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Friday Aug 26, 2016   
For many years I have been a fan of the analysis put out by a small group of economists who research and write about California energy and environmental markets. Severin Borenstein, James Bushnell, and Frank Wolak have all been deeply engrossed in California’s electricity markets since the 1990’s, serving at various times as members of the CAISO Market Surveillance Committee as well as the Economic Analysis and Allocation Committee at the California Air Resources Board (CARB). While the CAISO and CARB lack independence and are extensions of the California ... » read more
Thursday Aug 25, 2016   
Since the market's prompt month closed last Friday (the forward curve shifted down $0.08-0.09 depending on the month) at $2.58 it has done nothing but go up this week as it ended Wednesday's trade date closing out around $2.80.  So what caused the $0.22 you might ask?  Look no further than Mother Nature, as she came out of the weekend with something to say.  First, she started with the Pacific Northwest as temperatures are going to be in the 91-95 degree range towards end of the week.   Second, the South Central portion of the country saw an uptick ... » read more
Wednesday Aug 24, 2016   
Texas natural gas production is hard to quantify as most wells are sitting on intra-state pipelines which are not subject to FERC jurisdiction. As a result we rely heavily on EIA and Texas Railroad commission monthly data in order to understand changes in Texas natural gas production. The latter recently posted an update to their production estimates, releasing new June data and revising prior months. The June Total NG Texas Railroad Commission production estimate is 20.14 BCF per day which translates to a 1.04 BCF/d decrease from May and ... » read more
Tuesday Aug 23, 2016   
As we closed last week there were a number of factors that caused sentiment in the overall natural gas market to change. Going out the door on Friday, front month NYMEX closed down 9 cents pushing the the day's settle down to $2.58. For one, power burns were trending lower as cooler temperatures and precipitation weighed on power loads through the middle third of the country. Burns were projected to fall from 36.7 to 32.8 this weekend, which is the lowest level we have seen since May. This is of course would force weekend storage injections to swell as a decline in ... » read more
Monday Aug 22, 2016   
With power burns going from going from a high of 39 BCF early last week to just over 32 BCF over the weekend, something has to give to balance the grid. Figure 1 | US Power Burns - 7 Day Rolling Average That something is pretty simple, it went into storage as the daily net injection shfted up from the 1-2 BCF/d number that we have been seeing as of late (this week's EIA Storage number will be in the 8-10 BCF injection range) to more like 8-9 BCF/d. Some of this change can also be attributed to production not falling off, in fact it is slightly increasing over the ... » read more
Friday Aug 19, 2016   
One of the more interesting presentations to come into my Inbox in the last several months is Pacificorp’s presentation at an Oregon PUC meeting on July 26, 2016 titled “2016 Resource & REC RFP Public Utility Commission of Oregon Special Public Meeting.” The presentation, which we were only able to find on the website of the Northwest and Intermountain Power Producers Coalition, provides clues into a number of important trends in Western US power markets.  http://www.nippc.org/upload/PAC%20RFP%20Shortlist%20Presentation%20072616.pdf The ... » read more
Thursday Aug 18, 2016   
Since July 21st, the SP-Midc spread has been volatile with 10 of the days having Midc trade over SP15 while the other 17 showed the opposite.  Breaking it down even further, of the 10 days Midc was over SP15, 3 days have seen the former trade over the latter by more than $10.   Figure 1 | SP15-Midc Heavy Load Spread - Year on Year Comparison This included today as Midc indexed $57.37 while SP15 came in at $45.06.  Part of the reason for the uptick in the Midc price had to do with the weather shifting up to where Portland is expected to 98 degrees later ... » read more
Wednesday Aug 17, 2016   
The first half of August has seen strikingly strong power burns with the daily demand averaging 38.4 BCF which is up nearly 5.4 BCF from Last year.  Looking at the regional break out, we see that the East is the main bullish driver accounting for over half of the YoY Delta.  Figure 1| North American Power Burns by region - BCF Diving into the numbers a little deeper we broke down the EIA East region into sub-regions, they are: New England, Northeast, and the Mid-Atlantic. Figure 2| Power Burns Pipeline Sample by Sub-region    The one ... » read more
Tuesday Aug 16, 2016   
Sunday afternoon, Spectra posted a Critical Notice on the Algonquin Gas Transmission bulletin board notifying market participants that there was a force majeure at the Southeast compressor station in New York. Capacity on the Algonquin Pipeline was already being constricted due to a summer long construction schedule to tie in Spectras Algonquin Incremental to Market (AIM) project before the November 1 start date. The further cut in capacity flowing into New England shot cash prices up from $3.60 to $6.00 per MMBTU for Tuesdays delivery. In Figure 1 below, here is the ... » read more
Monday Aug 15, 2016   
Since the beginning of August, Texas (ERCOT) has seen well above normal temperatures for this time of year across most of the state.  This widespread heat shifted ERCOT's peak load above the 71,000 MW mark (new record) last week. Figure 1 | ERCOT Load and Wind Generation Profiles - Hourly The wind generation was decent those days, which helped shift down the net load numbers during the middle of the day.  From a price perspective, we saw the middle of the day spike as the grid needed to resort to quick firing peaker units to balance the grid.  As you ... » read more
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