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| Tuesday Aug 21, 2018 | |
| The NGTL gas system in Alberta has been under stress all summer. Maintenance and construction outages continue to plague the region causing havoc for exports and storage injections leaving few avenues for balancing. That has resulted in a very volatile cash dynamic. This week we saw another episode where the delivery issues on the system forced the cash market to index $0.44 with some trades coming in much lower at the end of the trading period. The index itself is off from $1.00 print seen for the Friday prior to the weekend. The culprit is another string of restrictions in the Northern Delivery Zone. Figure 1 | AECO Cash Prices for Apr - Aug 2018 In previous low price events, we have seen natural gas generation as well as imports come to save the day. » read more | |
| Monday Aug 20, 2018 | |
| If you live on the West Coast there is a high likelihood that the air is filled with smoke from the fires in California all the way up to British Columbia. In fact, as woke up in my hotel room (daughter's soccer tournament) in Seattle, WA the sun was hazy bright glowing orange which indicated that the smoke returned to a point that the air quality was going to be in question once again. Fortunately the soccer match was early in the morning as on the drive home in the afternoon only got worse the further I drove south on I-5. Figure 1 | Portland SMOG Once we arrived in Portland, the sky was filled with this haze which made me wonder how anyone could live in a city where this type of air quality is a common occurrence. The forecast are calling for the haze to ... » read more | |
| Friday Aug 17, 2018 | |
| Right around the year 2000 electricity policy makers at FERC and across the country collectively said: “We are sick of stranded utility generation costs. We want independent power producers to invest capital, take risk, and earn returns. We want to create competitive wholesale electricity markets where merchant generators can thrive.” Calpine heard the call and got busy building out its fleet of efficient, merchant natural gas generators. Yes, they got out a little too far over their tips, filing for bankruptcy in 2005, but today they are the largest generator of electricity from natural gas and geothermal resources in the United States. Its fleet of 79 power plants in operation or under construction represents approximately 26,000 MW of generating capacity. In 2018, J.J. » read more | |
| Thursday Aug 16, 2018 | |
| When it comes to weather, Portland-OR has seen the most consecutive 90 degree days within recent history while California has come off a record breaking month of July. Over in the East, the Northeast got off to a mild summer as June temperatures fell in line with last year. However, this quickly shifted to the upside as July heated up. Looking at the year over year monthly average temperatures, there was a 3 degree spread during the month of July. Figure 1 | Actual Temperature Averages for July Even though it was hotter, the simple graphic misses some of the details. Last summer held a fairly stable temperature across the region, but this summer saw wild swings with heat wave after heat wave passing through while interspersed thunderstorms brought flooding rains separating the heat ... » read more | |
| Wednesday Aug 15, 2018 | |
| Being a Green Bay Packer fan growing up, there were several highlight reels played where Vince Lombardi is on the sidelines yelling at his players and the referees. One of his most famous lines was captured on film as he was seen frustrated with the play of his team and yelled "What the hell is going on out there?" Figure 1 | Vince Lombardi's Famous Quote Over this past week, it seems like Vince could be heard standing on the sidelines of both Texas and California yelling his infamous phrase as both ERCOT and CAISO have been hit with moderate fundamentals as the Dog Days of Summer just ended. Taking a look at ERCOT, both Dallas and Austin have been looking at average temperatures 5-7 degrees below normal with last Friday kicking things off. This big ... » read more | |
| Tuesday Aug 14, 2018 | |
| This year, we are seeing many regions across the country have a change in dispatch strategy for coal fired power plants. Not only are we seeing total output drop due to retirements, the year on year change in the relationship between fuels generation has caused natural gas to move further into the base-load bucket. Power burns, as a result have remain buffered from any large swings in the net load. Weekday to weekend power burns are not as volatile as they were in years past. This has been a big reason why the power burns remain 4.5 BCF per day above last year's levels so far this month. Figure 1 | PJM Coal Output for 2017 - 2018 But in order to continue the gains for subsequent years, we need to see additional natural gas generation brought online as well as ... » read more | |
| Monday Aug 13, 2018 | |
| Over the past couple of weeks, the natural gas prompt month has moved up $0.15 or so to end the week just under $2.95. This leaves the speculative participants wondering if they should be selling since it the number mentioned is only $0.05 away from the top of the range ($3.00). Figure 1 | Prompt Month Henry Hub Natural Gas Settles - Daily Some of the key drivers are tied to the overall demand on the grid via Power Burns, Mexican Exports and the Industrial growth across the Lower 48. The power burns are tied to both Mother Nature as well as new facilities coming online such as Middleton Energy Center (TETCO) and Lordstown (DTI). Over the past 18 months, we have seen numerous power plants tie into the grid as the lower priced Marcellus/Utica basin was sending ... » read more | |
| Friday Aug 10, 2018 | |
| In the last 18 months we’ve seen a proliferation of “one to multiple” renewable deals where one project has multiple off-take agreements for a single project. This is a great development. Large projects can presumably come in with a lower levelized cost of energy. Often times a large project has an anchor tenant who takes more than half of the output, and then the project must find one or more smaller buyers to take the rest (sometimes leaving a small portion merchant). As more corporate buyers come to the marketplace we see demand for smaller chunks. So corporate buyers either organize themselves to purchase from a project or a project lines up multiple buyers on its own. The aggregation trend in renewable procurement is likely here to stay. It is a natural development ... » read more | |
| Thursday Aug 9, 2018 | |
| Last week we spoke about the carbon pricing that NYISO is considering implementing in order to reach renewable goals. This week we will move north to ISONE which has drastically different plans for the future. The smaller grid chooses to take what some might consider a more practical approach as it continues to develop combined cycle power plants. These are already a proven technology that can reduce carbon emissions as a result of their extremely efficient operations. Figure 1 taken from the ISONE State of the Grid shows that historic development and future plans are depending heavily on natural gas for energy needs. However taking a closer look, perhaps they are putting too many eggs in one basket. Figure 1 | State of the Grid ISONE But natural gas is abundant, cheap, efficient, and ... » read more | |
| Wednesday Aug 8, 2018 | |
| The past few weeks have been pretty exciting in the Western natural gas and power markets as we have seen SoCal Citygate index just under $40 the last week of July while August has shown us that Midc and Mead need the power when their respective loads hit a certain level. The Desert Southwest is not too far behind given that Phoenix and the surrounding areas have seen their fair share of hot summer days. Figure 1 | Phoenix Temperatures - Daytime High/Low In this week's Gold Package Newsletter Article we took a look at how the West has unfolded and who some of the winners and losers have been throughout this wild ride. As it stands right now, despite the Midway-Vincent nomogram constraint still showing up, the generators within NP15 seems to be in the ... » read more | |