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Tuesday Mar 31, 2020   
Oil prices have been hit with a double edged sword in the last month. The failure of Russia and OPEC nations to come to a quota agreement has led to a glut of supply in the world market just as coronavirus effects sap the demand. Zerohedge posted a good article about how some of the oil basis points have now dropped to all time lows. Canadian oil prices have fallen from $50 to below $5 per barrel (C$8) as the signal is being sent for the industry to shut down production. Marginal costs for oil production in the Athabasca range from C$30-45 per barrel so this is well below the price needed to sustain volumes. The article posted yesterday had us thinking about the probable changes to natural gas balancing in Western Canada. ZeroHedge: Oil Price Article Figure 1 | Western Canada and ... » read more
Monday Mar 30, 2020   
The world has a lot going on right now as information overload is front and center when it comes to the Coronavirus and the inability for countries to get in front of it in a way that allows for people to go about their daily life.  We have China that has begun to dig itself out of what would be considered self-quarantine for the past couple of months, while Italy and Spain are still in the trenches fighting for their countries life as many close knit families live with other family members in high density apartments.  Then we have the United States, who joined the countries mentioned by instilling the stay-at-home mandates by state.  As it stands this weekend, compared to last weekend, we have more cases across many more highly populated areas including Detroit, Chicago ... » read more
Friday Mar 27, 2020   
The good people over at Lawrence Berkeley National Laboratory (LBL) have recently published a report on the state of batteries in US electricity markets. LBL has partnered with the Electric Power Research Institute and Clean Kilowatts to write “Motivations and options for deploying hybrid generator-plus-battery projects within the bulk power system.” (see link below) Like most LBL electricity papers, it is well researched, relies on publicly available data, and is clearly written. While those who already perform detailed battery analysis may find the analytics to be overly simplified, it provides a good overview of battery costs, batteries in the interconnection queues, and comparative value of stand-alone versus paired with solar versus paired with wind. Figure 1 | Resource ... » read more
Thursday Mar 26, 2020   
Over the past few weeks the world has been turned upside down in a way that countries are in full lockdown mode, individuals are asked to cozy up in their small apartments/flats and every news station is finding it hard to stay on top of the information surrounding the coronavirus.  During this time high officials across the world have thrown out the words 'pandemic', 'stay-in-place' and 'social distancing' as they get their arms around what is happening on a daily basis.  The word 'pandemic' is similar to the words widespread, pervasive or rampant and in its noun form is defiined as an outbreak of an pandemic disease.  Figure 1 | Pandemic Alert The 'stay-in-place' is being used by government officials/top business owners who have made the decision to mandate ... » read more
Wednesday Mar 25, 2020   
The Corona Virus (CV) and the related illness COVID-19 (C19) has unsettled and upended the world as we know it. People are socially distancing, businesses are closing, people are losing jobs, those with jobs are working from home, people are getting sick, and people are dying. This is like nothing we’ve ever seen before. In addition to the horrible personal toll this is taking on people’s health, lifestyle, and livelihoods, the CV and the measures taken to limit the spread of the CV and C19 are having tremendous impacts on markets. The US equity markets are down about 30% from the highs in February. Oil prices have fallen by more than 50%. Other energy markets are under pressure due to little change in supply and sharp reductions in demand. It is difficult to handicap what ... » read more
Tuesday Mar 24, 2020   
The last couple of weeks have been a disaster for energy prices. The two edged sword of quarantine efforts as well as the break down of oil quota talks has slashed near term natural gas prices. But there is a silver lining to the recent price action. The futures prices beyond this immediate summer strip have been well supported. Since the first week of the month when both issues started to gain steam, the Q3 2020 NYMEX HH contract has risen 19 cents to $2.61 while the Q2 2020 has fallen 7 cents to $1.68. Each of the two major event is contributing to the widening of the spreads. Figure 1 | Q2 2020, Q3 2020 and Q1 2021 NYMEX HH Natural Gas Futures Settles First, the news that Saudi Arabia is sending 24 MM barrels of crude oil to US shores has producers in a panic. This is an attempt ... » read more
Monday Mar 23, 2020   
It is so easy to lose track of what day it is as they all get co-mingled into one lump sum now that working from home is being mandated by the stay-in-place orders sent down from either the state's governor or the city's mayor.  No matter who it is issuing the mandate, our country is working dilegently to stop the spread of the coronavirus that has taken over the world.  On our daily walk around the neighborhood, the streeets are now being used as a walkway for social distancing as there are few cars on the road.  As we passed the local public golf course on Saturday, I found myself staring at the putting green as there was a line of folks standing there (6 feet aprt) as five golfers were on the green putting their balls to their own exclusive hole.  Under normal ... » read more
Friday Mar 20, 2020   
Summer in ERCOT gets most of the attention as the hot days stretch the system.  In such times, system operators see the operating reserves diminish to a point that the Operating Reserve Demand Curve (ORDC) escalator price is added to the energy component within each hour.  We are not to this point yet, but the recent hourly price/implied heat rate pattern is worth discussing. Looking at the graph below, the red line represents load, the blue area shows wind generation, and the teal area shows net load—that is, load minus zero marginal cost resources. The yellow dotted line shows the North Zone’s day-ahead implied heat rate, which is calculated by dividing the auction power price by the bilateral gas price. Figure 1 | EROCT North Day-Ahead Implied Heat Rate compared ... » read more
Thursday Mar 19, 2020   
Growing up in the Midwest and now living in the Norhwest for over 20 years wrestling has been in my blood since my childhood.  I never have competed at a high level but participated in matches as apart of my middle and high school physical education classes.  When I went off to college, the University of Minnesota wrestling team was decent as they recruited out of the state of Iowa and Washington.  Two of the big time programs at the time were the University of Iowa and Oregon State.  Everyone knew the former as the lore of Dan Gable was present and still is to this day while the latter entrenched itself as being one of the top teams in the country residing in Corvalis, OR.   Figure 1 | Dan Gable Lore If you have ever been to a wresting match or ... » read more
Wednesday Mar 18, 2020   
Over the past few days my wife and I have had the opportunity to spend more time with our kids as we have taken the necessary actions to do our part to supress the virus from being transmitted in any way, shape or form.  This means that the lost art of having dinner together and talking to each other has come to light along with walking the dog as a family.  If I stop to think about it a bit, these two items mentioned were a common theme during my childhood as there was no iphone to hold onto, no club sport that required driving to/from practices/matches three times a week and cable television was so primative that it took up hardly any time at all.   Figure 1 | Sitting at the Dinner Table Up until last week, the hustle and bustle of today's world came to a halt with ... » read more
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