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Tuesday Feb 19, 2019   
Coming into this winter, many had assumed that natural gas production volume would continue its upward climb. The early spike in prices at the beginning of the withdrawal season combined with an abundance of company guidance suggested that it was possible to see a 10% increase in total volume from Q4 into Q1 2019. That should have put the total over 89 BCF per day prior to the start of the injection season. But it has not played out that way. Production volumes have been a big disappointment falling from 88 to 86.5 BCF. The warm climate during December and January may have overshadowed the production drop this year but this will come back into the spotlight as we start the refill season.  Figure 1 | Lower 48 Production Volume The spike in winter prices heading into the season should ... » read more
Monday Feb 18, 2019   
Over the years, I have been traveling to San Diego for leisure, work commitments and soccer tournaments.  We usually are on the north side, heading past La Jolla and ending up near Del Mar or slightly inland near Rancho Bernardo.  On many occasion there has been some news article in the local paper that compares San Diego to that of Portland, OR.  The range of topics included the urban downtown development, bike lanes, public transportation and last but not least the micro-brew scene.   Over the past 3-4 years, the San Diego breweries have gained national recognition starting with Ballast Point taking their bottled beer nationwide along with Stone Brewery making what I call the Taj Mahal of dining as the indoor/outdoor eating areas are truly amazing.  There ... » read more
Friday Feb 15, 2019   
With the colder weather in Western Canada and the Pacific Northwest well documented over the past couple of weeks, the natural gas pipeline infrastructure has been on high alert via the pipeline critical notices known as OFO's.  Figure 1 | Portland Temperatures - Actual and Forecast This alert system extends all the way down into Southern California as SoCal Gas's system has been tight ever since the Aliso Canyon valve leak as well as the limited transport capacity from the Desert Southwest via its North Zone.  As a result of the SoCal Gas issues, the Westcoast Pipeline explosion and the lingering cold weather across the west, the other storage facilities are feeling the pain as we speak.  For example, this week Northwest Pipeline (NWP) sent out a notice that stated ... » read more
Thursday Feb 14, 2019   
The Northeast has had a wild ride throughout late winter. While early winter was relatively mild, entering the second half of January erratic weather patterns shifted throughout the region. An initial burst of cold drove down temperatures, the reaction by energy markets was short-lived. Just after the extreme cold hit the region a warm low pressure system from the South engulfed the Northeast thawing out the accumulated snow and softening energy prices. The polar vortex in late January resulted in freezing conditions reaching wind chills in the -50 to -62 degree range in the Midwest which can result in frostbite in as little as five minutes. The high pressure system eventually made its way towards the Coast causing a precipitous drop in temperatures throughout all the regions it ... » read more
Wednesday Feb 13, 2019   
If you have followed the West Power and Natural Gas markets over the past few years, California has received most of the limelight dating all the way back to the corroded rods tied to SONGS to the SCE Limit Constraint inflating SP15 prices compared to their counterpart (NP15) to the north.  Then the Renewable Portfolio Standard (RPS) drive filtered into the frey along with a Carbon market that 'taxed' anything omitting gases into the air, including natural gas-fired generation. Figure 1 | SONGS and California's Renewable Portfolio Standard Without going into a lot of detail, the removal of the SONGS Nuclear Facilities demanded natural gas to be burned for power within the LA Basin as the grid was not prepared for the removal of over 2 GW of baseload generation in the area.  The ... » read more
Tuesday Feb 12, 2019   
This has been a winter of extreme demand shocks for the Gulf region. It all started with an early start to winter back in November. As temperatures dropped to levels normally seen in December, the concerns about storage inventory drove Henry Hub cash prices to the highest levels on the entire curve at over $4.70. As the climate flipped from below back to well above normal the same cash product flipped from premium to discount on the NYMEX curve. A rout of the futures curve was on as the lack of heating demand wreaked havoc with the balancing. Cash prices lost $1.63 in just three weeks ending the year at $3.06. That took the Q1 futures down a dollar to $3.50.   Figure 1 | Q4 2018 Henry Hub Cash and Q1 2019 NYMEX The warm weather pattern stayed intact through much of ... » read more
Monday Feb 11, 2019   
Growing up, I remember watching television where a specific commercial had this pink bunny racing around beating a drum.  The commercial went on to detail how the bunny could outlast any other bunny that would be trying to play an instrument of sort.  Yes, it is no other than the Energizer Bunny, which was promoting the last-lasting company's battery. Figure 1 | The Energizer Bunny The picture above details the memories I have as the bunny was always decked out in some sort of flip-flops and sunglasses with a little energizer battery down by its tail.  Little did I know that prior to the Energizer Bunny, there was the original pink bunny across the Atlantic Ocean, known to many in England as the Duracell Bunny. Figure 2 | The Duracell Bunny The Duracell Bunny, pictured in ... » read more
Friday Feb 8, 2019   
After watching the commercials during the Super Bowl last weekend, I could not get the robot one out of my head as it tied into the theme of smart technology we touched on a couple of weeks ago.  At some point in our kids lifetime if not our own, the idea of robots and gadgets doing everything for you makes a lot of sense as you get consistency along with reliability in whatever needs to get done.  With technology comes massive amounts of data that can be analyzed by us as individuals or others trying to figure out the human behavior or better yet the tendencies of things such as supply & demand in the energy sector.   This brings me to what was hanging on my door when I got home, it was a brochure that was colorful and stated, "Meet Your NEW Smart Meter".  ... » read more
Thursday Feb 7, 2019   
Over the course of last year we saw a huge natural gas combined cycle buildout across the ConUS. Many of these facilities were built throughout the Marcellus shale region in order to take advantage of the cheap gas locally. However, the additions have begun to slow down with less than half the nameplate capacity expected for 2019. While the Marcellus buildout hasn’t quite halted, just under 2 GWs of the new builds are located within the PJM footprint. Approximately 1.4 GWs are being built in Pennsylvania near the heart of the new gas revolution. However, the geographic location appears to be more diverse with large facilities popping up in Florida and Louisiana. The additions to these two states alone comprise nearly half of the planned combined cycle additions. Figure 1 | Natural ... » read more
Wednesday Feb 6, 2019   
The cold weather is locked in across Western Canada and the Pacific Northwest for the next two weeks.  This alone is enough to shift the natural gas rescom demand to levels that make the pipeline balances tough on a daily basis.  When you factor in the power loads are shifting up and the marginal megawatt is moving higher in the supply stack, the burden is pushed onto the natural gas-fired generation across the grid.  Since the Pacific Northwest is a net exporter of power on most days, times like these does not warrant more power burns per say as the Midc just needs to price itself high enough to keep the megawatts as home instead of flowing down into California on the AC or DC interties. Figure 1 | CAISO Day-Ahead Transmission Flows - Hourly In the figure above, the top ... » read more
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