As of the September 14, 2018 report week, working natural gas inventories in EIA’s Pacific region—California, Oregon, and Washington—totaled 255 billion cubic feet (Bcf), down 44 Bcf (15%) from last year’s level at this time, despite an inventory increase of nearly 20 Bcf increase in inventories in Southern California. EIA’s new Natural Gas Storage Dashboard shows that overall Pacific region storage capacity utilization is about 62%.

Sources: U.S. Energy Information Administration based on the Natural Gas Storage Dashboard.

The Pacific region has the smallest level of natural gas storage capacity based on EIA’s two measures of capacity: design and demonstrated maximum (for the years 2012–17). Meeting summer demands for electricity generation and building stocks for the upcoming winter depend on having sufficient working gas levels in the Pacific region. In addition to these seasonal needs, working gas in the Pacific region helps balance daily and hourly demand changes because the Pacific region relies on intermittent renewable sources of electric generating capacity, such as wind, photovoltaic solar, and hydroelectric.

The Pacific region’s natural gas inventories were lower than normal this summer because of several factors:

Temperature-driven cooling loads. Warmer-than-normal temperatures during parts of summer 2018 in the Pacific region contributed to increased natural gas consumption by electric generators to meet air-conditioning loads. California recorded its hottest average temperatures in July since the National Oceanic and Atmospheric Administration (NOAA) began collecting this temperature information in 1895. As a result, natural gas use by electric generators served by Pacific Gas & Electric’s (PG&E;) distribution system was up 31% year-to-date (January 1 to September 24), according to S&P; Global Platts. Adjacent states also posted some of their warmest July temperatures ever.

Source: National Oceanic and Atmospheric Administration, National Climate Report - July 2018.
Note: Higher ordinal numbers in the map reflect hotter years in the 1895—2018 temperature history for July. A value of 124 reflects the hottest year recorded.

Reduced hydroelectric availability. Hydroelectric generation in the Pacific Northwest has been down 3% year-to-date (January1—September 20) in 2018 compared to the level over the same period in 2017, according to S&P; Global Platts. Hydroelectric generation in the California Independent System Operator (CAISO) service area, which covers most of California, decreased 33% in 2018 (January through August) compared with the same period in 2017. Lower hydroelectric generation contributed to greater natural gas use and reduced natural gas injections into storage.

Pipeline constraints. Ongoing Southern California Gas Company (SoCalGas) natural gas pipeline outages affected SoCalGas’s ability to receive natural gas from interstate natural gas pipelines and reduced the ability to buy natural gas at the Southern California border and likely contributed to higher natural gas storage withdrawals in the Pacific region. Moreover, pipeline constraints in Southern California elevated the spot price of natural gas at the Southern California Citygate to average $9.18 per million British thermal units in July and August, which raised the locational marginal prices for electricity in the region. Those higher electricity prices, in turn, created incentives for generators in Northern California to burn natural gas and transmit electricity to the South—reducing the amount of natural gas available to inject.

Increasing solar penetration. The CAISO power grid needed flexible ramping services or generators that could start quickly during the summer of 2018 because of the continued growth of solar generating capacity and the lower availability of in-state hydroelectric generation. Average solar generation for heavy load hours in CAISO was up about 12% so far in 2018 (January – September) compared with average solar generation for the same period in 2017, based on EnergyGPS data. Consuming natural gas to help meet these flexible generation or ramping needs reduced the amount of natural gas available for injection.

In the Southern California Daily Energy Report posted on September 12, EIA indicated that the 19 Bcf increase in natural gas stocks in Southern California was the result of the California Public Utility Commission’s directive to the SoCalGas to increase working gas capacity at its Aliso Canyon storage complex from about 24 Bcf to 34 Bcf. The Aliso Canyon storage facility had a working gas capacity of about 86 Bcf before the methane leak accident in October 2015.

Southern California Gas Company's (SoCalGas) working natural gas inventory was 77.7 billion cubic feet (Bcf) on September 11, 2018, up 20 Bcf or about 34% since early September 2017. Natural gas stocks in Southern California are now the highest since January 2016.

SoCalGas' demand for natural gas peaks between December and February, despite the region's generally mild winter climate. Increasing its natural gas inventory will help SoCalGas meet winter energy energy in Southern California.

SoCalGas natural gas stocks are higher now than a year ago because of several factors:

• More access to natural gas storage capacity. On July 2, 2018, the California Public Utility Commission (CPUC) directed SoCalGas to increase its working natural gas inventory at the Aliso Canyon storage facility to 34 Bcf, representing more than a 9 Bcf increase in overall capacity. The CPUC ordered the increase in working gas at SoCalGas's Aliso Canyon complex to increase natural gas supplies that may be required for the upcoming winter.
• Lower natural gas consumption. SoCalGas' natural gas consumption so far this summer (April 1 – September 10) has been about 7% lower in 2018 compared with natural gas consumption for the same period in 2017. Also, natural gas used for power generation in California is down about 6% so far this summer.
• Offsets to account for pipeline outages. SoCalGas has carried a bigger working gas reserve to help meet summer demand and to build stocks for winter partly as a result of reduced natural gas pipeline receipt capacity this summer because of maintenance and repairs.

Source: EIA Southern California Daily Energy Report.

Daily maximum temperatures across Southern California exceeded historical observations at 17 NOAA weather stations on July 6, 2018. The extreme heat led to high levels of electricity demand for air conditioning throughout the region, particularly in Los Angeles where the Los Angeles Department of Water and Power (LADWP) balancing authority experienced power outages for thousands of customers. The sharply higher electricity demand was met, in part, by a combination of increased natural gas-fired electric power generation and electricity imports into the LADWP service territory.

Source: U.S. Energy Information Administration EIA-930 data
Notes: Daily peaks for generation and demand do not necessarily correspond to the same hour. However, for July 6, 2018, the peaks shown above do correspond to the same hour.

The heat wave resulted in high electric power demand, reaching an hourly peak of 6,979 megawatthours (MWh) on July 6, 2018. This level was the highest hourly peak since September 1, 2017, when it reached 7,061 MWh, according to EIA-930 data. The peak-hour trade imbalance (electricity imports minus electricity generation) for July 6, 2018 was 1,017 MWh.

Daily average temperatures with locations of record daily-high temperatures for July 6, 2018

Source: U.S. Energy Information Administration based on data from the National Oceanic and Atmospheric Administration (NOAA)

Sempra Energy subsidiaries Southern California Gas Company (SoCalGas) and San Diego Gas and Electric distribute much of the natural gas used in Southern California. SoCalGas continues to face pipeline constraints this summer, which limit the amount of natural gas that can be imported into the region. Natural gas is typically injected into underground storage in Southern California during the summer, ahead of higher winter demand for space heating. On July 3, 2018, SoCalGas issued a system-wide curtailment watch in anticipation of increased demand for natural gas for electric power generation. Ultimately, however, no curtailments were announced on the SoCalGas electronic bulletin board system, and the watch ended on July 9, 2018.

SoCalGas' total system deliveries (sendout) of natural gas reached 2.8 billion cubic feet (Bcf) on July 6, slightly less than the 2.9 Bcf day-ahead forecast. During July 6 and July 7, 2018, SoCalGas withdrew 336 million cubic feet (MMcf) of natural gas from underground storage to meet demand. Although summertime withdrawals can occur, SoCalGas is working to maximize storage injections to meet peak demand for the upcoming winter. Recently, the California Public Utilities Commission authorized SoCalGas to maintain up to 34 billion cubic feet (Bcf) of natural gas at the Aliso Canyon storage facility in anticipation of winter demand, an increase of 9.4 Bcf from the level previously authorized for that facility.

Day-ahead natural gas prices at the SoCal Citygate reflected both the recent increase in natural gas demand for power generation and the need to withdraw natural gas from storage. Delivery-day prices for June 6, 2018, reached $8.28per million British thermal units ($/MMBtu), the highest price for natural gas at the SoCal Citygate since the beginning of the injection season, traditionally April 1.

On July 2, 2018, the California Public Utilities Commission (CPUC)—the principal regulator for natural gas distribution companies in California—directed the Southern California Gas Company (SoCalGas) to maintain a working gas capacity of up to 34 billion cubic feet (Bcf) at the Aliso Canyon storage facility. Previously, CPUC had limited SoCalGas to a total working gas capacity at Aliso Canyon of 24.6 Bcf. CPUC increased Aliso Canyon’s allowed working gas capacity because of the high level of pipeline outages on the SoCalGas system, the increased flexibility required for SoCalGas to effectively respond to core and non-core gas needs in a potential 1 in 10-year demand event, and concerns about having adequate natural gas supplies heading into winter 2018–19. CPUC did not change the protocols SoCalGas must follow to use the Aliso Canyon storage complex.

Source: U.S. Energy Information Administration, based on SoCalGas ENVOY electronic bulletin board system and California Public Utilities Commission.

SoCalGas can now increase its effective working gas capacity from 74 Bcf to about 83 Bcf. On July 3, total working gas held by SoCalGas was about 63 Bcf, according to EIA’s Southern California Daily Energy Report, or more than 11 Bcf more than in 2017 at this time.

The current National Oceanic and Atmospheric Administration temperature outlook heading into the weekend calls for temperatures in Los Angeles of more than 100 degrees with even higher temperatures inland. Rising temperatures will likely result in more natural gas flows on the SoCalGas pipeline network and potential net natural gas storage withdrawals to meet the higher demand for natural gas on the SoCalGas system.

Forecast of maximum temperatures in Southern California for July 6, 2018

Source: National Weather Service, National Oceanic and Atmospheric Administration

Sources: Natural Gas Intelligence (prices), Bureau of Labor Statistics (consumer price index)

The spot natural gas price in Southern California reached $19.58 per million British thermal units ($/MMBtu) on February 20, 2018—the highest price since 2000, and a record for the SoCal Citygate pricing point—according to data from Natural Gas Intelligence. The recent high price occurred during a period of moderately cold weather that raised demand, but not to levels as high as in other recent winters. The record price occurred because Southern California Gas Company (SoCalGas) is less able to meet peak demands this winter than in recent years as a result of the following factors:

• Ongoing unplanned maintenance on supply pipelines
• Reduced ability to draw on SoCalGas storage facilities

Source: U.S. Energy Information Administration based on National Oceanic and Atmospheric Administration

Weather and Demand. Temperatures in coastal Southern California reached an average of 46 degrees Fahrenheit (℉) on February 20, 2018, or 8℉ lower than the 1981–2010 average for that day. Daily average temperature deviations of this magnitude during winter months are not uncommon in Southern California, and each of the previous five winters (December through February) had days of colder daily average temperatures compared with the 2017–18 winter.

With colder-than-normal temperatures in Southern California, demand for natural gas in the region increased, straining the SoCalGas distribution system. SoCalGas is under reduced operational capacity for importing natural gas into the state through key delivery corridors and for withdrawing natural gas from underground storage facilities.

Notes: Receipt capacity and activity are the summation of the SoCalGas Southern, Northern, and Wheeler Ridge Zones (California Production Zones are not included). Maximum receipt capacity can vary from day to day, and larger reductions indicate more significant pipeline constraints.
Source: SoCalGas ENVOY

Reduced Pipeline Supply. Natural gas pipeline flows through SoCalGas's Northern Zone—a key corridor for bringing natural gas from the southeastern California border to markets across the state—are limited to 870 million cubic feet per day (MMcf/d) because of ongoing unplanned maintenance and outages on two major pipelines (Line 3000 and Line 235-2). This limitation constrained the ability of SoCalGas to import natural gas into the region. On February 20, 2018—when delivery-day prices reached $19.58/MMBtu— flows through the Northern, Southern, and Wheeler Ridge Zones reached the maximum operating capacity of each zone.

Note: Downward inventory adjustments of 5.5 Bcf on February 24, 2014 and 4.7 Bcf on June 20, 2016 are not shown as storage activity.
Source: SoCalGas ENVOY

Reduced Storage Flexibility. SoCalGas has less ability to draw from regional natural gas storage primarily because of ongoing limitations at the Aliso Canyon facility. Planned and unplanned maintenance at the Goleta, Honor Rancho, and Playa del Rey storage facilities have also limited SoCalGas's access to inventories. With the increased demand for natural gas following colder-than-normal weather on February 20, 2018, natural gas withdrawals from the SoCalGas inventory approached operating capacity, according to SoCalGas ENVOY.

During this period of colder weather, SoCalGas continues to issue system-wide curtailments for electric generation customers. Receipts in the Northern Zone are expected to continue to be limited because of ongoing maintenance, and on February 25, March 1, and March 5, 2018, SoCalGas withdrew 0.08 Bcf, 0.24 Bcf, and 0.21 Bcf, respectively, from the Aliso Canyon storage facility, according to SoCalGas ENVOY.

Between November 1, 2017 and February 15, 2018, natural gas consumption in Southern California averaged 8%, or 0.3 billion cubic feet per day (Bcf/d), less than the same time period in the prior year and 10% below the previous 5-year average.

Natural gas consumption in Southern California, particularly by homes and commercial businesses, varies seasonally. During peak winter months when natural gas use for space heating is common, residential and commercial consumption averages about 2 Bcf/d. So far this winter, residential/commercial natural gas consumption in Southern California has been lower than in recent years, averaging about 4% lower in November and December 2017 compared with the same time period in 2016.

Southern California has experienced warmer weather this winter than in previous years, as measured by the accumulation of heating degree days (HDD). Warmer weather translated into reduced natural gas needs to heat homes and businesses, lowering residential and commercial natural gas consumption. Since November 2017, Southern California has accumulated 41% fewer HDDs than over the same time period in the previous year, and is less to date than any of the past 5 years.

Natural gas consumption for electric power generation in Southern California tends to peak in the summer when demand for air conditioning is higher, but demand for natural gas by electric power is less variable than the residential and commercial sectors and can average more than 2 Bcf/d in winter months.

Over the past several years, natural gas use for electric power generation has been decreasing throughout California for several reasons:

• Increased solar generation—solar output in California Independent System Operator’s (CAISO) SP-15 region has increased 26% in the period since November 1, 2017 compared to the same time period the previous year, according to EnergyGPS
• Ability and economic incentive to import electricity into Southern California
• California greenhouse gas emissions targets encouraging alternatives without greenhouse gas emissions
• Improved efficiency of the natural gas-fired electric generator fleet

As a consequence of the combination of these factors, the share of natural gas in California’s electricity mix has decreased relative to solar and other renewables.

Unlike in much of the United States, natural gas consumption for electric power generation in California tends to be highest in the morning and late afternoon hours and much lower in the middle of the day. This pattern developed as solar electricity became a more significant contributor to overall generation. Southern California electricity customer demand ramps up and down through the day more slowly than solar output as the sun rises and sets.

With less overall demand for natural gas in Southern California, storage activity at SoCalGas facilities has been less variable than in past years, particularly withdrawals. Consequently, total natural gas inventories at SoCalGas storage facilities are about 15 Bcf higher than they were at this time last year, or 58 Bcf.

Natural gas pipeline outages on the Southern California Gas Company (SoCalGas) system continue to affect how SoCalGas imports natural gas into Southern California along key corridors. On January 17, 2018, new unplanned remediation work on a major pipeline reduced capacity by 270 million cubic feet per day (MMcf/d) through a key corridor on the SoCalGas distribution system. At the end of December 2017, SoCalGas completed repairs and maintenance on its natural gas pipeline network, providing more redundancy, increasing capacity by 740 MMcf/d, and helping SoCalGas manage its winter-peaking needs.

SoCalGas completed remediation work on Line 4000—restoring 740 MMcf/d—and partially repaired Line 235-2—restoring 270 MMcf/d—on December 22, 2017. However, on January 17, 2018, new unplanned remediation work on Line 4000 reduced capacity by 270 MMcf/d with no completion date specified. An additional 530 MMcf/d of SoCalGas capacity will be available when Line 235-2 is fully restored, although no completion date has been specified yet.

From December 23, 2017, through January 15, 2018, daily natural gas receipts in SoCalGas’s Northern Zone averaged 11% higher than on December 22, 2017, when the first major repairs were completed. Over the same period, total receipts on the SoCalGas system decreased by an average of 5%, while total system sendout (consumption) decreased by 22%.

SoCalGas imports natural gas into Southern California through four main corridors, or zones: the Northern Zone, the Southern Zone, the Wheeler Ridge Zone, and a collection of California Production areas, where natural gas is produced within the state. From January 1 through August 31, 2017, the Northern Zone accounted for 41% of natural gas imports into Southern California, and the Southern Zone and the Wheeler Ridge Zone accounted for 30% and 28%, respectively. The remainder was received from the California Production areas.

These two major pipeline outages in the SoCalGas Northern Zone—Line 4000 on September 18, 2017, and Line 235-2 on October 1, 2017—had reduced flows from the California–Arizona border through Needles, California, to markets across the state. These disruptions on the SoCalGas distribution system reduced SoCalGas’s flexibility to manage its system, constrained regional imports of natural gas into the Southern California market, and contributed to sourcing natural gas along alternate routes.

The Northern Zone was already operating at a reduced capacity before the outages on Line 4000 and Line 235–2 occurred. Since April 2016, remediation work on Line 3000 has limited receipts in Topock, and since February 2017, Topock has received no natural gas. When Line 4000 was taken out of service for unplanned maintenance starting on September 18, 2017, capacity through the Northern Zone was further reduced by 740 MMcf/d. On October 1, 2017, Line 235-2 (which provides redundancy to Line 4000) ruptured near Newberry Springs, curtailing receipts at Needles.

Prior to the Northern Zone pipeline outages, the Southern Zone had been operating at reduced capacity because of a voluntary pressure reduction on Line 2000. The pressure reduction limited receipts at the Blythe and Ehrenberg receipt points by a total of 202 MMcf/d starting in January 2, 2015. After the Line 4000 and Line 235-2 outages, however, receipts in the Southern Zone increased—primarily through the Ehrenberg receipt point—which largely offset the loss of capacity in the Northern Zone. On several days following the Line 235-2 outage, SoCalGas’s natural gas receipts at Ehrenberg reached maximum operating capacity.

Another result of the combination of reduced natural gas border receipt capacity in the Northern Zone and ongoing capacity limitations in the Southern Zone, SoCalGas increased natural gas supplies from its generally underused Otay Mesa receipt at the U.S.-Mexican border near San Diego. SoCalGas increased receipts at Otay Mesa to about 130 MMcf/d from October 19 through November 11, 2017, until a temporary natural gas quality issue forced SoCalGas to curtail these receipts. When the issue was resolved on December 1, 2017, Otay Mesa natural gas receipts rose once again to average about 130 MMcf/d from December 2, 2017, to January 15, 2018.

Receipts in the Wheeler Ridge Zone (which had been operating at maximum capacity) and in the California Production areas remained about the same following the outages in the Northern Zone.

Typically, natural gas consumption for residential and commercial use in Southern California peaks in the winter months. Most of the demand in the SoCalGas service area lies west of the Northern Zone, with the highest rates of consumption in the Southern California coastal region (see map).

EIA continues to provide ongoing commentary in the Southern California Daily Energy Report on the effect these pipeline outages and several other unrelated, overlapping infrastructure and energy-related issues. These issues have affected SoCalGas’s ability to receive and deliver natural gas to customers and have resulted in natural gas market price volatility.

Four wind-driven, mostly uncontained wildfires in Southern California may pose additional challenges to the energy system in the region because of the possible loss of electric transmission capability in the path of these fires. As discussed in this blog on December 5, 2017, the Southern California energy system is operating at reduced flexibility due to a mix of natural gas pipeline outages, storage field limitations, and planned electric transmission line maintenance. We will post updates on these conditions as needed.

In addition, EIA is monitoring the status and path of fires in Southern California on the Energy Disruptions map.

On December 6, 2017, the California Independent System Operator (CAISO) announced that it would increase the range of real-time, cost-based bids they expect from electricity generators to increase the reliability of the natural gas-fired electric generation needed to manage its system due to stress arising from energy delivery issues and the current wildfires near Los Angeles.

CAISO is re-instating scalars, or adjustments, to the natural gas commodity price index, effectively adders applied to the natural gas commodity price used to calculate generator commitment costs and cost-based energy bids in CAISO’s real-time market. CAISO has authority from the Federal Energy Regulatory Commission to implement natural gas price scalars until November 30, 2018.

CAISO increased the range of real-time, cost-based bids they expect from generators due to reliability issues outlined in the Aliso Canyon Winter Risk Assessment Technical Report 2017-18 Supplement as well as Southern California wildfires that may affect the reliability of the energy system.

Since early September 2017, many unrelated issues have affected the ability of the Southern California Gas Company (SoCalGas) to receive, store, and deliver as much natural gas for its customers as in the past. These issues include planned and unplanned natural gas pipeline outages, local natural gas storage use restrictions, operational restrictions on regional electric transmission, and other infrastructure issues. Together, these events have had an effect on the SoCal Citygate benchmark natural gas price, the price for natural gas deliveries to the greater Los Angeles market inside of SoCalGas's service territory.

The SoCalGas system is the main local distribution company serving Southern California.

SoCal Citygate spot prices reflect recent high daily-average and monthly-average differentials (basis) to U.S. benchmark prices for natural gas at Henry Hub, Louisiana, despite year-over-year decreases in aggregate demand on the SoCalGas system. The increased price differences have resulted from the cascading pipeline restrictions. In the November 9, 2017 Southern California Daily Energy Report commentary, EIA reported how warmer-than-normal weather this fall has contributed to natural gas spot price volatility.

Natural gas consumption (sendout) on the SoCalGas system was much lower than in prior years during the period between September 1 and December 4, 2017 (upper left chart). Even with episodes of much warmer-than-normal weather this fall, overall natural gas demand on the SoCalGas system was 7% lower than the same period in 2016.

Despite lower natural gas demand, the daily average spot price at the SoCal Citygate from September 1 through December 4, 2017 averaged about $0.72 per million British thermal units ($/MMBtu) higher than prices at the Henry Hub. By comparison, prices at SoCal Citygate averaged about $0.01/MMBtu lower than the Henry Hub over the same time period in 2016, and the 2009–2016 SoCal Citygate basis to the Henry Hub for September 1 through December 4 averaged about $0.20/MMBtu.

After reaching an all-time record basis of $9.65/MMBtu on October 24, 2017 because of periods of much warmer-than-normal weather combined with these infrastructure constraints, the spot price of natural gas at the SoCal Citygate has exceeded the spot price of natural gas at the Henry Hub by more than $1.00/MMBtu on 17 days between October 25, 2017 and December 4, 2017 (upper right chart). As of December 4, the spot price of natural gas at the SoCal Citygate was about $4.24/MMBtu, $1.40/MMBtu higher than the Henry Hub price.

The chart below illustrates the relationship between natural gas demand on the SoCalGas system and the regional price of natural gas. This chart shows daily SoCal Citygate basis to the Henry Hub on the vertical axis with SoCalGas natural gas demand on the horizontal axis. The chart compares September 1 through December 4 prices and demand for 2016 and 2017. Despite the 7% lower average SoCalGas natural gas demand year-over-year, daily price premiums for natural gas delivered in the Los Angeles market in 2017 greatly exceeded levels from 2016 as a result of regional constraints affecting the Southern California energy market.

Most of the natural gas supplied to Southern California comes from far-away basins in Canada, Wyoming, Texas, Colorado, and New Mexico. Consequently, the region is highly dependent on a network of interstate natural gas pipelines to bring natural gas to the SoCalGas pipeline system, through which it is transported to end-use customers. In some cases, natural gas is delivered directly to large end users directly by interstate pipeline systems. Together, these outages on the SoCalGas system and the pipelines that feed it have reduced SoCalGas's flexibility to respond to rapid or sizeable changes in natural gas demand.

Some of the key natural gas pipeline and electric infrastructure outages recently affecting SoCalGas delivery to its customers include:

• Unplanned remediation work on the SoCalGas Line 3000 started in July 2016, and this work reduced receipt volumes at the California border near Topock/Needles by 540 million cubic feet per day (MMcf/d) and closed the line until May 2018.
• Unplanned outage on the Transportadora de Gas Natural de Baja California (TGN) pipeline interconnect at Otay Mesa because a natural gas quality issue prevented receipts between November 11 and December 1, 2017 and reduced gas flows into San Diego to zero during that period.
• Rupture on SoCalGas Line 235-2 in the North Needles Sub-Zone on October 1, 2017, with no estimated timeframe for repair, reduced deliveries to SoCalGas by 800 MMcf/d.
• Unplanned remediation work on SoCalGas Line 4000 in the Northern Zone started on September 18, 2017 and is expected to last until December 30, 2017, affecting movement of 740 MMcf/d.
• Planned repairs on SoCalGas Line 2000 at Ehrenberg/Blythe in the Southern Zone from December 5–15, 2017 will reduce natural gas movement by 200 MMcf/d, and from December 18–20, 2017 will reduce movement by 150 MMcf/d.
• Capacity reduction of 80 MMcf/d on the Mojave Pipeline Company system from December 1–December 18.
• Outages and operational restrictions on electric transmission lines and at key electric generating plants that are also contributing to use of natural gas, especially during high-demand periods in the mornings and evenings.

These outages have affected the volume and location of natural gas flows into key receipt points on the SoCalGas system, as shown in the figure below.

Typically, reductions in natural gas capacity availability or flexibility are offset by increased use of natural gas from local storage facilities. However, temporary restrictions on the level of natural gas withdrawals allowed from SoCalGas's Playa del Rey storage facility in Los Angeles have reduced natural gas flows by 260 MMcf/d. Along with winter protocols for using the Aliso Canyon storage complex, these restrictions have reduced the role these facilities might play in meeting volatile regional gas demand.

On November 28, 2017, the Aliso Canyon Technical Assessment Group (ACTAG)—consisting of the California Public Utilities Commission, the California Energy Commission, the Los Angeles Department of Water and Power, and the California Independent System Operator—issued a supplement to its 2016–17 winter technical report on energy system reliability because of the challenges in Southern California related to these outages. ACTAG stated that natural gas curtailments are more likely this winter than they were in winter 2016–17 because of these outages. Further, they noted a greater likelihood of the potential loss of natural gas service for non-core customers such as refineries, large hospitals, and manufacturing facilities.

Some of the new mitigation options ACTAG cited included:

• Using more natural gas from Aliso Canyon compared to last winter
• Appealing for energy conservation measures
• Bringing liquefied natural gas (LNG) from Mexico through Otay Mesa

ACTAG concluded that the reliability situation will depend largely on the weather. The National Oceanic and Atmospheric Administration's winter outlook for California predicts a warmer-than-normal winter for Southern California. The movements in the SoCal Citygate price relative to the Henry Hub since September 2017 reflect the market dynamics of meeting demand while facing supply constraints. Additional volatility in the natural gas spot market may occur in the event of winter curtailments, particularly on colder days with increased space heating demand.

The natural gas spot price difference between the SoCal Citygate and the Henry Hub—the national benchmark natural gas price—reached record highs in October 2017. Although, October price differentials between the SoCal Citygate and the Henry Hub exceeded $0.50 per million British thermal units($/MMBtu) just four times since 2008, they were more than $0.80/MMBtu over 11 consecutive days this October, reaching an all-time high (for any time of the year) of $9.65/MMBtu for delivery on October 24.

Major factors accounting for the October price volatility at the SoCal Citygate—the primary natural gas trading point for the greater Los Angeles area—included: periods of warmer-than-normal temperatures coupled with an increased share of natural gas used for electric power generation; constrained electricity transmission from Northern California to Southern California; and constrained supply of natural gas because of pipeline outages and ongoing restrictions at the Aliso Canyon underground storage facilities.

Record-high temperatures for October in Southern California lifted regional demand for electricity, and the share of natural gas-fired generation increased to meet this demand. Daily average temperatures throughout much of the state were more than 10 degrees above normal for this time of the year, but temperatures were especially high in the heavier electric-load zones along the coastal parts of California; daily high temperatures throughout Southern California exceeded 100 degrees on October 25.

Electric power demand in SP15, the Southern California power market zone, averaged 15.7 GW in October 2017, however, with record temperatures on October 25, 2017, loads rose to 20 GW, or 27% higher than the October average.

Southern California experienced three distinct periods of elevated temperatures in October, with the third period—including October 25—being the most extreme. These warmer-than-normal periods contributed to overall statewide average temperatures being above normal for the month. The latter two warm-weather periods were more prolonged and were closely associated with periods of increased electricity consumption, according to data from EnergyGPS.

The incremental demand for power was met partly by increased consumption of natural gas at power plants—represented by thermal generation in the California Independent System Operator (CAISO) daily net generation supply stack. The 13-day average temperature for the October 1-13 time period was normal for this time of year, natural gas accounted for an estimated 34% of SP15's electric power generation. However, for the periods October 14-20 and October 21-29—the timeframes corresponding to the highest two periods of departure from normal temperatures—estimates for the shares of natural gas for electric power generation were 37% and 41%, respectively. At peak temperatures on October 25, natural gas represented 47% of the power generation share.

Outages affecting natural gas pipelines and electric transmission lines contributed to the upward pressure on natural gas prices at the SoCal Citygate. For example, Line 235-2 of the Southern California Gas Company (SoCalGas) pipeline system—a key pipeline for moving natural gas from the California border to the coast through the North Needles Subzone—has been out of service since October 2. Also, SoCalGas’s Line 4000 in the Northern Zone has been out of service for maintenance over the past several weeks and is not expected to be back in service until December 30, 2017. Derated electric transmission flows from the Pacific Northwest into California contributed to higher demand for natural gas at California generating plants, increasing natural gas demand.

Despite challenging operating conditions during October 2017, SoCalGas natural gas inventories are currently about 68 billion cubic feet (Bcf), or more than 6 Bcf higher than a year ago. Each morning, EIA updates information concerning Southern California’s regional natural gas stocks and other market information in the Southern California Daily Energy Report.

On October 2, 2017, Southern California Gas Company (SoCalGas), a Sempra Energy Utility, issued a critical notice that a key pipeline—Line 235-2 of the SoCalGas system in the North Needles Subzone—would be taken offline for repairs for an undetermined amount of time after an incident—currently under investigation—occurred near Newberry Springs, California. This outage stopped pipeline deliveries through the North Needles Subzone—a key corridor for bringing natural gas across the state to the North Coast Zone—constraining the supply of natural gas from Southeast California to Southwest California and limiting storage injections into SoCalGas storage facilities.

The California Public Utilities Commission (CPUC) authorized SoCalGas to resume limited storage injections at its Aliso Canyon facility on July 19, 2017. Since then, total system inventories rose at an average rate of 0.15 billion cubic feet per day (Bcf/d). According to public data from SoCalGas ENVOY, inventories this year surpassed last year's levels for the first time on September 26, a time when storage levels typically approach their maximums in Southern California.

Between September 1–30 this year, aggregate daily natural gas load (sendout) on the SoCalGas system averaged 2.5 Bcf/d, and receipts at the Transwestern—North Needles point—natural gas destined to flow through the SoCalGas North Needles Subzone—offset sendout by about 25% over the same time period. Since the pipeline outage, SoCalGas has increased scheduled deliveries into Southern California on alternate routes. For example, deliveries to the El Paso—Ehrenberg receipt point—near Blythe, California—averaged 792 million cubic feet per day (MMcf/d) through September, but have averaged 1,039 MMcf/d since October 2, an increase of more than 30%.

Spot prices for next-day delivery at the SoCal Citygate—a key regional natural gas trading hub—increased $0.45 per million British thermal units ($/MMBtu) following the force majeure event before peaking at $3.28/MMBtu, or $0.56/MMBtu higher than prices at the Henry Hub. (Henry hub serves as the national benchmark for natural gas prices.) Prior to the event, prices were closely following Henry Hub. Southern California border average prices remained below Henry Hub throughout the pipeline outage.

At SoCal Citygate, the premium to the Henry Hub spot price decreased to $0.15/MMBtu as of October 5. According to SoCalGas estimates, storage injections may reach between 300–400 MMcf/d by October 8 but possibly decrease again in the following days.

Temperatures are likely to rise above 100 degrees in many parts of Southern California on September 1, possibly resulting in record regional electricity loads. At about 10:00 a.m. Pacific Standard Time (PST), the California Independent System Operator, the electricity grid manager for most of California, was projecting a system peak record today of 50,869 megawatts (MW), eclipsing the record set on July 24, 2006 of 50,270 MW. Estimated natural gas send-out (demand) on the Southern California Gas system is set to exceed 3 billion cubic feet per day for a sixth day in a row. The spot price of natural gas at the Southern California Gas (SoCalGas) Citygate is $3.58 per million British thermal units (MMBtu) or $0.71/MMBtu higher than the spot price of natural gas at the national benchmark location—the Henry Hub. The average on-peak, electric power price today at the SP15 zone in Southern California topped $170 per megawatthour. Real-time prices for this afternoon could be significantly higher. A statewide Flex Alert has been issued for 1:00 p.m. to 10:00 p.m. (PST) this afternoon in California.

On July 19, the California Department of Conservation, Division of Oil, Gas, and Geothermal Resources (DOGGR) and the California Public Utility Commission (CPUC) announced that Southern California Natural Gas' (SoCalGas) Aliso Canyon Natural Gas Storage Field (Aliso) in the Porter Ranch neighborhood of the City of Los Angeles could commence limited operations after meeting certain safety, testing, and reporting milestones. According to the press release, SoCalGas has taken about 60% of the 114 wells at Aliso out of service and isolated those wells from the rest of the facility. Under new targets, CPUC mandated that SoCalGas manage working natural gas storage levels at Aliso so that they do not fall below 14.8 billion cubic feet (Bcf) or rise above 23.6 Bcf to protect public safety and prevent energy shortages. EIA estimates that the total working gas capacity at Aliso prior to these restrictions was 86.2 Bcf. SoCalGas was directed to reduce inventory levels at Aliso to 15 Bcf on January 21, 2016, and CPUC authorized SoCalGas to withdraw natural gas at Aliso only under particular protocols in a letter on June 2, 2016 to ensure reliable natural gas supplies and to prevent electric curtailments.

EIA reported on its Southern California Daily Energy Report dashboard that working gas on the entire SoCalGas system was 53.2 Bcf on July 21, or about 8.2 Bcf lower than a year ago on this date. However, SoCalGas working gas inventory has increased about 13.8 Bcf since April 1. Analysts can track future changes to SoCalGas' storage inventories and other market fundamentals using EIA's Southern California Daily Energy Report.

Much hotter-than-normal temperatures in Southern California and the broader Southwest this week contributed to rising spot natural gas prices. Temperatures have exceeded normal ranges since June 14, and on June 21 temperatures were above 90 degrees in Burbank, California, topped 100 degrees in the inland valleys, and surpassed 120 degrees in the low desert.

As a result, estimated natural gas demand, or send-out, on the Southern California Gas (SoCalGas) pipeline exceeded 3 billion cubic feet per day from June 19 – June 22. SoCalGas delivered more natural gas, in part, to meet the electricity demands of higher air-conditioning loads.

Because of this higher demand, the price of natural gas at the SoCalGas Citygate—a natural gas trading point for the greater Los Angeles basin—rose to about $4.15 per million British thermal units (MMBtu) on June 21. The spot price of natural gas for delivery on June 21 into the Los Angeles market reflected a premium of about $1.28/MMBtu compared with the spot price of natural gas at the Henry Hub. This price was the highest local premium for natural gas at the SoCalGas Citygate relative to Henry Hub since early 2014 when several episodes of cold weather contributed to high natural gas prices. Moreover, this was the highest differential for a summer month since Ventyx Energy Velocity began reporting Intercontinental Exchange spot natural gas prices at the SoCalGas Citygate trading point in 2008.

EIA commented earlier in June in the Southern California Daily Energy Report that SoCalGas underground natural gas storage inventories were lagging behind levels during the summer of 2016.

According to the Southern California Energy Reliability Summary released on May 19, 2017, Southern California Gas Company (SoCalGas) held roughly 14.8 billion cubic feet (Bcf) of working natural gas in its Aliso Canyon storage field as of May 1, 2017. Total working stocks at that time in all of SoCal's facilities were 41.4 Bcf.

EIA's Southern California Daily Energy Report showed that as of June 5, total SoCalGas system working inventories were 46.9 Bcf, 15.3 Bcf (25%) lower than at this time last year and 46.5 Bcf (50%) lower than the five-year (2011–15) average at that time.

On May 8, the California Public Utilities Commission (CPUC) directed SoCalGas to maximize storage injections at its remaining available storage facilities. Since May 8, total storage injections have averaged about 0.2 Bcf per day (Bcf/d). SoCalGas injected 0.3 Bcf into storage on May 24, the company's largest storage injection in 2017, according to data from IHS PointLogic.

The CPUC highlighted the need to increase natural gas stored at SoCalGas's Honor Ranch, La Goleta, and Playa del Rey storage fields in the May 19 Aliso Canyon Mitigation Measure plan. Moreover, the Aliso Canyon Technical Assessment Group – which includes experts from the CPUC, California Energy Commission (CEC), the California Independent System Operator (CAISO), the Los Angeles Department of Water and Power (LADWP), and SoCalGas hydraulic modeling support – kept in place mitigation measures adopted from the 2016 mitigation review and added a new initiative for 2017 requesting SoCalGas to maximize natural gas storage injections at non-Aliso storage facilities.

EIA has updated its Southern California Daily Energy Report to provide a "winter" edition of market information (the original "summer" edition also remains available from a pull-down menu bar at the top of the main dashboard). The dashboard includes important information that EIA regularly collects about energy operations and the management of electricity and natural gas systems in Southern California in the aftermath of a leak at the Aliso Canyon natural gas storage facility in October 2015. The leak has since been plugged but has resulted in continuing limitations on the use of that facility. The winter edition provides more details on natural gas activity than the summer edition, which focuses primarily on electricity markets that are the main source of summer demand for natural gas in the region. EIA updates the dashboard at about 7:00 a.m. Pacific Time every morning. Key elements in the winter dashboard include:

Interstate natural gas pipelines and the Pacific Gas and Electric (PG&E) system deliver natural gas into the SoCalGas system. With less natural gas available from storage, deliveries to SoCalGas are likely to be more important this winter than in the past. This new chart shows daily deliveries of natural gas to each of SoCalGas' major receipt zones: Southern, Northern, and the Wheeler Ridge area. SoCalGas has firm access rights up to a total of 3.565 Bcf/d of natural gas from these three zones. However, this level would not be enough to meet demand on a peak winter day, so SoCalGas supplements these supplies with withdrawals from its four underground natural gas storage fields and modest amounts of natural gas produced in Southern California in its Coastal Zone and Line 85 Zone.

Recent daily natural gas receipts and demand (sendout) help determine if daily non-storage sources of natural gas are sufficient to meet demand. Net daily changes in SoCalGas storage inventories show how storage injections and withdrawals balance demand for natural gas with available supplies.

The annual trend in natural gas storage inventories in Southern California is compared with last year's inventory level at this time and with the previous five-year range. Lower storage levels relative to prior winters indicate how much less in-region stored natural gas is available to meet natural gas demand this winter. Although current restrictions do not allow natural gas injections into Aliso Canyon, on November 1, 2016, SoCalGas requested authorization from the California Public Utility Commission and the State Oil and Gas Supervisor (Division of Oil, Gas, and Geothermal Resources) to reinject natural gas at Aliso Canyon in some of the wells.

Changes in spot natural gas prices can indicate constraints or disruptions in the natural gas system. Much higher-than-normal price differences between downstream (demand) market points, like the PG&E Citygate or the SoCal Citygate, and upstream (supply) market points, like in Western Wyoming, the San Juan Basin, or West Texas and Southern California border, can indicate conditions including wellhead freeze-offs, high market demand, cold weather in the Southwest, high use of pipeline networks, or unplanned outages on pipelines. This new daily chart shows how winter market fundamentals (supply, demand, and storage) can lead to price differences between the Southern California border and market and supply trading points relevant to Southern California.

The "market" columns show how much higher the spot price of natural is at the SoCal Citygate or the PG&E Citygate compared with the SoCal Border. Conversely, the "supply" columns show how much higher the spot price of natural gas is at the SoCal Border compared with the supply areas of Western Wyoming, the San Juan Basin, and West Texas. California Citygate natural gas prices are usually higher than the natural gas price at the Southern California border because of the additional costs to transport natural gas from the border to the Citygate. The spot price of natural gas at the SoCal Border is usually higher than the spot price of natural gas at the upstream trading points to cover those transportation costs. However, these differences can be negative when other destination markets provide more value than the Citigates or Border. In those cases, the smaller-than-normal or negative difference signals that little gas is likely to be moving from the higher-priced source areas to the lower-priced California market.

The previous 365-day and 30-day ranges only account for trade days within those ranges. As of now, data are not included in the EIA database.

Southern California daily natural gas prices for 2015 and 2016 show the Southern California Border price. Higher prices at the SoCal Border can reflect periods of stress on the energy delivery systems. So far in 2016, prices have reflected mixed levels of stress. During the spring and early summer, natural gas prices were generally low. Nationally, the 2015–16 winter that was warmer than normal reduced the need to withdraw natural gas from underground storage facilities to operate natural gas-fired furnaces. This, in turn, lowered the need to buy natural gas in the spot market in early spring to backfill for depleted inventories. Relatively plentiful hydroelectricity, increased electricity imports, and more generation from solar and wind resources also eased demand for natural gas for electricity generation. There were several episodes of natural gas price volatility during summer 2016 when the local price of natural gas at the SoCal Border and the SoCal Citygate spiked temporarily. These price increases mostly resulted from warmer-than-normal temperatures coupled with pipeline constraints and reduced regional storage deliverability.

Past actual temperatures and near-future forecasts of daily low and high temperatures are provided for Los Angeles. For the winter, temperatures are a good measure of likely furnace load for space heating needs, and Los Angeles is the center of the metropolitan area. These daily ranges are compared with normal ranges and with record ranges.

Hourly electric load is summed across Southern California, including load by these utilities: Southern California Edison, Los Angeles Department of Water and Power, San Diego Gas and Electric Company, and the Imperial Irrigation District in the winter report. Historically, Aliso Canyon provided natural gas supply flexibility to manage variability in daily and hourly electricity demand. These levels are compared with historical ranges to show if the current load is high or low. The black line is the coincident peak load record.

To have natural gas available to meet residential and commercial customer needs on the coldest days, electric utilities and grid managers may rely on electricity imports to a greater extent than when Aliso Canyon was fully operational and when SoCalGas had much higher levels of stored gas available. This new chart illustrates the role that electricity imports from the Pacific Northwest into California play in meeting Southern California's seasonal loads. The chart shows hourly electricity flows transmitted by the Bonneville Power Administration to CAISO along the Pacific DC Intertie. For yesterday, the chart shows the following information for the Pacific DC Intertie to CAISO path: total transfer capability, day-ahead flows, and actual flows for delivery to CAISO. For today, the chart shows the day-ahead flows from the Pacific DC Intertie to CAISO.

Spot electricity prices at the SP15 trading point — the main zone for trading electricity in Southern California — are reported by hour. EIA uses CAISO's 15-minute data for SP15 across each of the four intervals per hour to derive average hourly prices for yesterday's day-ahead market and real-time market. This calculation also provides a schedule of the locational marginal prices (LMPs) for today's day-ahead by hour. Using hourly LMPs instead of daily, on-peak, average LMPs makes it easier to assess how changes in hourly loads and key hourly electricity imports align with changes in hourly prices. The chart lines do not show prices that exceed $100 per megawatthour, but users can see these prices by directing their keyboard pointer or mouse to the location on the chart where the prices exceeds the $100/MWh range.

This updated regional map shows the key natural gas pipeline and storage infrastructure in Southern California. The map now includes a daily total of natural gas receipts from interstate and intrastate natural gas pipelines by major zones in the SoCalGas system. The map does not show the relatively modest amount of Southern California natural gas production flowing into the SoCalGas system, but these supplies are part of the overall natural gas receipts already reported in the dashboard's Natural Gas Receipts and Sendout chart.

EIA's new dashboard, the Southern California Daily Energy Report, shows how electricity and natural gas are being managed in Southern California following the discovery of the leak at the Aliso Canyon natural gas storage facility in October 2015. The dashboard includes important information that EIA regularly collects about energy operations in Southern California. EIA updates the report at about 10:00 a.m. every morning. Key elements in the dashboard tab section include:

Hourly electric load across Southern California, including details about that load by utilities including Southern California Edison, Los Angeles Department of Water and Power, San Diego Gas and Electric Company, and the Imperial Irrigation District. Historically, Aliso Canyon provided natural gas supply flexibility to manage variability in daily and hourly electricity demand. These levels are compared with historical ranges to show if a load is high or low.

Past actual and near-future forecasts of daily low and high temperatures in Los Angeles. For the summer, temperatures are a good measure of likely electric load, and Los Angeles is the center of the metropolitan area. These daily ranges are compared to normal ranges and to record ranges to show whether temperatures are high or low.

Recent daily natural gas receipts and sendout levels to determine if daily non-storage sources of natural gas are sufficient to meet demand. Net daily changes in aggregate SoCalGas storage inventories on the dashboard show how storage injections and withdrawals balance demand for natural gas with available supplies.

The annual trend in natural gas storage inventories in Southern California is compared with last year's inventory level at this time and with the preceding five-year range for comparison. Restrictions do not allow natural gas injections into Aliso Canyon as of early September. The resulting gap in storage could limit storage inventory available to meet natural gas demand this winter.

Southern California daily wholesale on-peak power and natural gas prices are graphed for 2015 and 2016. Prices in these actively traded markets reflect periods of stress on the energy delivery systems. So far in 2016, prices have reflected fairly low levels of stress because relatively plentiful hydroelectricity, imports, and renewable solar and wind sources have been able to meet electricity demand.

A regional map shows pricing locations and utility service areas in Southern California.

This data-heavy part of the report in PDF form can be printed as a one-page fact sheet. The content of the dashboard is likely to change over time as issues emerge, new data sources are identified, and our thinking evolves. Occasionally, we will include short posts in the Commentary tab that will include more details or explanations.

For interested readers, the Commentary section also includes links to sources other than EIA such as the Department of Energy's Office of Electricity Delivery and Energy Reliability' Energy Assurance Daily report, the National Oceanic and Atmospheric Administration's weather forecasts, and reports and data from the California Public Utilities Commission, the California Independent System Operator, and SoCalGas.

Background articles

Natural gas generation and electricity imports used to follow load in California, Today in Energy, September 7, 2016

California is using more renewables and less natural gas in its summer electricity mix, Today in Energy, September 6, 2016

Southern California natural gas inventories nearly flat this injection season, Today in Energy, August 9, 2016

Natural gas leak at California storage site raises environmental and reliability concerns, Today in Energy, February 1, 2016