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Thursday Mar 28, 2019   
I recently came across a report that stated PJM coal capacity was in danger of being retired in favor of wind and solar. The article had some great charts and an interesting analysis on the economics of wind and solar. However, the article downplayed the lack of reliability of the renewable fuel mix. To their credit, they did mention that coal was able to be dispatched unlike renewable resources but did not go much further than that. While it was a fairly interesting read, I don’t quite think that coal is going to be giving up much ground to renewable resources in the near future. Figure 1 | Energy Innovation’s Coal vs Renewables Cost Perhaps the most important factor is that wind and solar are intermittent resources. Both of these Renewables cannot be easily controlled in ... » read more
Wednesday Mar 27, 2019   
After four years of drought-like water conditions in California, 2017 proved to be one of the wettest precipitation years on record.  If you recall, the California Water Year started out relatively slow, only to be hit with an onslaught of precipitation in December 2016 which then led to a late winter/early spring weather pattern that created snow water content levels never seen before in the Northern Sierra Mountains and along the coastal areas along Highway 101.  In fact, it was shortly after the New Year when a mudslide off the highway move the earth and collapsed the Pfeiffer Canyon bridge on the old highway near Big Sur. Figure 1 | Pfeiffer Canyon Bridge Crack due to Mudslide - Feb 2017 As you can see in the figure above, the movement of Mother Earth wreaks havoc on the ... » read more
Tuesday Mar 26, 2019   
Starting last Friday March 22nd, Cheniere has taken two trains down at the Sabine pass liquefaction terminal for seasonal maintenance. With two of the liquefaction trains out of service, Sendouts at the location have dropped from 4 to 2.5 BCF/d forcing the rest of the Gulf pipeline and storage complex to accommodate the excess volume on the system. Storage injections have stepped higher at many salt caverns. The facility is expected to be out of service through the first week of April. During that time we expect the Henry Hub cash pricing to remain under the prompt futures contract. Figure 1 | Sabine Pass Sendouts A push back of 1.5 BCF of natural gas has a big impact on the pricing dynamics along the Gulf Coast. Cash prices have been weighed down accordingly as ... » read more
Monday Mar 25, 2019   
The saying, 'the rubber meets the road' is a point where an abstract idea is tested out in practice.  In the case of the natural gas sector, the idea is tied to power burns and how they were impacted by the big run up in the prompt month back in November 2018.  As we moved through the winter strip, several indicators are out there showing that market participants made it a choice to hedge their natural gas power plant consumption with other facilities such as coal units across the country.  When you tied this in with the fact that the December weather came in above normal, the forward natural gas curve moved off the highs seen on November 14th, 2018. Figure 1 | Prompt Month Natural Gas Settles - Daily As we started the New Year, Mother Nature saw some volatility in ... » read more
Friday Mar 22, 2019   
Recognizing the need to address the increasing number of new electricity resources coming on line as a result of state-driven procurement mandates, PJM has pushed for changes to mitigate against monopsony or “demand side” market power that can have a depressive effect on clearing prices in its capacity market auctions.  Figure 1 | Unlike FERC, Brutus Nailed His Deadline PJM’s Capacity Reform proposal (Docket Nos. EL16-49/18-1314) filed in October 2018 proposed revisions to its Minimum Offer Price Rule (MOPR) so that "subsidy free" offers would be required on all new resources built (or repowered) as a result of state mandates. State mandated resources may include the familiar “green” resources of demand response, wind, and solar.  They can also ... » read more
Thursday Mar 21, 2019   
As I reached for my jacket earlier this week, I quickly checked my phone only to realize that I wouldn’t be needing it as the weather forecast said highs would reach into the 60s. The burden of my heavy jacket was finally lifted from my shoulders with the warm sunny weather managing to stick around. However, the Pacific Northwest appears to be the last region to finally see the seasonal shift. Along the East Coast, temperatures already made their way back to normal earlier this month as the latest cold front dissipated. With the warm spring weather finally on the board, demand for electricity declined giving some leeway to generation. Facilities are now taking this opportunity to perform maintenance with demand likely to remain on the lower end of the spectrum. In PJM, total outages ... » read more
Wednesday Mar 20, 2019   
if you live in Houston, Texas the air quality conversation has been on the forefront of the local news as the burning chemical storage tanks in Deer Park have been burning since Sunday.  The explosion and following fires spread over 8 storage tankers within the first 24 hours. Figure 1 | Chemical Fire in Houston, TX By Tuesday afternoon, the fires were contained to just 4 storage tankers, which meant that the smoke by-product was reduced but still pushing toxic particulates into the air.  The local news continued to state that the air quality was not in harms way but many chemists begged to differ.  The one thing the local agencies had going for it was the air pattern as it kept the smoke anywhere from 5,000 to 6,000 feet in the air instead of down around 400 to 500 ... » read more
Tuesday Mar 19, 2019   
It is that time of the year again. Along with the transition from withdrawal back to injections we will see the energy infrastructure across the continent undergo maintenance and construction activities. During the past three summers, the Algonquin Pipeline which is the largest natural gas artery into New England has seen major cuts in capacity as service gets expanded into the Boston Citygate. This year the maintenance schedule is not nearly as impactful as years past. most of the upstream work has been completed and now the focus moves to the downstream portion. The Algonquin market will not see the price impact we have seen in years past.   Figure 1 | Early Summer Algonquin Pipeline Maintenance Impact   Last year, the Stony Point compressor, which stands at the ... » read more
Monday Mar 18, 2019   
On a sunny Saturday morning, the soccer field was jammed packed with enthusiasm from both the players and parents as they did not have to bundle up in their winter gear just to step on the turf fields to play or watch.  In fact, if you forget to grab your sunglasses, the eye squinting became somewhat annoying as it was hard to look directly into this thing called the sun.  Once the matches ended (around noon), it was time to drive home and as we turned the corner onto Skidmore street, you could see several fire trucks with their sirens flashing and the road blocked off.  This brought back the images of a couple of weeks ago when on a crisp Sunday morning, our neighbor's house down the street caught fire and lit up like a torch.  By the time the fire department arrived ... » read more
Friday Mar 15, 2019   
With only a half of the month left in March 2019, the winter season is coming to an end and the summer strip is right around the corner.  This not only means there is a hopeful transition between the colder weather and the spring-like temperatures that gets everyone excited for the actual summer period between July and September.  If you recall, last year this transition was put on hold as the month of April saw well below normal temperatures and a precipitation pattern that warranted plenty of snow across the country.  I remember it vividly as a friend of mine is a true baseball fan who looks forward to opening day across the league. There were several cities/teams that had to cancel their opening day games as snow covered both the infield and outfield.  If the games ... » read more
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