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Monday Mar 9, 2020   
This blog reports on a paper co-authored by REsurety and Energy GPS titled The “P99 Hedge” That Wasn’t which was originally released in the spring of 2018 and was updated on March 3rd 2020. A copy of the original paper and the update can be found here: https://documentcloud.adobe.com/link/track?uri=urn:aaid:scds:US:40414cea-833b-4b21-99ec-8aba42571c65 For a number of years, ERCOT generation owners, retail electric providers, and traders have anxiously awaited the hot summer months to see if spot prices would finally experience sustained price spikes up into the thousands of dollars per MWh. They rarely did. Forward contracts for on peak August 2018 and then August 2019 deliveries ranged in value from $75 per MWh to more than $200 per MWh in advance of the delivery month. » read more
Friday Mar 6, 2020   
Over the past few months, EGPS has been watching the basis story unfold in the Desert Southwest area. We found that the area, dominated by huge amounts of solar, has been experiencing congestion with almost exactly a solar shape: as solar generation ramps up, basis increases, and as solar declines in the evening, basis declines with it. The historical basis in the area is interesting to examine, as the influence of solar becomes more and more obvious over the years. If you missed our two articles on this topic, you can purchase either a la carte by clicking on the links provided (Basis Story Part 1, Basis Story Part 2) as well as our third one in the serios published today (Basis Story Part 3).  The other option you have is to sign up for either our Gold or Platinum ... » read more
Thursday Mar 5, 2020   
It is the beginning of March and the 15 day weather model runs are showing nothing but below normal HDD accumulation across the Lower 48.  This means that the natural gas landscape will be trying to find its way as the daily balancing act is holding on for dear life.  Speaking of holding on, the Lone Star state is going to have a situation of its own this weekend as the wind looks to be picking up a head of steam.  For example, the current flat daily average for the wind output is just under 10.0 GW while Sunday is looking at doubling that amount with just under 20.0 GWa in the forecast. Figure 1 | ERCOT Daily Summary Breakout If you combine the uptick in the wind generation with the fact that the power demand is shifting lower due to it being a weekend and moderate ... » read more
Wednesday Mar 4, 2020   
The month of March is off to a similar start as to how the month of February played out inside of California and tis precipitation pattern.  If you look back at the month of January, it started out with somewhat of a reasonable start to the 2019-2020 Water Year as the precipitation pattern was tracking that of normal and the prior couple of years.  It was at the halfway point of the month that things started to change as the jet stream was holding any type of precipitation out in the Pacific Ocean and not letting it onshore. Figure 1 | California's Northern Region Snow Water Percent as of April 1 This trend continued on through the month of February as the northern portion of the state basically dried up as there was no snowpack accumulation or rainfall to speak of.  If ... » read more
Tuesday Mar 3, 2020   
Over the past decade, Columbia Pipeline has recreated itself. The pipe was originally designed to take natural gas from the gulf of Mexico back up to Kentucky and West Virginia. But with the blooming production idustry out of the Marcellus Basin the compression on the pipe has been progressively reversed. The pipe now has over 2 BCF of capacity from the Midwest down to the Gulf designed to feed the growing LNG exports. Last month that capacity was cut from 2.1 to 1.5 BCF as a forced outage was initiated. The lost volume was the catalyst for large storage draws out of the South Central caverns. Figure 1 | Columbia Pipeline Back Haul Flows South of Leach The outage lasted from January 24 into this past weekend. Once the derate was lifted the balancing in the Gulf flipped ... » read more
Monday Mar 2, 2020   
It is now March 2020 and the winter season will be coming to an end over the next 28 days.  Now some might argue the end was a few months ago as Mother Nature sprinkled warmer than normal dust across the Lower 48 early and often.  This has led to a natural gas storage level that is just over 600 BCF higher than last year at this time.  If you take into account the fact that the latest 15-day forecast is showing above normal temperatures (below normal HDD accumulation), it might be time to officially move this year's month of March into the summer strip. Figure 1 | Lower 48 HDD Accumulation Forecast The yellow line represents last year's HDD accumulation by day while the blue line is this year's forecast.  As you can see, the 1-5 day period is well below that of ... » read more
Friday Feb 28, 2020   
As the new year progresses, it is always interesting to take a year-to-date comparison to last year to see how the prospects for CAISO solar are shaping up this year. There are so many moving parts with more solar being added to the grid, changing hydro conditions, changing natural gas prices, and an evolving energy imbalance market. The table below draws from data published by CAISO where “Potential Solar” equals the metered solar generation plus solar curtailment, “Curtailed Solar” is taken directly from the CAISO reports, “MWh % Curtailed” is simply the curtailed MWh divided by the potential MWh, and the “SP15 GEN-APND” is the SP15 hub price in the CAISO 5-minute market. Table 1 | YTD Jan-Feb Comparison of CAISO Solar Data for 2019 and ... » read more
Thursday Feb 27, 2020   
Every year, there is a time at the beginning of February when 'Phil', the groundhog, is taken out of its little nesting place to figure out its shadow situation.  This is known across the country as Groundhog Day where people gather around in Punxsutawney for the annual event. If the groundhog sees its shadow, it is an indication that there will be six weeks left of winter whereas if there is no shadow we are looking at an early spring. Figure 1 | Groundhog Day This year the one big difference at the time of the shadow reveal was the winter weather was almost non-existent up until that point.  This led to  the natural gas forward curve prompt month moving down below the $2.00 handle with the summer period dropping below that of true production costs in many regions.  ... » read more
Wednesday Feb 26, 2020   
Over a couple of decades, you can clearly see how the recycle movement has made an impact in behaviors of humans throughout the world.  If you live in the Portland Metro area, we have gone as far as eliminating plactic bags that were common when getting groceries or ordering from a fast food establishment.  Within the past 6 months, you now have to ask for a simple straw or plasticware at checkout.  In fact, after you ask, the cashier has to pull out a tray/box and place it in front of you as they are not suppose to touch the straw or utensils, some of which are still in the little plastic wrapper (hmmmm). There was a moment in time that Multonomah Country was even making Starbucks move their wood stir-sticks behind the counter to where you had to ask for one to mix ... » read more
Tuesday Feb 25, 2020   
Each month the EIA puts out their Drilling Productivity Report. In the publication they detail current and forecasted production along with a count of drilled but uncompleted wells (DUC) across the Lower 48. These DUC wells are available in the producer inventory for extracting natural gas. Typically they only need a well head and gathering connections in order to push volume into the pipeline stream. Since May of 2019, the Lower 48 DUC count has dropped from 8,568 to 7,658 wells which means the producer community has stopped building inventory and is now working off the well count in order to keep natural gas volumes stable.  But if you break down the DUC count by region you can see that there is a bigger story. The Appalachia region, which represents the Marcellus and Utica ... » read more
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