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Wednesday Aug 3, 2016   
Frequent readers of this newsletter will know that the relationship between coal and natural gas generation has been an ongoing and evolving theme over the last year.  Heading into the summer speculation began to swirl around the idea that the strong load could drive an increase in coal generation relative to gas, reversing the trend that was set this spring when natural gas prices bottomed out. The simple argument for this came in early June when the cash natural gas price moved up from the $2.00 level to the $2.75 mark rather quickly and putting the ... » read more
Tuesday Aug 2, 2016   
One of the big surprises in last weeks EIA number was the large withdrawal in the South Central Region. We are accustomed to the Salt storage facilities reacting to the cash price but this time it was also the basin storage that reported withdrawals. The region, as a whole, took 18 BCF out of the ground setting the stage for a 22 cent rise in the September NYMEX Henry Hub contract after the inventory report.  Figure 1 | EIA Inventory Report for Week Ending July 22, 2016 In order for withdrawals to occur, there must be the proper incentive for storage operators ... » read more
Monday Aug 1, 2016   
After a week of extensive heat across the entire West, where we saw the likes of Midc and Palo Verde price themselves over SP15 by $15 so that the energy flowing on the transmission lines into California would want to stay in their respective regions.  In fact, at these price levels, some took it upon themselves to export power from the CAISO day-ahead market.  This could be seen with the Mead flows. Figure 1 | CAISO Day-Ahead Heavy Load Mead Flows - Hourly As you can see in Figure 1, last Thursday/Friday were the two days that really stuck out as ... » read more
Friday Jul 29, 2016   
A large portion of our work at EnergyGPS pertains to shedding insights into risk and price. We analyze everything from next day power, to next month natural gas, to next year’s heat rates, to the long term prices. As any trader can attest, it is a difficult game. Some might even argue the price prediction business is a fool’s errand. Back in the trading days we used a litany of metrics to evaluate trading skill. One of those metrics was “batting average” which attempted to measure how often a trader was right. The rock star traders had batting ... » read more
Thursday Jul 28, 2016   
As we wind down the month of July, lets take a look at how the weather has impacted the record setting power burns and what that means as we head into August.  As we look back on July 2016, we will most likely see one of the warmest months on record as widespread well above normal temperatures created what was being called heat bubbles all over the Midwest and Eastern portions of the country. Figure 1 | Average Temperatures by Region - Daily and Month to Date Compared to Normal What you quickly see in the last two columns is the delta from normal is not much ... » read more
Wednesday Jul 27, 2016   
Heading into the back half of this month we faced a a known maintenance outage on the Rex pipeline that threatened to push production offline in the Marcellious region. Figure 1| Rex Pipeline Maintenance Announcement    The maintenance work began on schedule shutting in nearly 1.6 BCF of production across 5 different points. The maintenance missed its initial return date for Friday and withheld production through the weekend.  Figure 2| Rex Marceullus Production 7/17 - 7/26  The delay in production combined with a bullish demand outlook for ... » read more
Tuesday Jul 26, 2016   
Under normal circumstances, the natural gas merchant generators in the Desert Southwest dedicate their output towards the Southern California energy markets. That is until they get the proper price incentive to keep the generation east of the Colorado River. Recently, with some of the coal generation activities in Arizona and New Mexico, and the typical summer heat, the Palo Verde Switchyard has had to price itself over the CAISO SP15 energy market to meet the needs of their evening peak because of an unlikely culprit. Typically the coal fleet in the west has been ... » read more
Monday Jul 25, 2016   
Over the past week or so, the country's energy grid has been seeing record net load.  In fact, the entire month has been running at a rate higher than what we saw last year during the month of June. Figure 1 | US Net Load - 7 Day Rolling Average This is due to the heat bubble that sat over most of the country all month.  California and the Pacific Northwest were the two regions shielded by the heat wave earlier in the month.  That all started to change last week as Southern California's load shifted up with Burbank's highs over 100 degrees for a ... » read more
Friday Jul 22, 2016   
The future of batteries in the electricity grid continues to capture our attention at EnergyGPS. Part of the intrigue around our shop is the lack of good, public analysis associated with costs and benefits associated with the deployment of batteries in the power grid. If you plug any number of search terms into Google to find out about batteries on the grid dozens and dozens of results pop up. More than half of the results are some form of battery hype. The publishers of these materials are mostly environmental or tech operations. They discuss the declining cost of ... » read more
Thursday Jul 21, 2016   
On a daily basis, Texas production is hard to quantify as most wells are sitting on intra-state pipelines which are not subject to FERC jurisdiction.  In our daily scapes (shown later in this newsletter), we can see some of the points and have a regression model that uplifts the South Central regions total daily production to what we think is going on within the state.  The way we calibrate the numbers on a monthly basis is to look at both EIA and the Texas Railroad Commission monthly data.  The latter posted new data yesterday and here is what we have ... » read more
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