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| Friday Apr 9, 2021 | |
| When Winter Storm Uri pummeled Texas in February, many generators stopped performing on their contracts for physical delivery and claimed force majeure. Many wind projects with fixed quantity hedges with banks played the force majeure card as their blades froze due to the cold temperatures. Of course, the banks and the power marketers on the other side of those trades likely didn’t see it that way. In general, those entities purchase “firm LD power” and they expect delivery else they will replace the energy and charge the seller liquidated damages (“LDs”). The billion dollar question (literally) is whether the high demand, unit outages, and curtailment of load that directly resulted from Winter Storm Uri qualifies as a force majeure event. I’ve been ... » read more | |
| Thursday Apr 8, 2021 | |
| There is a little time before the summer heat is upon us in Texas but ERCOT is working its way through the first real warm period of the spring as temperatures in Houston are projected to hit 86 degrees later today then hold with daytime highs in the low 80's over the weekend. Dallas and Austin are not too far behind when it comes to the influx of Mother Nature's warmer weather fairy dust sprinkled over the Lone Star State. The warmer weather does not equate to sunny skies throughout as some areas of the ERCOT's footprint will be dealing with cloud cover over the next 48 hours. Figure 1 | Texas Temperature Forecast - Daily Average by City Similar situations in the past created a transition from moderate power demand to that of big increases during the later ... » read more | |
| Wednesday Apr 7, 2021 | |
| Exports to Mexico in the past several days have posted a precipitous drop as maintenance season gets underway. Volumes should post a typical seasonal recovery as Mexican power burns rise to support cooling loads during the summer months. However, summer burns will continue to be inhibited by COVID; Mexico has been one of the world’s hardest hit countries by the pandemic. The longer-term outlook is fuzzy, too: the recent years’ trend of increasing U.S. exports to Mexico will be challenged by the country’s efforts to meet more of its energy needs with domestically produced sources. In just a matter of days, exports to Mexico have swung by nearly 1.2 Bcfd, going from 6.1 Bcfd on March 31 to a low of just 4.97 Bcfd this past weekend. The last ... » read more | |
| Tuesday Apr 6, 2021 | |
| The Lower 48 natural gas balancing still has some seasonal heating load in the mix for the next few days. But by the end of the week the total ResCom demand is expected to fall from the present 21 BCF per day down to 14 BCF per day. This drop off will accelerate the storage refill injections all over the continent. Presently the EIA is reporting 1.76 TCF of inventory in the caverns across the United States. Based on current supply/demand fundamentals the end of October inventory is expected to post near 3.65 TCF. That is within the range of normal and is considered adequate for a normal winter heating season. Figure 1 | Lower 48 ResCom Demand Cash prices have remained resilient this Spring in the wake of the Texas Energy event in February. At its height Henry Hub cash posted $23 ... » read more | |
| Monday Apr 5, 2021 | |
| There is a saying that goes like this, "don't cry over spilled milk", which means do not spend time worrying about things of the past that cannot be changed. This holds true in the Pacific Northwest this time of year as the first week of April has the Lower Snake river system starting their mandated fish spill requirements. Such spill happens every year like clockwork where the only thing that is in question is tied to the volume that moves away from the turbines and onto the spillway. Figure 1 | Hydro Facility Spillway The fish vs. economics has been a constant discuss in the Pacific Northwest for decades where the old-school technical management team (TMT) meetings were held in downtown Portland the USACE building where the fish agency representatives were seated along side ... » read more | |
| Friday Apr 2, 2021 | |
| On Thursday of this week the wires lit up with news of President Biden’s $2.3 trillion infrastructure plan. The plan “would supercharge an already booming clean-power sector by expanding subsidies and addressing key bottlenecks impeding the shift to a greener grid” according to the Wall Street Journal. Biden wants to produce 100% carbon-free electricity by 2035 (I’m pulling for you, Joe, but I’ll take the “over” on 2035 for 100%). While it is easy to get caught up in the giddy enthusiasm of green energy supporters, there is also a palpable sense that we’ve seen this movie before. Remember the election of Barack Obama twelve years ago? There was that distinctive ‘hopey changey’ vibe swirling around. Conferences were packed to the ... » read more | |
| Thursday Apr 1, 2021 | |
| No joke: we made it to April 1. If you’re a baseball fan you regard this as day as the official start to summer. It is also the start of the gas market’s “summer”, contracts spanning April through October. While this conjures warm thoughts of shorts, flip flops, and backyard barbeques, the reality for most people north of the 36th parallel is there are still several more weeks till you can safely pack your down jackets away. For those in the Rockies and Western Canada, it’s the start of mud season: that sloppy interlude when the snow is not good enough to ski, but the ground is not yet dry enough to do anything with, either. Image 1 | April 1 is baseball's opening day, which many regard the start of summer. But the grass ... » read more | |
| Wednesday Mar 31, 2021 | |
| As a kid, one of the enjoyments of rummaging through the Sunday newspaper was to get to the comic section where one of the frames on the front page was dedicated to two images that on first glance looked identical but then the caption read 'can you find the x differences in the two images provided?' This is where the competitive nature in me kicked in at an early age as I sat there and stared at both until the little nuances were found and discussed amongst other family members. At times, there was a distinct competition to who could find the differences fast where the reward was to have the other person do one's chores the upcoming week. Figure 1 | Spot the Differences? In the energy space, a snapshot picture of market conditions changes from day to day so the pertinent ... » read more | |
| Tuesday Mar 30, 2021 | |
| Outside of two weeks in February the Eastern United States has kept the above normal trend intact and this past weekend was no exception. It was the warmest three day stretch since October of last year with many cities posting daytime highs in the mid 70's. The warm weather has also brought a season low for residential and commercial heating load across the region forcing many pipelines to start the storage refill process a few weeks earlier than normal. Caverns all over the Midwest, Eastern Canada and Northeast injected volumes for the first time this year. As a result of the low demand conditions cash prices at delivery hubs also fell to season lows. Figure 1 | EIA East HDD Count for Nov 1 - Apr 15 Transco Z6, TETCO M3, Algonquin and Dominion South all fell to ... » read more | |
| Monday Mar 29, 2021 | |
| Now that we are over a full year into the Pandemic lockdown situation, the day of week or time of day gets lost in the shuffle as one's routine is to work out of a home office and look at a calendar that is full of conference calls with clients and internal meetings. In the old days, the former would be balanced with in-person trips or conferences where golf or some other activity would be interwoven with a nice meal and guest speakers on certain topics in the power and natural gas space. The latter would be tied to a conference room meeting or a Friday lunch where everyone would get together and discuss what the weekend plans looked like as well as picking a topic of conversation around the energy space that would educate the younger analysts dipping their feet in their ... » read more | |