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Friday Jan 24, 2020   
Yesterday's short-term natural gas market came out firing on all cylinders, which meant the prompt month was up a measley $0.05 prior to the open.  If you looked at the weather model runs, there was a slight HDD uptick in days 14 and 15 that game some hope for a late winter-season 'rally'.  This move up pushed the prompt month up to $1.96 which is still $0.20 below where the month of February started the month trading. Figure 1 | Weather Model Run - 15 day Forecast As the day went on, the EIA stroage number was released and the noon weather model runs were coming out.  This halted the little party that was going on in the front of the curve as the day ended up settling a couple of pennies higher than the previous close.  As of this morning, the model runs have taken a ... » read more
Thursday Jan 23, 2020   
Now that we are basically into the final third of January 2020, we though it would be a good time to cover a couple of things that has shaped the natural gas market into its current state.  This state is a robust supply situation and a prompt month that has dropped below the $2.00 handle it was holding onto for some time.  The two main pieces of this conversation are production across the country and the weather pattern that has been locked in since early December 2019. Figure 1 | Balmy Weather Patterm - Lower 48 Starting with production, we continue to see strength in numbers as the daily average for the month of January 2020 is right around 94.5 BCF/d which is up just over 7.0 BCF/d when compared to last January.  This number is quite impression as the pipeline expansion ... » read more
Wednesday Jan 22, 2020   
Throughout my career in the energy industry, the Pacific Northwest has always been close to my heart as it is a market that reshuffles its cards every year, has a lot of intra-year volatility and is quite interesting to learn about as the Columbia and Snake river basins have a lot of histroy.  What gets lost in the shuffle sometimes with the Pacific Northwest Hydro outlooks is what is happening on the Westside as this region can produce anywhere from 1.7 to 2.0 GWa of generation when the streamflows are at their cresting point.  For this to happen, Mother Nature needs to deliver either precipitation in the form of rain or be cold enough to layer in some lower elevation snowpack that will eventually melt when it warms up and send the newly found water down the mountains and into ... » read more
Tuesday Jan 21, 2020   
While the Lower 48 has seen a record warm winter so far, the temperatures in Western Canada have not been so fortunate. Alberta just experienced one of the coldest weeks in history with average temperatures in the province posting 40 degrees below normal. That sent the Nova Intra demand to a new all time record of over 7.5 BCF per day eclipsing the mark set during last February's polar event. This cold event forced the storage draws on the system to max out at 2.6 BCF per day. But even with the response from the cavern system it was still not enough to meet the native demand. Figure 1 | NGTL Demand for 2018 - 2020 Once the storage withdrawals were maxed, the AECO cash prices had to run up far enough to compromise the variable transport costs out of the province. Pipelines cut ... » read more
Friday Jan 17, 2020   
Basis from generation projects to load are of critical importance to all market participants.  In recent years, many long-term renewable energy contracts have been written as hub-settled deals, where the resource owner settles with the buyer at a zonal hub price (gen hub or DLAP) and wears the basis risk to its project’s pnode. Figure 1 shows how three chosen CAISO nodes, one in Antelope Valley (teal color) and two in San Joaquin (gold and dark lavender colors) fared.  Both areas have seen large increases in solar generation in recent years. Note that all basis quantities are calculated as Node LMP – Hub LMP, so a negative basis means that the node is at a discount to the hub, and positive basis means the node is at a premium.    One of the most ... » read more
Thursday Jan 16, 2020   
A couple of weeks ago, one of our Newsletter blogs promoted the seminar titled 'Renewables and Wholesale Electricity Markets - Managing Risk, Maximizing Value' which will be led by EnergyGPS's own Tim Belden and Alan Comnes.  The two-day event will be held at the Magnolia Hotel in Houston  on the 23rd/24th of January.  Since that is only a week away, I would like to spend this blog highlighting once again what will be covered at the conference as the panel is full of expertise and knowledge of how the market will shape up in the coming years. Below is a list of topics on the agenda: Wholesale market structure and how renewables fit within that structure | the evolution of renewables is here to stay with California being the pioneer of state mandates and solar ... » read more
Wednesday Jan 15, 2020   
Growing up with Footloose as one of the top movies, it is hard to pass on anything tied to Kevin Bacon.  In fact, most of us have been in a conversation around the '6 Degrees from Kevin Bacon' or stated another way '6 Degrees of Separation'. The sayings are tied to the myth where any two people on Earth are connected by six or less aqcuantances at any given time.  In the Hollywood circle, it is where people try to take an actor/actress and connect the dots to Kevin Bacon as he has started in several fancy free movies over the years such as 'Hollow Man', 'A Few Good Men', Apollo 13', 'The River Wild' and the infamous 'Animal House' Figure 1 | Kevin Bacon Movie List The '6 Degrees of Separation' theme is common in the energy industry as two people seem to always figure out a way ... » read more
Tuesday Jan 14, 2020   
Just two years ago the total LNG sendout from United States shores was limited to 2.8 BCF. In those past 24 months there has been a prolific growth in liquefaction trains.  Multi billion dollar investments at Sabine Pass, Corpus Christi, Cameron, Freeport and Cove Point have now propelled the export volume to over 8.4 BCF. Almost all of that is on the US Gulf Coast. There is still more on the way. Kinder Morgan has put the finishing touches on the Elba Island Facility turning it from an import to export terminal. When fully completed it will take the liquefaction capacity up to 9 BCF per day.   Figure 1 | Total Lower 48 LNG Demand This large increase in LNG supply has had a big effect on spot LNG prices. Comparing the United Kingdom's Balancing Pool spot price to ... » read more
Monday Jan 13, 2020   
if you are a sports fan, you are privy to Las Vegas betting when it comes to the point spread (better known as the 'line on the game').  As with Oregon and many other states, the betting on professional games is now legal and many are active participants as they can stay at home, sit on the couch and place their bets as they see fit.  In the Pacific Northwest, there were a lot fo Seattle Seahawk fans that liked their chance in Green Bay on Sunday night, especially with Las Vegas giving them 4 points.  The 4 points were the betting line spread Vegas put on Packer-Seahawks game to see who would play the San Francisco 49ers next week to see who goes to the Super Bowl.  The 4 points spread basically stated that you could place a bet on either team, if you chose the Packers ... » read more
Friday Jan 10, 2020   
On December 19, FERC issued its long-awaited order on PJM’s capacity market addressing capacity resources in receipt of state-level subsidies.  In short, FERC’s republican-majority voted 2-1 for an existing-generator-friendly order to expand the minimum offer price rule (MOPR) under PJM's Reliability Pricing Model (RPM, aka Capacity Market).   Compared to PJM’s more nuanced filing made back in October 2018, FERC: Rejected PJM’s resource-specific carve out (RCO) for new and existing resources Eliminated exemptions from the MOPR for several resource types: small units, units that could claim a minimal subsidy (materiality threshold), energy efficiency, and smaller resource category types such as landfill gas Allowed for unit-specific MOPRs. Individual ... » read more
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