Menu
Featured Articles
| Friday Oct 16, 2020 | |
| Determining the shape value of a resource is a deceptively simple task. It is simple because the calculation is an easy one: for a given time period, take the generation-weighted price and divide by the flat average price. It is deceptive because there’s more to it than just what prices appear at what times of day. Before continuing, some definitions will be useful: As-Generated Shape Value is the historical, real-time, as-generated production-weighted price divided by historical, real-time, average price. 12x24 Shape Value is calculated as historical, real-time, 12x24-weighted price divided by historical, real-time, average price. This metric gets at the value of the resource if its generation were identical on each day of a given month. Negative Covariance is calculated as the ... » read more | |
| Thursday Oct 15, 2020 | |
| As a kid, I remember when leaving the house early in the morning with my grandfather after a night or heavy rain. We would walk around the yard with a flashlight and a bucket. The goal was to fill up the bucket with night crawlers (worms) that have risen to the surface after the rains urged them top come up from the soil. The vivid memory of plucking them out of the grass and into the plastic bin also has the words "son, the early bird always gets the worm" vertebrate in my head. I have to say, there were times that we could see two shiny eyes off in the distance on those chilly mornings only to flash the light over and see a crow feasting on the same night crawlers we wanted to capture for our next fishing expedition. Figure 1 | Early Bird Gets the ... » read more | |
| Wednesday Oct 14, 2020 | |
| The 2020 Hurricane/Tropical Storm season will go down in the record books as twenty-five storms have been named since the start. One of the last storms named with the common alphabet letters, Hurricane Laura, hit the heart of Louisiana as it made landfall just east of New Orleans. This included Cameron Parish, which is the home of several processing plants as well as the new liquefied natural gas facilities known as Sabine and Cameron. The former was offline for a bit as they had to access the damage. After a couple of weeks, the Sabine natural gas nominations ramped back up to levels prior to the Category 4 hurricane. Cameron was not so lucky as they lost power that had to be restored and to make matter worse, the channel used to move the fully-loaded ships ... » read more | |
| Monday Oct 12, 2020 | |
| Since the middle of August 2020, there has been numerous articles written about the California Independent System Operator (CAISO) having to adhere to rolling blackouts for a couple of days in Northern California. This was the first time since the California Energy Crisis that the grid operators had to resort to such tactics to make sure the system was reliable everywhere else. I ran across a news article this weekend where the headline read "California Rolling Blackouts during summer heat wave caused by 3 main factors". The summary article came about from the joint effort report that hit the wire last week from the California Public Utility Commission (CPUC) and the California Independent System Operator (CAISO) committee tasked to dig into the information. Since ... » read more | |
| Friday Oct 9, 2020 | |
| The Northwest Power and Conservation Council (NWPCC or Council) is an important planning body in the Pacific Northwest (PNW) region. The Council, formed in 1980 as part of the Northwest Power Act, was created partly to respond to the inability of BPA and the region's utilities to effectively plan and adapt to changing circumstances (at that time the rising cost of nuclear power) as well as their inability to recognize the value of energy efficiency as a resource. To this day, the NWPCC plans are still the premiere source of comprehensive long-term planning information for the region. (The Northwest Power Pool provides important reliability and data sharing functions but does provide nearly the same level of transparency to nonmembers.) In draft ... » read more | |
| Thursday Oct 8, 2020 | |
| The concept of Sumas Island has been in the conversation amongst our product offering as the Pacific Northwest saw its trading hub shfit up to $4.84 coming out of the weekend as the T-South compressor in BC was restricted while the Roosevelt compressor was having maintenance downstream. With the colder weather moving in and shifting the rescom demand along I-5 and I-84, tightness was inevitable as power plants were running near full capacity thus chewing up the molecules. Since we have not officially started the winter season, the storage molecules were not going to be in the cards. Figure 1 | Sumas Island It did not take long for region to loosen up as the T-South compressor capacity increased from just under 1.0 BCF/d to over 1.2 BCF/d. The .2 volumetric increase ... » read more | |
| Wednesday Oct 7, 2020 | |
| Henry Hub cash posted a monster rally coming out of the weekend as the market is pushing in its chips on the next tropical storm generating more production cuts but taking a track that will not impede the restoration of chunky LNG export volumes. While a similar-sized gain is highly unlikely this week, the price should remain well supported. In Monday’s trading, Henry Hub spot cash bounced to $1.92 from an open of $1.34. This is one of the largest single-day gains for the node in 400 days of trading and comes less than a week after Hub cash set a 10-year record low, the 3rd time that has happened this summer. Figure 1 | Henry Hub cash prices via NGI The rally is boosted by market bets another tropical storm is going to wipe out production in the Gulf of Mexico as ... » read more | |
| Tuesday Oct 6, 2020 | |
| If you have become familiar with our publications you will notice that we have a few go - to phrases to describe our philosophy on natural gas pricing. One of our favorites is "Storage Trumps All". It is generally true that when it comes to natural gas trade dynamics that storage caverns hold the market power in most circumstances....until they do not. This is one of those weeks. Prior to Monday morning the abundance of volume in the daily balancing had driven cash prices to a steep discount versus the rest of the NYMEX (HH) futures strip. For the Gulf, Henry Hub cash prices dipped down to $1.33 this weekend which was a $1.10 discount to the November futures. This is the price expression of the shortage of storage injection capacity in the region. Figure 1 | NYMEX Continuous ... » read more | |
| Monday Oct 5, 2020 | |
| The summer months have now moved into fall as the month of October is here. This means the leaves are turning colors and the overnight low temperatures are dropping to a point that will increase the heating demand as we move deeper into the month. On the power side of the equation, the fall season also represents outage season as many plant operators take their units offline to give them a tune-up. The process is similar to maintaining your vehicle with an oil change every 3,000 miles and when you get up to different levels the tires, belts and other key components need to be looked at to makes sure the car is running efficiently. Figure 1 | Time for an Oil Change Looking at the nuclear fleet first, the fall and spring periods have the most units offline as ... » read more | |
| Friday Oct 2, 2020 | |
| Anyone who trades commodities spends a lot of time and effort trying to divine what the price will be in the future. They try to understand the cost of each resource type (supply curve) and when each type of resource will become the marginal, price-setting unit as different demand levels shift the market-clearing supply resource. I mean no disrespect to the demand side of the equation, or flexible demand, or demand side management – but someone’s cost of production ultimately determines the price level – this is the supply curve. Electricity and natural gas traders obsess over this. https://economics.stackexchange.com/questions/26355/real-world-examples-of-supply-curve-shapes Energy GPS advises a large swath of corporates, developers, utilities, investors, and asset ... » read more | |