Long-term Fuel Price Forecasts for the Sixth Power Plan

NorthwestPower andConservation

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Long-term Fuel Price Forecasts for the Sixth Power Plan

Northwest Power & Conservation Council

Generating Resources Advisory Committee

August 21, 2008


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NPCC long-term fuel price forecasts

• Determine a range of plausible long-term trends in natural gas, world oil and western coal prices

• Commodity cycles around the trend and short-term volatility are simulated in the Portfolio Model analysis

• Fuel prices affect resource selection, generation cost, and price of electricity

• Retail prices affect demand for fuels and electricity (directly through competition, indirectly through cost of generation)

• Delivered prices for residential, commercial, industrial and electric generation are estimated for the AURORA, GENESYS, Energy 2020 and Portfolio Risk model

• Seasonality is estimated where significant


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NPCC Fuel price forecast history

• Fifth Power Plan (Summer 2004)

• Revised Council Forecast (Sep. 2007)

• Revisions proposed to the Natural Gas Advisory Committee (Aug. 2008)

• Draft for Sixth Power Plan (Oct. 2008)


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What's Happened to Oil and Natural Gas Prices Since 5th Plan

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120.00

140.00

2003 2004 2005 2006 2007 2008

06

$/B

bl

0.00

2.00

4.00

6.00

8.00

10.00

12.00

06

$/M

MB

tu

Oil

Natural Gas


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Natural Gas


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Henry Hub Forecast Compared to Actual Prices

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No

min

al $

/MM

Btu

L

ML

M

MH

H

Actual

Actual Annual


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2025 Natural Gas Price Comparisons

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9.00

10.00

Low Medlo Medium Medhi High

2006

Do

llar

Per

MM

Btu

5th Plan

7-Sep

Working (2)

$4.64

$5.60

$7.25


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Working wellhead natural gas price forecast(2006 $ Per MMBtu at wellhead)

Low Medium Low Medium Medium High High2006 6.402010 6.50 7.00 7.50 8.00 9.002015 5.00 5.75 7.00 8.00 9.002020 4.25 5.50 7.00 8.00 9.252025 4.25 5.75 7.25 7.75 9.252030 4.50 6.00 7.50 8.25 9.50

Growth Rates 2006 - 15 -2.71% -1.18% 1.00% 2.51% 3.86% 2006 - 30 -1.46% -0.27% 0.66% 1.06% 1.66%


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Working FC vs. Futures Market and Range of Short-Term Forecasts

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2006

$/M

MB

tu

NYMEX

NGW Low

NGW M

NGW H

STEO

Low

Medium

Medlo

Medhi

High


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Working FC vs. AEO08 and Others(Natural Gas)

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20

06

$/M

MB

tu

AEO08

L

ML

M

MH

H

GII

EVA

EEA

DB

SEER

Altos

AEO-H

AAEO-L

Avg others


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Delivery costs to AURORA LRAs

Delivery Points Costs in 2008

Sumas to Western OR/WA $ .63

AECO to Eastern OR/WA $ .59

Rockies to Southern ID $ .62

AECO to Eastern MT $ .77


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World Oil Prices


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Crude Oil Price Forecast Revisions

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20

06

$ P

er

Ba

rre

l

Draft 6th

5th Plan

Rev Sept. 07


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Working Crude Oil Price Forecasts(Imported RAQ in 2006 $ / Bbl.)


Growth Rates 2006 - 15 -1.83% 1.08% 1.91% 3.44% 4.80% 2006 - 30 -1.12% -0.29% 0.71% 1.53% 2.00%


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Working FC vs. Others(Imported RAQ)

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160.00

Imp

ort

ed

RA

Q (

06

$/B

bl)

Low

Medlo

Medium

Medhi

High

AEO08

AEO -HighAEO -LowIEA Ref

GII

DB

SEER


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Coal Prices


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Source: EIA

Recent spot coal pricesApril 05 To April 08


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Historical and Forecast Coal Prices(Powder River Basin)

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1.40

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00

$ P

er

MM

Btu

History

Low

Medlo

Medium

Medhi

High

6th Plan working forecast


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Working coal price forecast(Powder River in 2000$/ MMBtu)


Growth Rates 2006 - 15 -0.76% 0.63% 1.63% 2.62% 3.43% 2006 - 30 -0.60% 0.17% 0.92% 1.48% 2.03%


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Working Forecast vs. AEO08(PRB Coal)

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20

00

$/M

MB

tu

WY

/MT

Low

ML

M

MH

High

AEO08


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At its August 15 meeting, the NGAC ...generally agreed with the proposed medium oil price forecast

(about $80 in the long-run)

recommended use of a wider range of oil prices - well above $100 in the high; below $40 in the low (see poll results)

generally agreed on a somewhat higher medium long-term gas price (about $8), based on a 10:1 oil:gas price parity

recommended against a fixed oil:gas price parity across the cases (see chart of history)

generally agreed the spread of gas prices be increased on the high side, but not to exceed $12. Disagreement regarding low (arguments ranged between $4 to $6).


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The NGAC poll of long-term world oil price

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1

2

3

4

5

6

7

8

$40 $50 $60 $70 $80 $90 $100 $110 $120

Crude Oil Price Forecast

Vo

tes

Low

Med

High

Average of Medium poll

$125 & higher$40 & lower


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Crude Oil and Natural Gas Price History(Refiners' Acquisition Cost of Imported Oil)

(Wellhead Price of Natural Gas)

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No

m $

/ MM

Btu

Crude Oil

Natural Gas


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Where to from here

• Digest NGAC and other comments

• Proposed revisions for draft 6th Plan to Power Committee in October

• Incorporate into planning models by December for use in 6th Plan analyses

Long-term Fuel Price Forecasts for the Sixth Power Plan

Documents

Transcript of Long-term Fuel Price Forecasts for the Sixth Power Plan