- Nephi’s natural gas prices should be even lower than last year
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By Myrna Trauntvein
Times-News Correspondent
Nephi has natural gas prices which are among the lowest in the United States.
Tony Ferguson, Superintendent of the Electric and Gas Utility Systems for Nephi City, reported to Nephi City Council that prices should be lower in the community-owned utility for the coming year than they were last year.
“Costs have been trending downward this year,” said Ferguson.
“We can make the reasonable assumption that this year should be even better than last year.”
In 1991 a new natural gas system was installed in east Juab County with sufficient capacity to serve both present loads as well as future development of the area.
Twenty six miles of 8-inch high pressure gas line feed natural gas from Questar Pipeline’s main trunk line in Payson Canyon to Nephi.
Eleven miles of 4-inch high pressure pipe take gas on south of Nephi to Levan Town.
The cities of Rocky Ridge, Nephi, Mona and Levan and to county utility customers are all served by the pipeline.
This high pressure transmission system was designed and installed to provide over 500 percent of a 6 year projected gas requirement for the area. However, this system is large enough to serve an area larger than Richfield, Cedar City, and the St. George area combined.
State of the art distribution systems were installed in Nephi City, Mona Town, and Levan Town and Rocky Ridge.
These systems were designed and installed with plenty of capacity for any foreseeable residential, commercial and industrial growth in the area.
Long term, twenty year contracts were in place for a firm natural gas supply and for firm transportation service on the Questar Pipeline. In 2001, those contracts expired and prices are now negotiated.
However, overall, Utah continues to have the second lowest natural gas rates in the nation, behind Alaska, according to a report by the U.S. Energy Information Administration.
“For the past year, compared with the year previous, all months showed gas prices in the negative,” Ferguson said.
In January 2007, gas costs were 23.2 percent lower; February, 13.8 percent lower; March, 4 percent lower; April 31.4 percent lower; May 10.5 percent lower; June, 12.3 percent lower; July 13.9 percent lower; August, 22.0 percent lower; and September, 21.9 percent lower.
Statewide, prices are going down.
“Our system is self-regulating,” said Randy McKnight, city administrator. “Our rates regulate every month.”
To date, Ferguson said, only 76 percent of the gas needed for the East Juab system has been purchased.
“Natural gas is still a good value when compared to other options,” he said.
Nearly all Utahns receive their natural gas from Salt Lake-based Questar Gas Co., which has roughly 820,000 Utah customers who use the fuel to heat their water and homes.
Two Utah cities, Eagle Mountain and Nephi (and participant cities and unincorporated homes in East Juab County), have their own municipal natural gas companies.
Ferguson said that short term gas prices have detached their historical tie with oil prices, but long term is still tied.
“The last few years have been volatile,” he said.
“I don’t see that volatility going away.
He predicted that pricing of the commodity would continue that trend. However, the volatility would continue from season to season.
There is more natural gas in storage than ever before, which has driven prices down. However, longer term prices have stayed high due to long term supply/demand fundamentals and the fact that low short term prices reduce drilling, aggravating supply constraints.
Forecasts suggest that natural gas prices in Utah will track just below the trend line for the near future.
However, throughout North America, residents will continue to face high prices to power, heat and cool their homes through at least 2008.
“The market continues to be volatile and no one has a crystal ball,” said Mark Jones, mayor.
Ferguson said that, with the 76 percent of future purchase made, it looked at though the blended cost would be good for residents.
The blended cost for November would be $6.563 MMBtu and last year it was 7.32; for December it is projected at $5.999 MMBtu and last year it was $6.53; January ‘08 should be $5.972 MMBtu and last year it was $5.93; from February ‘08 it should be $6.234 MMBtu and last year it was $6.88; and for March ‘08, the price should be $6.498 MMBtu and last year it was $8.97.
Prices at market locations in and to the west of the Rocky Mountains, as well as in the Midcontinent, generally decreased last week, with wide-ranging declines between 9 cents and $3.44 per MMBtu.
Average spot prices in the Rockies were $3.42 per MMBtu on Wednesday, November 7, with seven locations recording prices below $2 per MMBtu. The price decreases in the West and the Midcontinent were not matched elsewhere in the Lower 48 States, as trading locations mostly recorded increases on the week. The Henry Hub spot price increased 16 cents or about 2 percent on the week to $7.34 per MMBtu.
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