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Tuesday Nov 20, 2018   
...Here we go 'round again.... Seven months ago a cold spring took the year on year storage deficit to .8 TCF which at the time was one of the largest deficits to start a refill season. But there were no worries as the production story had a grip on the market as the numbers were soaring up to 80 BCF/d which was a year on year gain of 8 BCF. Our EGPS Supply/Demand balance sheet forecast had a solid recovery of inventory to start the winter heating season based on normal summer cooling load. The end of October was expected to see 3.6 TCF in the caverns. That just did not play out. The summer posted a record CDD accumulation led by the middle third of the continent. By the end of October the inventory was only able to close the deficit to .58 TCF. Figure 1 | Lower 48 Natural Gas ... » read more
Monday Nov 19, 2018   
It seems like so long ago that the Enbridge 36 inch pipeline in Shelley, British Columbia saw a big ball of fire shoot into the air as the pipe itself burst.  Since that afternoon day on October 8th, 2018, many people have been speculating on the cause as well as focusing on getting the line back into service as it is the main artery to serve load in the Vancouver, BC area as well as inject enough gas into the Seattle/Tacoma/Portland area at Sumas.  The former is still unknown to many as they have taken the charred pieces of pipe that have been recovered back to the lab to see what they can learn from any of the evidence while the latter quickly saw the 30 inch pipe that runs parallel to the one that exploded back in service.  This allowed for just under .700 BCF/d to flow ... » read more
Friday Nov 16, 2018   
The California Air Resources Board (CARB) released its emissions report in early November for Compliance Year 2017. The news on the carbon emissions front is mostly good, although a bit mixed. The electricity industry is crushing it in terms of emissions reductions with year-on-year reductions of more than 10% for the sector. Natural gas (excluding power generation) and transportation fuels (extraction, refining, and tailpipe) are up slightly. Californians still love to drive and, apparently, the fuel efficiency for the fleet doesn’t change much from year to year. Figure 1 from the CARB report (see link below) shows emission trends by sector over time. Figure 1 | 2011 to 2017 Total Emissions by Source Category EnergyGPS has worked a lot with this data over the years. The cap for ... » read more
Thursday Nov 15, 2018   
If you were up at 3:30 am PST yesterday and lived in the Pacific Northwest, a couple of items definitely woke you up. The first being the temperatures inside the house as the thermometer usually shows a number in the 68-69 degree level for this time of year.  When I looked at it yesterday when I was getting ready to let my dog out for his morning duties, it read 64 degrees which is a level I see on the coldest days in the winter.  In fact, when I let the dog out the door was open and you feel the chill come into the house to where the thermostat dropped another degree.  You know it is cold when the dog only takes a few seconds and comes dashing back into the friendly confines of the 63 degree interior of the home.  Man it was cold!!! Figure 1 | Average High/Low ... » read more
Wednesday Nov 14, 2018   
When you talk to traders in the natural gas industry, they refer to the following year as the color red for some reason.  For example, being in November and the current winter strip January 2019 is spoken in terms of what it is while January 2020 is considered the 'Red' January.  Speaking of the winter strip, the spread that gets plenty of discussion is the Mar-Apr as they are the two months that bring the end of winter together with the start of the summer months.  In terms of this time of year, the current Mar-Apr spread is worthy of a discussion while the 'Red' Mar-Apr does not see as much action as in years past. If you have been following the natural gas futures market prior to this month, the forward outlook was hitched to the production story where the Summer 2019 ... » read more
Tuesday Nov 13, 2018   
The AECO cash market exemplifies how the market have changed over the years as many basis hubs have seen more volatility due to new production, pipeline maintenance and increased demand when it comes to power burns and industrial.  For example, the Alberta gas market has seen negative settles at times over the past year while other times it gets to compete with the connecting US markets when gas can flow.  All this is due to the NGTL upgrades and expansions, which has bound up the system for much of the summer.  Such binding has restricted access to the storage caverns which has limited the injections. During demand episodes where the excess system pack has been reduced, the storage operators are then capable of competing for daily injection volumes. The result is a price ... » read more
Monday Nov 12, 2018   
As we head into the winter months, we always seem to get some sort of polar vortex in the Northeast, where Algonquin prices rip higher as the demand for natural gas tied to rescom takes precedent over the need for power burns on the pipeline.  This type of situation usually forces the implied heat rate ($power/$natural gas) below the operating economics for the gas-fired generators needed to help balance the electricity grid.  While the power plants are putting some of the gas back on the pipe, the system operators are needing to go to the top of the supply stack resources, such as oil, to balance.  In some regions,  such as AECO, the top of the supply stack comes quicker as coal retirements are in play and wind volatility is enough to push the marginal megawatt ... » read more
Friday Nov 9, 2018   
Figure 1 | If only I had been of a longer duration ...  Reserve margins in several regions of the U.S. are getting tighter. Consider some of the news: ERCOT’s Reserve margin was revised downward this summer. ERCOT had record breaking peak loads in May and June and set a new all-time high during July 2018 at 73.3 GW. There have been 4 GW of coal plant retirements of recent and another 5.6 GW of existing power plant capacity is expected to retire by 2022. CAISO is known for having a lot of capacity laying around due to its aggressive renewable build out in recent years, but three things have changed in the last few years: (1) retirements are up; approximately 3 GW in the last year; (2) the value of capacity for solar is decreasing due to increased penetration; and (3) the ... » read more
Thursday Nov 8, 2018   
The power supply curves across the country all have some unique characteristics tied to the dispatch of units, especially within an ISO where economic bidding strategies come to the forefront of any day-ahead and/or real-time hourly auction results.  There are some cases where the optimal solution to the dispatch is not straight forward as certain constraints in the model have different outcomes.   We have also seen some ISO operations trigger out of merit or out of market dispatch as the grid needs the units on for reliability purposes they say.  The one that always starts to scratch the head is when an unit is running or getting dispatched at an implied heat rate lower than its marginal heat rate.  This is the indicator that states the facility is tied to other ... » read more
Wednesday Nov 7, 2018   
With the Republicans maintaining the majority of the Senate and the Democrats taking over the House of Representatives, the next two years will be full of fireworks as the president will be in the crossfire of many political debates and war of words as he rounds out his first term.  Moving onto the state level, all eyes were on Washington as they had Measure 1631, which was essentially a Carbon Tax tied to the core industrial and power producers in the state. Figure 1 | Washington Ballot Measure - Initiative 1631 (Carbon Tax) Two years ago, the state ballot had an initiative that was similar in nature but did not pass as many of the industrial advocates were out in full force making sure people voted against it.  This go around, the polls seemed to be tilted in the direction of ... » read more
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