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| Friday Mar 19, 2021 | |
| It’s been thoroughly rehashed by now that a failure of wind energy to produce when expected was not among the causes of the disaster in ERCOT during the mid-February storm. As we and others have pointed out, wind wasn’t expected to produce much at that time, so it wasn’t devastating to the grid when it didn’t. Little attention has been paid, however, to the performance of wind before and after the storm. In order to explore this in more depth, and in order to contrast the wind performance during the event with the conditions in the rest of the month, we’ve divided the month of February into three distinct periods: before, during, and after the event. Each period is so different they almost behave like individual months. Defining “the event” is ... » read more | |
| Thursday Mar 18, 2021 | |
| The recent events across the middle third of the United States have brought the weather forecasting conversation to the forefront as several vendors have promoted themselves as have the tool that is able to predict what Mother Nature has in mind in the near-term and longer-term outlooks. If you have been in the energy industry long enough, you quickly realize how volatile this process can be as there can be a whip-saw effect where one day the 1-15 day period is showing nothing but bearishness only to give way to a weather formation in northern portion of North America that gets the bulls riled up in a short period of time. The one thing we are certain of, if this last year is any indication of what is to come, volatility and uncertainty is in order as we move out of the winter ... » read more | |
| Wednesday Mar 17, 2021 | |
| With global LNG demand market prices running at multi-year highs, U.S. LNG exporters are chomping at the bit to get as much gas out on the water as possible. Recent days’ volumes are closing in on record highs and prospects look strong for those levels to be maintained through the summer. Although spreads to ship into winter markets are even stronger than summer, U.S. exporters will have to wait to jam more volume into the market for new capacity to come online, which is not slated to happen until the end of this year. Feedgas deliveries to U.S. LNG export terminals have returned to the 11 Bcfd level not seen since mid-December, when the single-day record high was set. Following that event, January exports were fairly strong, though with sporadic ... » read more | |
| Tuesday Mar 16, 2021 | |
| In the past week we have heard a number of comments about the Texas demand destruction and how the state's economy has yet to make a full recovery in the aftermath of the energy crisis. The is being touted as reason why power burns have not performed anywhere near year ago levels. While it is true that the power burns in the EIA South Central have been a big disappointment this month it has nothing to do with ERCOT demand. If you look at the on peak demand versus temperatures for the past three years, this month is right on par with consumption in 2019 and 2020. So why is there a big drop off in the power burn component in the region? The burns are posting 1.6 BCF less than last year when COVID was impacting the economy. Figure 1 | ERCOT On Peak Demand versus Houston ... » read more | |
| Monday Mar 15, 2021 | |
| The weather event this weekend had several micro systems brewing as the Midwest, Ohio Valley and Northeast all transitioned back into the winter mode after spending the past week basking in a spring-like setting. Down in the South Central region, the wind gusts persisted as both ERCOT and SPP continue to deal with the volatile renewable resource across their respective footprints. Over in California and the Pacific Northwest, we saw a combination of sunny skies and spurts of precipitation in the form of rainfall as temperatures were moderate as the clock changed to daylight savings. The Rockies and Plains region was the area that received the most attention as the forecast was calling for a massive snow dump that would leave the mountains with over 4 feet of snow and ... » read more | |
| Friday Mar 12, 2021 | |
| As winter moves on to spring, weather turns milder, the sun comes out, and load declines, balancing the CAISO supply stack becomes a complicated problem. Because of the prevalence of solar, it’s useful to think about the daytime stack in three buckets: Morning Ramp, Midday, and Evening Ramp. It is the Midday period that catches the eye each and every day due to the massive influx of behind-the-meter and utility-scaled solar output there is on the grid. The balancing act for the power demand profile is tricky as each hour is supplied with hydro, solar, wind, thermal, or nuclear generation, as well as imports from surrounding regions. The seasonal change affects this stack in more ways than one. Not only does load decline and solar increase, but snow stops piling up ... » read more | |
| Thursday Mar 11, 2021 | |
| The one market that continues to take a backseat to both California and ERCOT is the Southwest Power Pool (SPP). The name is a bit deceiving as one might attribute the footprint to the Desert Southwest, New Mexico and Nevada as these are the states that are tucked into the geography of the United States-Lower 48 as California stretches north to south and is identified by itself. Since the east and west electric grids are basically separated for reliability purposes, this leaves the former with say two-thirds of the country and since ERCOT's situation of being isolated from the rest of region has come to light over the past few weeks we have a similar situation as the latter where SPP is tucked away in the southwest corner of the outlined East region (left image) in Figure 1. Figure ... » read more | |
| Wednesday Mar 10, 2021 | |
| Just a few weeks after ERCOT set a 'theoretical' winter power demand record the thermal fleet was going to be pushing out generation that would have topped any record setting high water mark during a heat wave in July/August. As we know, due to Mother Nature blasting the Lone Star State with extreme cold temperatures, such a scenario never came to light. As we settle into the month of March 2021, the grid could not be more 'polar' opposite as the power supply/demand picture is now showing the thermal fleet facing the potential for new low-side generation records. Today through Sunday hosts the likelihood for hourly thermal generation levels drop to unprecedented lows as wind and solar surge to record highs. The upcoming event is not simply a function of weather ... » read more | |
| Tuesday Mar 9, 2021 | |
| Each quarter of the year we get to review a summary of the financial performance of the publicly traded natural gas production firms when they report quarterly earnings. The first quarter of the year is particularly important because they go over the volumetric forecast for the rest of the year. This can then be aggregated across the industry to create a production expectation. It is particularly useful in the Marcellus and Utica production zones where the incentives are aligned. The earnings presentations and subsequent transcripts also provide other useful information. It is a check on infrastructure, maintenance and hedging performance for the balancing equations. The big three in the Northeast production are Cabot Oil and Gas, Range Resources and EQT. Together they make up over ... » read more | |
| Monday Mar 8, 2021 | |
| The Pacific Northwest is quite unique when it comes to the energy sector, specifically the electricity sector as the hydro system comes into play each and every month. Prior to the solar penetration in California, Mother Nature was already placing the original renewable resource at the forefront of everyone's mind. The science was all about figuring out when the snow was going to melt off the mountainsides and push enough water through the turbines that the transmission lines were full down to California and you needed to price coal and natural gas units offline to make sure the system balances. This meant that the bilateral price for both the heavy and light load Midc would gap down from the $20-$30 level to low single digits. This was the volatility that set the region ... » read more | |