States as a whole increased 13 cents, from $3.31 per gallon to $3.44 per gallon. In general, gasoline prices in the Rocky Mountain area have been lower than the national average for much of the past year due to relatively low crude oil input costs to refineries in a region that is fairly self-sufficient in meeting its demand for gasoline and other petroleum products; refineries within the Rockies supply most of the regional demand.

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U.S. coal production rises slightly in 2011 amid lower domestic demand and higher exports

U.S. coal production increased slightly during 2011 for the second year in a row, rising about 0.4% from from its 2010 level, after falling sharply during 2009, according to EIA's weekly coal production report. Exports drove gains in production, as U.S. coal shipments to other countries climbed to their highest level in two decades, while domestic coal consumption for electricity generation fell.

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Natural gas and renewable shares of electricity generation to grow, coal still largest

Over the next 25 years, natural gas and renewable fuels gain a larger share of the United States generating mix of electricity, according Annual Energy Outlook 2012 (AEO2012) Early Release Reference case. Coal remains the dominant source of electricity, but its share drops from 45% in 2010 to 39% in 2035.

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U.S. natural gas inventories at end of winter heating season expected highest since 1983

The amount of U.S. working natural gas in underground storage at the end of March 2012 is expected to be the highest since 1983 for the close of the month, the traditional end of the winter heating season. A combination of warmer-than-normal temperatures this winter that reduced gas heating demand and rising domestic gas production has contributed to high inventories.

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Tight oil, Gulf of Mexico deepwater drive projected increases in U.S. crude oil production

EIA's Annual Energy Outlook 2012 (AEO2012) Early Release Reference case, providing updated projections for energy markets through 2035, projects increased domestic crude oil production driven by development of tight oil resources onshore and deepwater resources in the Gulf of Mexico. Tight oil refers to oil produced from shale, or other very low-permeability rocks, with horizontal drilling and multi-stage hydraulic fracturing technologies.

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