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Wednesday Jan 26, 2022   
As we move into February, the 14-day weather outlooks will start moving into a window in which year-on-year comparisons will incorporate last winter’s Winter Storm Uri.  The brunt of that event came during Valentine’s Day, triggered colossal infrastructure failures in Texas that led to fatal blackouts, and spiked gas and power prices across North America to record high levels that were multiples greater than the previous highs.  Anytime the “unthinkable” happens it moves from being “conceptual” to “possible”.  As we approach the one-year anniversary of Uri, it poses the question: what happens to ERCOT if Uri-like conditions return? Figure 1 | Weather forecasts for the start of February for ERCOT are starting to hint at cold ... » read more
Tuesday Jan 25, 2022   
Tomorrow is expected to be one of the coldest days of the year for the North American continent. Population weighted heating degree days are going to push up to 39 which eclipses the polar event experienced last February. That weather event knocked out power to millions of residents in Texas causing one of the biggest energy infrastructure failures in history. Most of the Midwest, Northeast and Eastern Canada will see average temperatures post 15 to 20 degrees below normal. Since it is the coldest day of the year it has the potential to be also the highest gas demand day of the year as well.   Figure 1 | WSI Average Temperatures and Departures for Wednesday January 26 Lower 48 heating load is forecasted to be 59 BCF per day for Wednesday January 26. That will be the highest ... » read more
Monday Jan 24, 2022   
The Alberta market has been relatively tame over the past couple of weeks as temperatures are not quite as cold as once seen earlier in the month.  The power grid’s real-time balancing act has incorporated both strong wind generation and a healthy thermal fleet along with plenty of imports from BC and Montana.  Sunday evening, the marginal cost of energy started to shift dramatically during HE 21 as the price tickers within the hour topped the $100 mark and has not looked back as the latest tick came in just under $700 for the second time since half past the hour. Figure 1 | Alberta Real-Time Price Settles As you can see from the table above, the volume in the right-most column varies while the price handle is soaring to recent highs.  Looking at the grid operations ... » read more
Friday Jan 21, 2022   
Author | Tim Belden This is my first blog of 2022. As we settle into the New Year I thought I’d take the opportunity to share some share some observations related to the trends we are seeing from the work streams that come across our consulting desk.  The Bulls are Running: We wrote extensively over the last 18 months about the bullish factors in the wholesale electricity and the renewable energy / energy transition space. On the energy price side of things, we saw natural gas prices bottom out in Q2 of 2020 and steadily rise since then. The figure below shows the prompt month natural gas futures contract over the last five years. The markets got pretty hyped heading into the winter and are off from the highs. However, the markets are up a good $1.50 ... » read more
Thursday Jan 20, 2022   
Colder weather is moving into the South Central regions, for the purposes of this newsletter blog specifically Texas/ERCOT.  This means all eyes will be on the natural gas production component along with the happenings in the control room within ERCOT as management has spent the past 11 months honing in on reliability and availability.  It should be noted that the temperatures are not as dire as Storm Uri, but the next couple of days is the coldest stretch of the winter season to date.  Figure 1 | ERCOT Net Load - 7 Day Rolling Average The graph above represents the ERCOT net load rolling 7-day flash average for each day and compares the past three years.  The grey line is the forecasted tied to the demand volume to which is the highest the grid operators have seen if ... » read more
Wednesday Jan 19, 2022   
EU storage inventories continue treading at relative record lows, but the new year-to-date has provided a bit of relief with mild weather and featuring a brief period of injections.  The deceleration of draw-downs has helped narrow some of the annual deficits, but hasn’t quite been enough to bring current inventories out of record-low territory.  And, while all of this has eased some of the price pressures on European and Asian prices, forwards remain astonishingly strong. Over the past month, we have been pushing out a series of flashes as part of our EU Storage dashboards describing how the storage situation has unfolded.  The European winter got off to a strong start weather-wise this year.   Compounding issues, Russia – a major supplier of gas to ... » read more
Tuesday Jan 18, 2022   
In the past two weeks the weather pattern across North America has made a big shift. The west has warmed and the region east of the Rockies has cooled.The one area that has seen the largest magnitude of change has been Alberta. The province has flipped from seeing temperatures 20 degrees F below normal to 15 degrees above normal. The Nova system demand has fallen by 1.5 BCF per day. The looser balancing combined with the ramp up of heating load in the Midcon and Northeast has provided an opportunity for pipeline shippers to increase volumes flowing into the Lower 48. TransCanada, Northern Border, Alliance and Westcoast pipelines have increased flows by a combined .8 BCF.  Figure 1 | Canadian Pipeline Flows into the Lower 48 for 2020-2022 Combined with increased volumes flowing into ... » read more
Friday Jan 14, 2022   
The month of January has, so far, been an interesting time for CAISO transmission. To begin with, the Palo Verde line was derated to 1 GW. Since this line regularly provides ~3 GW of baseload or ramping supply to California, and can provide as much as 3.6 GW, moving down to only 1 is a significant shift. This shift occurred on January 3rd, 2022 and should be continuing to the last week of the month.  Throw in fact that currrent weather pattern has brought with it some cloud cover therefore impacting the in-state California solar output.  The combination of less megawatts from the Desert Southwest and the the solar fleet (both behind the meter and utility-scaled) has the potential of burdening the natural gas supply stack within PGAE, SCE and SDGE. The statement is general in ... » read more
Thursday Jan 13, 2022   
The Nymex rally over the past week has been solely driven by the simple fact that Mother Nature has decided to deliver winter-like weather to key demand areas across the Lower 48.  This is something that we have not seen since last February when Storm Uri sliced down the middle vertical third of the country and knocked around the ERCOT power grid and the natural gas landscape. Figure 1 | WSI 6-10 Day Model Forecast Conditions The image above is an illustration of the current WSI 6-10 day period and the coloration Mother Nature is going to be delivering.  As you can see, North America is divided by a downward sloping white line as the West is moderate in temperature while the eastern portion of the grid varies in its degree of blue.  The darker hue is further north but ... » read more
Wednesday Jan 12, 2022   
Easy come, easy go.  It was only a handful of weeks ago that we were talking about Sumas rising to become the nation’s highest-priced gas cash hub.  Now, it has fallen back to earth.  While eastern gas markets gear up for their first significant cold blast of this winter, western markets are sliding back into the easy chair.  In particular: the Pacific Northwest.  The brunt of that region’s cold is very much in the rear-view mirror with the road ahead looking smooth. In the final weeks of December, the Sumas spot cash prices climbed sharply, doubling in the span of just a handful of days to top out at $11.11.  Last February, prices went higher during the U.S. Deep Freeze event, but prior to that, Sumas had not breached an $11-handle since its ... » read more
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