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Wednesday Aug 1, 2018   
Over the past couple of months, we have discussed the ERCOT wind profile on an hourly/daily/monthly basis and its impact in the marketplace.  Before we get into some of the details, it should be stated that the max generation (wind) output has increased from 15.9 GW to over 17.3 GW since December 2016. Figure 1 | ERCOT Wind Max Generation Cumulative Output Looking at the figure above, you can see the step up values in and around the end of Q3/Q4 as developers rushed to get their facilities up and running prior to the end of the year.  So far this year, the max cumulative max capacity has not increased, but what did increase was the overall wind capacity factor in Q2.  The capacity factor is when you take a period's average and divide it by the cumulative max value for that ... » read more
Tuesday Jul 31, 2018   
At EnergyGPS we use a number of metrics to tune our production forecast for shale and non shale growth. One of the items we track closely is the processing expansions throughout the country as a means of estimating wet gas volume. Late last week MPLX Corp, formerly Markwest Energy, posted their Q2 earnings. As part of the financial release they give an update on existing operations as well as growth strategy. Their growth strategy is the construction and operation of new processing facilities. They currently have capacity for 8 BCF per day with most of that residing in the wet Marcellus region. Their processed volumes from Permian and the Northeast make up 6.6 of the 80.5 BCF of  Lower 48 total natural gas volume. The company was successful in bringing an additional 5 processing ... » read more
Monday Jul 30, 2018   
'Tis the season' is a phrase that gets used over the Christmas holiday season as everyone gathers around the lighted Christmas tree and celebrates being with family and friends.  This is a joyous time of year for most as the kids open up their presents and Santa Claus leaves crumbs on the plate where the cookies were left. Figure 1 | Tis the Season In the energy sector, the 'Tis the Season' takes on a different tone as the dog days of summer present many obstacles that are not so joyous.  The first is the heat, which we saw move through the State of California the past couple of week ('LeHeat in LA').  The last go around stretched the heat wave out into the Desert Southwest as well as the the Pacific Northwest.  This situation created quite an uproar when it came ... » read more
Friday Jul 27, 2018   
Amidst the high power prices that hit southern California this week, was Tuesday’s announcement by LADWP (beautifully reported in the New York Times[1]) that it wants to augment Hoover Dam  with a $3 billion pumped storage facility ostensibly powered by renewable energy. Figure 1 | Hoover Dam    Hoover Dam is truly a wonder of the modern world.  It is an icon known to millions and its specific features and history are well known by many energy geeks, including myself.   The “colossus of Black Canyon” was conceived of by engineers and promoters of Southern California development beginning in the 1920s. The 726-foot dam was ultimately built by the “Six Companies”, a consortium of engineering and construction enterprises owned ... » read more
Thursday Jul 26, 2018   
Zone A congestion has seen several spikes so far this summer with LMPs remaining significantly above last year. While part of the elevated prices are undoubtedly due the hot weather, other fundamental factors have also affected the region. In order to get the big picture of what’s going on, let’s first take a look at the constraints in Zone A, as seen in Figure 1. The Niagara dam helps provide hydro generation across the ISO and is also the largest supply source in Zone A. This hydro generation can flow along a 345 kV line out to the rest of the state showing up on the Dysinger East Interface. In order to reach load in Zone A, flows have to step off of the 345 kV and onto a 230 kV system. Comparing this to our road system, flows out of Niagara exit the highway and get stuck in ... » read more
Wednesday Jul 25, 2018   
Since the settle of the July NYMEX contract almost one month ago the price action for the August futures has been a one-way ticket south. The contract has lost 26 cents to settle at $2.72 to begin the week. The weight of production growth has overwhelmed the big year-on-year power burn gains throughout the EIA South Central region. That said we are wary of further price drops. There are a number of fundamental factors that have changed in the recent days that cause us to temper any additional downside expectations. The first is we have seen a dramatic rise in the coal to NG price ratio since the beginning of the month. In previous episodes this has been sign of price support for the natural gas curve.   Figure 1 | Coal to NG Price Ratio for 2016 - 2018 Second, cash basis ... » read more
Tuesday Jul 24, 2018   
Over the past several weeks, the West has been the topic of discussion with many in the marketplace as Los Angeles Department of Water and Power saw record loads and some isolated blackouts post 4th of July.  Last week, the major transmission highway between the north and south was derated (Path 26) due to an unplanned maintenance outage as well as the Desert Southwest recovering from its monsoon type weather where some key transmission towers toppled (within SRP's balancing authority) due to high winds. Figure 1 | Toppled transmission towers in SRP due to high winds All this got the party started as SoCal Border's cash started to get lively as the marginal megawatt sat in the Desert Southwest as the likes of Pacificorp was buying for their load in their East system as well as ... » read more
Monday Jul 23, 2018   
Last night my seven-year-old son and I went to a Portland Pickles baseball game.  For those of you not in the know regarding this powerhouse baseball squad, the Pickles are part of the West Coast League (WCL), a college wood bat baseball league.  Pretty much this league is where good college players come to play during the summer to keep their skills honed.  While this is no Major League Baseball, it is great baseball, and when you throw in $10 tickets for the seats from where Figure 1's picture was taken, and $3 beer/soft drinks/hot dogs, I will buy the WCL/MLB value spread all day long.  Anyways, as we sat there watching the game, the Corvallis team hit a couple early home runs on us that got my son asking me how they hit the ball so far.  I told him that the ... » read more
Friday Jul 20, 2018   
We are in the full swing of summer, and that means it is fire season. Last weekend I rafted 50 miles of the Deschutes River in Oregon from Warm Springs to Maupin. The Deschutes River drains the Oregon Cascades running south to north before feeding into the Columbia River just above The Dalles Dam. The 500 kV DC lines running from The Dalles to Los Angeles are close to the Deschutes in this part of the state. Just a few weeks ago that portion of the Deschutes was hit by several wildfires, including the Boxcar Fire depicted below. The landscape along the river for most of my trip was charred. We saw a lot of wildlife, presumably hanging out close to the river where there was still plenty of vegetation. Figure 1 | Boxcar Fire in Central Oregon along Deschutes River In recent days the fire ... » read more
Thursday Jul 19, 2018   
Since the founding of the United States of America, we have seen a struggle between the East and West. From squabbles over which coast is the leader in industry with tech in the West and our finance centers in the East, to city residents arguing over which side of town to live. Looking at PJM, the East/West divide is ever present with new natural gas fired plants popping up in the East while the West is mainly comprised of large coal generators. The West Hub is situated right in the middle of PJM between Ohio coal and coastal gas generators which has resulted in an interesting tug-of-war. Looking at Figure 1, we can see that the West Hub LMP reflects this as it generally sits between the East and AD Hub LMPs. Figure 1 | Select PJM Hub LMPs PJM covers a vast geographical area ranging from ... » read more
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