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| Thursday Feb 17, 2022 | |
| Over the years, the California System Operator (CAISO) has been managing the influx of renewable capacity in the form of wind and solar. The former can create volatility within the day while the latter has a consistent profile as megawatts are produced during the daylight hours as the sun’s rays are the key source for the panels that overlay both residential communities along with the utility-scaled development projects that are strategically placed in the desert land in Southern California. Figure 1 | CAISO Solar Generation Profile – Hourly Figure 1 above displays the hourly profile for solar generation within the CAISO system for the past two weeks along with the numeric values tied to the heavy load block of hours. As you move left to right in the table ... » read more | |
| Wednesday Feb 16, 2022 | |
| Tensions along the Russian-Ukrainian border are high as the threat of a Russian invasion looms large. The topic is – and has been – of keen interest to energy markets as Russia is a major supplier of gas to Europe through Ukraine. Yet, while current events have gained broad attention, close energy market observers are used to all of this. So used to it, in fact, that it is possible much of the fear premium has already been priced in. High level interest over a Russian invasion center on concerns that Russia will cut off gas supplies to Europe. However, there are a handful of reasons to discount such concerns. As we have discussed with clients through our LNG and European Gas Storage reports, Russia already severely curtailed gas flows to ... » read more | |
| Tuesday Feb 15, 2022 | |
| Last week was the beginning of the fiscal Q4 earnings season for the oil and gas industry and after a number of releases there is a consistent theme for the North American producers. The recent climb in crude prices has ushered in rates of return that have never been seen in the modern drilling era. The returns along with the well documented inventory issues have many focused on expanding output particularly in the highly efficient shale plays in West Texas. The EIA currently estimates the Permian Basin is producing just over 5 million barrels per day of crude oil. As per the EIA Drilling and Productivity Report posted last week they expect that amount to grow to over 6 million barrels per day in 2022. That would be a never been seen before 20% increase in output. Figure 1 | EIA Crude Oil ... » read more | |
| Monday Feb 14, 2022 | |
| The National League Football (NFL) came to an end last night with the Super Bowl Champions Los Angeles Rams defeating the Cincinnati Bengals 23-20 in a triller of a game. If you are into streaks, the Rams was the second straight team to win the Super Bowl in their regular season home stadium. If you recall, the Tampa Bay Buccaneers beat the Kansas City Chiefs in Tampa Stadium last year. It was also the first Super Bowl where both starting quarterbacks has losing career records, with Matthew Stafford ringing up losses with the Detroit Lions while Joe Burrow’s losses were tied to his rookie season being cut short with a knee injury (since he is only in is second year, his W-L-Tie record was 12-13-1. Figure 1 | Super Bowl LVI If you are not into the game ... » read more | |
| Friday Feb 11, 2022 | |
| There is a lot of talk in the Western US about pushing the grid to 100% renewable electricity. The traditional regulatory push towards high renewable portfolio standards has been a steady drum beat in most states in the west for the last five years (or longer). California is supposed to reach 60% renewables by 2030 and requires all the state’s electricity to be carbon free by 2045. The traditional way of accounting for RPS compliance is simple – the number of compliant RECs is in the numerator and the total load for the compliance period (say, one year) is in the denominator. Of course, there are strict rules associated with what types of resources count towards the RPS but the timing of production does not factor into things. To give an extreme example, in 2030 California ... » read more | |
| Thursday Feb 10, 2022 | |
| As part of our Newsletter Platinum Renewables package we break down the market fundamentals in different regions across the country each month, with a focus on the events most relevant to the renewable landscape. Our most recent Renewable Monthly report, titled “Mild West, Frigid East” drills down into the mild weather and excess storage that has accumulated in the SoCal Gas system throughout the month of January as well as the changing CAISO supply stack. The report also discusses the frigid winter weather that has blanketed much of the Midwest, Ohio Valley and Northeastern United States in recent weeks. Down in the South-Central region, we drill down into ERCOT, touching on structural changes in ERCOT load and how these changes and high gas prices are ... » read more | |
| Wednesday Feb 9, 2022 | |
| Former president George W. Bush sometimes slipped up his words when giving impromptu speeches. One famous gaff came when he tried giving a phrase about learning from mistakes. He said, “There’s an old saying that says, ‘Fool me once, shame on…shame on you. Fool me – you can’t get fooled again.” While he didn’t exactly get the phrasing right, those familiar with the phrase knew what he meant: if you don’t learn from your mistakes, its on you. Last week’s ERCOT power market seemed to show it wouldn’t get fooled again by a winter storm. There were a few major factors that enabled the market to weather last week’s winter storm that featured the coldest temperatures to hit Texas so far ... » read more | |
| Tuesday Feb 8, 2022 | |
| Heading into this winter it was assumed that the record natural gas production levels in Alberta would more than offset gains in demand and exports leaving the province with plenty of storage inventory prior to next summer. Total natural gas receipts were posting 1 BCF per day higher at 14.3 BCF. That was 1.2 BCF per day more than the previous year thanks to increased pipeline capacity out of the British Columbia foothills. It was the single largest year on year increase in production which started the music for a large sign up in export capacity on TransCanada Pipeline and Gas Transmission Northwest. This was expected to be an orderly balancing year for Alberta with receipts posting at record levels. Figure 1 | Nova System NG Production But then December ... » read more | |
| Monday Feb 7, 2022 | |
| ERCOT continues to lead in conversation with the first real cold weather test passing with flying colors. As it stands, both the power and natural gas markets did what they needed to so that the heating demand and power consumption was met across the state. In fact, many took it as a bearish signal as the natural gas spot prices did not jump above the $6.50 mark at Houston Shipchannel and stayed in a nice low double digit level in West Texas (loss of production). As we like to say around here at EnergyGPS, natural gas needs higher power prices to escalate the bottom line indices or if molecules are actually scarce. At the end of the day, neither of the two were in play as the renewable sector in ERCOT saw wind show up in groves and the solar output pick back up ... » read more | |
| Friday Feb 4, 2022 | |
| Last May, we published a blog about the Friday Burrito’s annual CAISO curtailment-guessing competition. We’ll reiterate here—the Burrito is an excellent weekly newsletter from Gary Ackerman that is available to those working at a member of the Western Power Trading Forum (WPTF). The competition involves guessing, at the beginning of May, the total amount of MWh that will be curtailed in CAISO over the year. All those who get within 1% of the total split the $250 prize pool. As you may have already guessed from the fact that we’re bringing this up… we won! We had to split the prize pool with the two other winners, but the real prize is the bragging rights. The actual number turned out to be 1,504,676 MWh, with our guesses a little above and a little ... » read more | |