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Friday Apr 29, 2016   
Spring is always an interesting time in the Pacific Northwest. The size and timing of the spring runoff varies from year to year. Fortunes are made or lost as energy traders try to anticipate the relationship between runoff, production, and price. Peak and off-peak prices during the second quarter are often the most volatile of the year in the western markets. April is so complicated that the reliability planners split it into two months. During early April, the threat is cold weather combined with low runoff can strain the system -- especially during the morning ... » read more
Thursday Apr 28, 2016   
As we get closer to the end of April, this past week has seen some record wind which has resulted in the middle of the day clears to come in negative for the first time in 5 years during a weekday. Let's take a look at the data. First, wind generation within the state of California has been on a tear as of late. Figure 1 | Daily California Average Wind Generation - 7 Day Rolling Average Breaking it down by zone (NP15 and SP15) you can see the steady output down in the Southern part of the state, while the North has been a little choppy. Figure 2 | CAISO Wind ... » read more
Wednesday Apr 27, 2016   
Yesterday's newsletter covered a recent update from the Texas Railroad Commission which indicated that total natural gas production in Texas had declined 1.25 BCF/day between February and January of this year and fell over 4 BCF/day from February last year. Texas has multiple shale plays, all with different economics, fortunately the commission provided district level information which allows us to match production levels to an individual region.  In Figure 1 below we break out Oil, NG, and Associated NG production for Districts 1 & 2 which are primarily ... » read more
Tuesday Apr 26, 2016   
Trying to estimate natural gas production in Texas is a tricky proposition. Since most of the production is metered on intrastate versus interstate pipelines they are not under FERC jurisdiction to post meter data to a bulletin board. Forecasting services are left with the few long haul pipes that run through the state to gather their sample size. When reconciling the data, most forecasters will go back to the Texas Railroad Commission or EIA data to true up the actual volumes. To complicate matters, a significant amount of Texas natural gas comes from crude ... » read more
Monday Apr 25, 2016   
With the Pacific Northwest have a glut of supply hit their system (wind and hydro), there is plenty of MWs flowing down on the Paci and Nob lines during the middle of the day.  Add to it, the fact that the in-state California wind is howling and producing a massive amount of generation in both NP15 and SP15. Figure 1 | CAISO Wind Generation Forecast It should also be noted that the overall load week on week has shifted down considerably across both regions with California's peak demand shifting down from 31,500 W to 28,600 MW for today. Figure 2 | CAISO Peak ... » read more
Friday Apr 22, 2016   
As I watched the Houston Rockets/Golden State Warrior basketball game last night, I could not help but think what the fans and the city have been going through the past few days.  The massive rainfall flooded the city to a point it was shut down for a couple of days and lingering precipitation is no helping the cause as street are still flooded.  Seeing all the fans in their red t-shirts did tell me that the city is working its way back to some normalcy, which can be translated into the energy markets. Here we saw the heavy rains impact the in-state natural ... » read more
Thursday Apr 21, 2016   
As the week finishes up, I thought it would be good to highlight some of the key elements impacting the market.  Starting on Monday, April 18th (4-08, 408) it was officially tax day for everyone.  In Texas, Mother Nature was not too kind to the accountants that left filing to the bitter end as a massive storm moved through the state where some hours saw up to 4 inches of rain.  Needless to say, such an amount was enough to break a single hour record and rank right up there with the most rainfall within a given day across Houston. Figure ... » read more
Wednesday Apr 20, 2016   
Heavy rain fall in the South Central region this week caused massive flooding, primarily in the Houston area.  At one point the rain fall equated to four inches an hour, clogging run off drains and pushing creeks and rivers over their banks.  While the Lone Star State declared a state of emergency to deal with the rising waters the NG market aggressively traded up as the May contract rose 15 cents to settle around $2.09. The fundamentals behind the market strength were valid as production numbers declined and power burns rose.  While the ... » read more
Tuesday Apr 19, 2016   
Now that we are a couple of weeks into the storage refill season it is an appropriate time to do some quick balance sheet analysis of the present natural gas supply/demand picture. At this point, natural gas is clearly tighter when compared to April of 2015. Figure 1 details some of the year on year component changes to the natural gas landscape. The most notable items are ResCom demand, Power Burns, Exports to Mexico, LNG Canadian Imports and Production.  Figure 1 | North American Supply/Demand Balances Here we will discuss some of the factors that have ... » read more
Monday Apr 18, 2016   
With the hydro system flowing over 319 kcfs at McNary and 94 kcfs at Lower Granite, the generation out of the turbines is at/near their max capacity.  This has led to several of the dams to over-generation spill as the water has nowhere else to go.  Despite the higher hydro generation in the region, Midc's heavy load price was strong for today as it averaged $14.09.  Using weekend Malin gas that put the implied heat rate at an 8.79. Figure 1 | Midc Heavy Load Price This type of implied heat rate would entice gas fired power plants to nom up as it is ... » read more
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