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Monday Dec 23, 2019   
The weather across the country has been quite interesting over the past couple of months as the end of October/early November chill was short-lived as warmer weather moved in across the Midwest and Eastern portion of the country.  The Pacific region has maintained some chill to the daily temperatures but nothing crazy.  This past week saw a couple of days where temperatures dropped in the Midwest and East to a point that the natural gas cash markets needed to price themselves high enough to makes rue the molecules were being consumed for heating demand and not power burns. Figure 1 | Daily ConUS HDD Forecast Compared to Normal, Last Year and Previous Run As we left for the weekend, the 11-15 day period was showing some signs of colder weather returning to the grid, hence why ... » read more
Friday Dec 20, 2019   
Today, one MWh of electricity costs $28.50/MWh. How much will it cost tomorrow? If you were asked to answer this question, you might want to know things like what region this is referring to, and what time of day and year. Lacking any other information, you might simply assume that the price tomorrow will be the same as the price today—a reasonable short-term method known as persistence forecasting. It’s unlikely that tomorrow, at the same location and time of day, the price will have jumped to $1000/MWh. But could it go as high as $40? As low as $5? And, much more importantly for energy projects that can often span decades, what’s the price likely to be 10 years from now? EGPS uses Monte Carlo modeling as one tool to explore this question. Monte Carlo simulations are ... » read more
Thursday Dec 19, 2019   
It is definitely short-lived but to see how the bilateral cash and day-ahead market in the East markets unfolded was somewhat exciting considering the December month to date volatility had been pretty dormat. This was due to above normal temperatures hitting the grid and plenty of natural gas on the grid.  In fact, after the initial cold snap in early November, the citizens of the Big Apple and Boston were enjoying the fall-like weather pattern. That was until this week when temperatures dropped drastically where both power load and heating demand shifted up.  This brought the battle of the molecule to the forefront of the ongoing conversation  As stated, up until this points, the grid needed to find a home for all the swirling natural gas and the method of choice was ... » read more
Wednesday Dec 18, 2019   
Today marks the second straight day that the California aggregated natural gas demand has topped the 8.0 BCF mark as PGAE, Kern and SoCal have all seen both the rescom and power burn numbers shift higher compared to last week.   Figure 1 | California Natural Gas Demand by Region - Daily The table and charts in the figure above give a good illustration of how much of an increase we are seeing across the board compared to a week ago when the daily gas consumption aggregate was just over the 6.0 BCF mark.  The 2.0 BCF increase is rather large considering a portion of that number is tied to the power burns needed within the CAISO footprint to balance the flex ramp demand tied to utility-scaled solar output as well as power demand increasing during the evenin ramp as ... » read more
Tuesday Dec 17, 2019   
A decade ago, the industry relied on the Baker Hughes rig count to provide a good indicator on the direction of natural gas production. That worked well in the era of conventional drilling. But once horizontal drilling became the technology of choice, this metric became irrelevant for determining future volumes. As best practices were adopted across the country the production community was able to focus on efficiency as a means of increasing volume. But light of a drop in rig counts it meant there was a collision ahead. At some point the gains from new technology would level out and we would have to revert back to rig counts to further the growth. That meant doing more with less would eventually run its course. Figure 1 | Baker Hughes Lower 48 NG Rig Count The industry is starting to see ... » read more
Monday Dec 16, 2019   
Everyone knows the Christmas tale of Rudolph the Red-Nosed Reindeer, he was the deer that was born with that bright red nose that everyone made fun of until one Christmas Eve when Mother Nature dealt the North Pole with a blizzard like no other.  It was this one reindeer that was able to save the day as his bright red nose led the team of reindeer pulling Santa's sleigh to the promised land to deliver all the gifts to the children who went to bed after leaving the milk and cookies out for good Ole Saint Nick. Figure 1 | Rudolph the Red-Nosed Reindeer If you look at the weather forecast for this next 15 days, you will see that Mother Nature is the one who has the bright red nose this year as the entire country is looking to be above normal when it comes to the daily average ... » read more
Friday Dec 13, 2019   
Long time readers of the Friday edition of the EnergyGPS daily blog know about my admiration for the research and writing of Vaclav Smil, who is the Distinguished Professor Emeritus in the Faculty of the Environment at the University of Manitoba. Professor Smil writes about natural resources, human consumption, and technological change. Four of his books are contained in Bill Gates’ list of his 60 favorite books as reported by Blinklist. One of my favorite books by Smil is titled “Energy Transitions: Global and National Perspectives.” In this book Smil provides searing, data-driven insights pertaining to the time it will take to shift from our current, fossil-fuel based energy economy to largely renewable energy infrastructure. A number of people in the renewable ... » read more
Thursday Dec 12, 2019   
It is that time of year again where the holdiay parties start to form, Christmas trees are sitting in a place ready for the gifts to be put under them and the decorations are abound around the house. It is a festive time of year no doubt as people generally seem happy.  It is also a time of year that the annual Hydro Year End meeting takes place in Portland. It is a day long event where everyone on the Technical Management Team (TMT) congregate as re-live the previous Water Year and discuss how this year is going to be another trying but enjoyable one as we start the New Year.  I thougtht it would be good to highlight some of the key points of the day-long meeting as they tie into the EnergyGPS Pacific Northwest Hydro Reports and Discussions that we publish as the Water ... » read more
Wednesday Dec 11, 2019   
Now that the regular season is over for college football, there will be a pause before some of us get to hear the 'Eyes of Texas' fight song played at every Texas Longhorn football game.  If you happen to be in San Antonio for New Years (December 31st, 2019), you will not have much of a choice as the Texas Longhorns play the Pac-12 runner-up Utah Utes.  Like any other bowl game that has 18-22 year old kids playing for their school and fans, it should be exciting to say the least. Figure 1 | 2020 Alamo Bowl Prior to any tailgaiting and the actual kick-off, their is another event that should have all eyes on ERCOT.  If we stick with the college bowl theme, the game will be played on December 17th, 2020 where the Power Demand is colliding with the Wind Generation ... » read more
Tuesday Dec 10, 2019   
Oh how the sentiment for natural gas can change so quick. it was only four weeks ago when the prompt futures had risen to $2.86. The EIA inventory report had come out with a large withdrawal of 94 BCF indicating an early start to the heating season. The forecast was calling for more below normal weather. Due to the polar event we had at the turn of the month, freeze ins had cut back production from 94.7 to 93 BCF. This was exactly what the balancing needed to clear out the ongoing year on year storage inventory surplus of .5 TCF. It did not take long to flip all of those expectations on their heads. Production not only recovered its losses but posted new record highs by the middle of the month of over 95 BCF. The weather turned from a early bout of arctic cold to what now looks like an 8 ... » read more
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