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Tuesday Aug 30, 2022   
Since the beginning of the injection season back in April the NYMEX continuous contract has appreciated from $5.70 to not the $10 mark. In that time there have been little to no supply/demand elasticity changes that could alter the end of October inventory balancing. Production is at the same level as it was one year ago. Power burns, with respect to the net load, are unchanged despite the change in underlying generation costs. And most important is that the end of October storage inventory forecasts continue to point to 3.35 TCF which would be a five year low and one of the lowest levels seen over the past two decades. There is limited time to find any method of loosening the current storage balancing dynamic. If it cannot be accomplished then the Lower 48 will enter winter with ... » read more
Monday Aug 29, 2022   
All eyes have been on the Colorado River this summer and discussions amongst the market participants as this water year has provided drought conditions for the second consecutive year.  The conditions have had a huge impact on water availability throughout the Southwest including hydropower production in the Desert Southwest.  This summer the elevation of Lake Mead has reached historic lows, after falling into a Tier 1 Shortage status in 2021.  This past May the elevation dropped below 1,050 feet, triggering the more severe Tier 2 Shortage status, which constitutes a drop from over 1,120 feet in late 2012 as shown in the figure below, a decline of over 70 feet in less than 10 years. Figure 1 | Lake Mead Elevation, 2010 – 2022 (feet) Over the past several weeks since ... » read more
Friday Aug 26, 2022   
Energy GPS Consulting recently completed two studies of the Pacific Northwest (PNW) market. These studies evaluate the potential costs and impacts associated with potential changes to the PNW hydro system. There are two important and significant changes being proposed. The changes are intended to increase the viability of salmon. One of the proposed changes would require increasing the amount of spill, taking water that otherwise would have run through the generators and diverting it to the spillways. The other proposed change requires the removal of the Lower Snake River Dams (LSRD). The spill rules would have an immediate impact. The breaching of the LSRD would likely not happen until around 2030. Certainly, these are complex issues which depend on the science surrounding salmon ... » read more
Thursday Aug 25, 2022   
Last week, the Bureau of Reclamation announced new cuts in water usage for Arizona, Nevada, and Mexico. The decision is based on their 24-month study that was released the same day. The study projects the elevation for the lakes behind two of the biggest hydro producers for the Desert Southwest region: Glen Canyon and Hoover dams. Both lakes, Powell behind Glen Canyon and Mead behind Hoover, have faced serious shortages in recent years as a megadrought has raged through the region for more than a decade. Both are at historic lows and could sink beyond the ability to produce hydropower if interventions are not made. The figures below show elevations at the lakes over the last 12 years, as well as the timing for passing important critical points identified by the Bureau. Figure 1 | Lake ... » read more
Wednesday Aug 24, 2022   
While the whole world continues to see higher prices in anticipation of a winter energy crisis particularly in Europe, there is one location that has not followed that sentiment. Over the past week maintenance outages on the Nova system combined with record levels of production have forced gas prices to seek much lower levels. The AECO cash price has sunk from $3 to only 15 cents. The price is the lowest of the past three years. During the summer of 2019 when a number of construction activities bound the Nova system there were regular price prints under 10 cents. This week's drop in AECO cash occurs while the Gulf Coast is posting near $10 per MMbtu putting the spot basis differentials at record levels.    Figure 1 | AECO and henry hub Cash for June-Aug 2022 (USD/MM) Most ... » read more
Monday Aug 22, 2022   
Mother Nature is delivering modest weather for the past couple of weeks and the latest 15-day forecast is carrying the pattern into the first week of September 2022, which means the Labor Day weekend is going to be somewhat cool across the country.  This is a bit different than what the Lower 48 experienced throughout June and July 2022 as temperatures were above normal for most of the country. Figure 1 | Lower 48 CDD Accumulation for 15-Day Forecast – Daily Despite the lack of power demand, we continue to see two things happen across the energy sector with the first being tied directly to the power demand profile; it is the lack of wind generation in key areas.  The two areas we continue to focus on are SPP and ERCOT as the swings in the hourly generation profile from ... » read more
Friday Aug 19, 2022   
Energy GPS Consulting recently completed two studies of the Pacific Northwest (PNW) market. Both of the studies evaluate the potential costs and impacts associated with potential changes to the PNW hydro system. There are two important and significant changes being proposed to the hydro system. Both of these changes are intended to increase the viability of salmon. One of the proposed changes would require increasing the amount of spill, taking water that otherwise would have run through the generators and diverting it to the spillways. The other proposed change requires the removal of the Lower Snake River Dams. The spill rules would have an immediate impact. The breaching of the Lower Snake River Dams (LSRD) would likely not happen until around 2030. Certainly, these are complex issues ... » read more
Thursday Aug 18, 2022   
With the weather in the region hot again with temperatures nearing 100 degrees in Portland, the Pacific Northwest grid is growing significantly tighter.  The Mid-C bilateral price moved up to trade more than $30 higher than SP15 for this past Wednesday—a big change from the price on Monday where Mid-C came in more than $40 below SP15—as the need was there to send a price signal to keep the MW generated in the Northwest at home instead of sending them over the transmission lines down to California.  Thankfully, a change took place this week on the hydro system that has provided a boost to the supply stack in the PNW.  This past Monday, August 15th marked the transition from the initial set of summer fish spill regulations to a less strict set of requirements that ... » read more
Wednesday Aug 17, 2022   
The SPP market continues to deliver price volatility across the two zones (North and South) as well as provide a thoroughfare for megawatts to move in/out of adjacent regions.  We continue to expand the coverage of the region that moves up and down the middle third of the Lower 48; to which we have created the SPP Power Package.  Such a package dives into the grid’s market fundamental supply/demand components and displays them in charting tools, dashboards and written commentary that can be found on the EnergyGPS website portal. In today’s blog, we detailed a few of the key pieces that are on display daily. Starting with the net load, the graph below illustrates a year-on-year comparison for all SPP to which we can carve into sub-regions to really see how the price ... » read more
Tuesday Aug 16, 2022   
One year ago the ElPaso Pipeline suffered a rupture near Coolidge, Arizona that killed two people. Immediately ElPaso shut down the L2000 segment of 30 inch pipe cutting .54 BCF per day of flows from West Texas to the California Border as repairs and inspections mandated by the Department of Transportation - Pipelines and Hazardous Materials Administration(PHMSA). ElPaso Pipeline is an older pipeline with some lengths having an age close to 50 years old. As a result extensive repairs and inspections are needed to ensure the pipe is safe to use. This past week Kinder Morgan, the owner of Elpaso Pipeline, posted a note stating the repaired segment will continue to be out of service at the behest of the PHMSA at least through the end of the year.  Figure 1 | AZ Exports to ... » read more
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