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Tuesday Jan 11, 2022   
The Northeast is waking up to their coldest weather of the winter this morning with overnight lows in the single digits. As a result the New England heating demand has pushed up from 2.7 to 4 BCF per day this morning which is at the high end of the historical range. The problem for New England is that they do not have in ground storage due to geologic limitations. This is a big problem when the demand soars on the coldest days. Residential demand is always the top priority for reliability concerns and during these demand events New England does not have the pipeline import capability to serve all components of demand. Something has to give and that is usually the natural gas generation in the power dispatch. In the past five days ISO New England has had to forcibly switch ... » read more
Monday Jan 10, 2022   
The regional weather is always a focal point this time of year as any cold pattern originating in the northern arctic and diving down into the Lower 48 causes concern on the heating demand front when it comes to the Midwest, Ohio Valley and Northeast.  On the occasion when the colder weather pattern knifes deeper into the South Central or Southeast, we have a grid that is pushing and pulling molecules on the pipelines along with megawatts on the transmission lines.  If you recall, last February Storm Uri was such that the South Central was hit quite hard by well-below normal temperatures to which both the natural gas and power grids nearly came to a screeching halt. Figure 1 | North America Weather Pattern – 11-15 Day Period So far this winter, the only region that has ... » read more
Friday Jan 7, 2022   
Over the first week of the new year, cold weather has brought significant increases to coal usage in the Midwest, East, and Midcon regions of the country.  As we move further into January and the heart of winter, however, there is evidence that rather than simply being a function of increased overall thermal demand by itself coal is beginning to displace natural gas to some degree within the thermal stack as well.  Figure 1 shows daily round-the-clock coal generation from December 1st through yesterday.  Generation for the major ISO for each of the three regions is shown in the top three panes—MISO, PJM, and SPP.  The bottom pane shows aggregate coal dispatch.  As the wave of winter chill caused temperatures to drop and thermal demand to increase by January ... » read more
Thursday Jan 6, 2022   
It was unexpected but as we were having a few cocktails in the bleachers of a fast pitch softball tournament back in 1991, there was this lively music coming from the parking lot.  Around 7:00 pm on that enlightening summer evening, it was decided that we had enough softball (did not have to play until the next day – Sunday) and that is was time to check out the music.  As we entered the event, we still did not know who was going to perform at the outdoor concert but as the sun set and the stage lights turned on for the main event and the band came out singing ‘Joy to the World’ where the opening lyrics were as such: Jeremiah was a bullfrog Was a good friend of mine I never understood a single word he said But I helped him a-drink his wine And he always had ... » read more
Wednesday Jan 5, 2022   
The volume of renewables growth in ERCOT has been some of the most impressive rates in the world.   While this contributes to overall lower prices, it actually creates some pronounced periods of volatility.  Namely: the evening load ramp hours.  No matter how much installed capacity of solar grows, the solar power will still vanish when the sun sets.  Fortunately, ERCOT’s daily wind patterns sync up fairly well – but not perfectly – with solar because ERCOT wind’s diurnal pattern tends to feature intra-day peaks that precede the daily solar solar startup and follow its fade out.  However, the two resources’ shapes are not quite in perfect harmony; there still exist gaps between the two, which happen to tend to occur in the ... » read more
Tuesday Jan 4, 2022   
The transition to winter weather this week reminded the market of just how fragile the pipeline gathering system is in Oklahoma, Texas and the Rockies. Average temperatures across the region fell by 20 degrees taking the averages below freezing. From December 28th to January 2 the receipts fell 3.6 BCF. Combined with the 1.4 BCF of losses in Louisiana and the Marcellus the total fell to 90 BCF per day. This erases all the gains since the summer and takes the Lower 48 production output back to levels last seen in Q2 of 2021.   Figure 1 | Lower 48 Production By Friday the cold air mass will have moved East and the recovery of temperatures and production can begin. The equipment that has been frozen should return to service quickly allowing the receipts to correct higher. But what ... » read more
Monday Jan 3, 2022   
The Midwest and East are having a bit of winter, which is something our friends to the north have been dealing with for the majority of December.  During that period, both Alberta and British Columbia were seeing record temperatures hit the region along with heating demand.  The Pacific Northwest fell into that bucket between Christmas and New Years while California finally got some precipitation in the form of snowpack in the Sierra Mountains. Figure 1 | Sierra Mountain Snowpack Level The graph above details the Snow Water Percent as of April 1 for the northern region of California, which includes the Sierra Mountains.  As you can see from the red line, the month of December 2021 was impressive as there were two vertical upticks with the last one taking the current water ... » read more
Thursday Dec 30, 2021   
The current weather pattern across North America could not put Alberta and Texas at opposite ends of the temperature spectrum as the former continues to see well below normal daytime highs while the latter tinkers with some cooling load on certain days during the later afternoon hours.  As a result, we continue to see record natural gas numbers tied to heating demand in Western Canada while the South Central region is illustrating just how warm it has been by sending moderate price signals to market participants in both the day-ahead and real-time markets. Figure 1 | ERCOT Net Load and North Zone Day-Ahead Price – Hourly Yesterday’s blog focused on the Alberta power market where today’s will focus on the ERCOT landscape as we turn the corner and put 2021 in the ... » read more
Wednesday Dec 29, 2021   
The close of December has been one for the record books for Albertan power and gas markets.  Extreme cold has generated new all-time highs for demand while putting the squeeze on supplies, leading to sharp commodity price rises (in the case of power, going as high as they can).  Not only does this week present the potential for more, but longer range forecasts indicate it may be awhile before brutal cold gives Albertans a break. It all starts with weather.  A couple of weeks ago, a potent Arctic air mass began descending southward into Alberta.  By this past Sunday, Edmonton temperatures were plunged down to new all-time record los of -44˚F (-42˚C).  15 municipalities across the province also recorded new record lows.  On Monday, Calgary’s average ... » read more
Tuesday Dec 28, 2021   
One of the biggest issues in the Western states last year was the dramatic drop off in snowpack and run off into the river systems. It is an ongoing issue with drought conditions that have developed over the past two decades. The lack of streamflow caused the hydro projects in California and the Desert Southwest to draw down elevations to all time lows. Operations along the Sacramento and Feather Rivers in Northern California were taken to zero mid summer as all reserves were used. Around the clock hydro generation fell by 2-3 GWa from previous years putting the balancing burden on the grid squarely on the natural gas dispatch. But as of recent there has been a change in the fortunes. California has been hit by some big storms allowing a rebound in the snow water ... » read more
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