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Wednesday Dec 19, 2018   
If the end of November and the first half of December is any indication of what is in store for 2019, we will be in for several ups and downs within the natural gas market as the supply/demand balance tries to find a home for the marginal molecule.  On cold days, the gas molecule is in high demand as rescom is essentially a price taker whereas industrial is a close second given that the majority of the facilities are tied to operations within the energy space or have a high breakeven point.  That leaves power burns as the lone component that will turn off given the appropriate price signal.  What we learned in November is the old price levels are long gone during a winter month when rescom demand is strong and coal retirements/outages are prevalent.  This led to ... » read more
Tuesday Dec 18, 2018   
For the better part of six years the story in natural gas has been the build out in the production space with the advent and implementation of shale technology. In the eternal words of Reggie Jackson it was the "straw that stirred the drink". Over the past month, the natural gas community is not so concerned with how much is being taken out of the ground. The focus has turned to demand at a time when natural gas production has started to drop back from historical highs. Since the middle of October the total Lower 48 volumes have fallen by 2 BCF per day. Even more alarming is the fact that this occurred while the December futures raced up from $3.20 to $4.84. A portion of this issue can be pointed to pipeline and processing issues, but the question remains why we are not overachieving ... » read more
Monday Dec 17, 2018   
If some of you have not heard, I am a die-hard Cheesehead and the Green Bay Packers are the team I root for the most.  Over the years, I have been privileged to witness a two Super Bowl Championships along which goes back to the days when Brett Favre and Reggie White were the leaders of the team to the passing of the torch to Aaron Rodgers.  This is usually a time when the Packer fan starts to look at the standings to see if they will be able to win the division to get a home game and a potential bye in the Wildcard round.  The past two years have been far from bracket gazing as the Packers did not make the playoffs in the 2017-18 season.  This off-season, the expectations ran high during training camp as a healthy Aaron Rodgers was in the cards and our defense ... » read more
Friday Dec 14, 2018   
California has been building new solar facilities at a record pace. In 2017 we saw the first large scale solar curtailment in the CAISO. Developers, project owners, and buyers were all concerned that the “new normal” would include significant curtailment. There was a palpable fear that curtailment would increase materially as California’s renewable penetration rate increased. EnergyGPS published a detailed report in May 2017 analyzing the CAISO solar curtailments. The news was not good. Relative to 2016, curtailment – especially solar curtailment – was up considerably from 2016. April of 2017 experienced almost 85 GWh of combined solar and wind curtailment in the CAISO. March of 2017 was right behind that value with about 80 GWh of curtailment. At least in ... » read more
Thursday Dec 13, 2018   
Since the start of December, the weather pattern has delivered some below normal temperatures across the country.  In the Pacific Northwest, Portland has been no different as last week saw the daytime highs stick around the 40 degree mark while the overnight lows were below the freezing level in many places.  This lent itself to seeing your breathe in the early morning hours as you opened the door to get a gauge of how cold it really was outside.  When I opened the door this week, I braced myself for the impact of the cold /wet gush of air the presented itself last week only to be greeted with a nice warm feel as the overnight temperatures have been in the upper 40's.  As I sipped on my morning coffee,  I took a look at the latest WSI weather patterns which told ... » read more
Wednesday Dec 12, 2018   
We have discussed the wind penetration across the county in many of our daily blogs as well as Newsletter Articles and/or our Platinum Package Monthly Reports.  In the case of ERCOT, they have become the front-runner when it comes to the installed capacity within a given footprint.  This has led to some interesting days as some hours have over 50% of their power load served by wind.  It was not that long ago where the coal and natural gas fired generation was battling it out for supremacy of who will be needed to produce the power to balance the electrical grid in question. Figure 1 | ERCOT Net Load Breakdown - Hourly With the coal retirements in play and the ERCOT wind capacity over 17 GW, the times have changed and it is not more evident than what is happening as we ... » read more
Tuesday Dec 11, 2018   
As we close out the year it is time to take stock of the winter storage dynamics after a month and a half of the withdrawal season. The month of November got off to a cold start. As soon as the calendar flipped over to November the heating load started to pile up making the month look more like December. This early jump in demand combined with the seasonal pipeline and generator maintenance put added pressure on the storage complex to meet the strong demand numbers. As a result the above normal demand continued the summer long trend of offsetting the 8 BCF per day jump in gas production that was powered by the Permian and Marcellus growth. The storage deficit, after making up some ground in September and October is now back out to 700 BCF. But as we look at the year on year ... » read more
Monday Dec 10, 2018   
A little James Taylor 'Carolina in my Mind' to start the week seems fitting as my son's soccer team is stuck in Raleigh, North Carolina after the ice storm known as 'Winter Storm Diego' set foot late Saturday night and all day Sunday.  Not only were the last two matches of the tournament cancelled due to the Governor of North Carolina calling for a state wide emergency, all the flight in/out of Raleigh-Durham airport have been cancelled.  The ice storm we are alluding to is not isolated to just North Carolina, it hindering the daily activities throughout the entire southeast as flights airports ranging from Knoxville, TN to Atlanta, GA are seeing cancellations tied to the weather.   Figure 1 | Current Weather Map - Saturday - December 8th From a winter storm ... » read more
Friday Dec 7, 2018   
California has long been leading the western region, and the country, in the effort to de-carbonize the electricity grid. The other western coastal states – Oregon and Washington – have been considering  a number of policies to reduce carbon emissions. After Washington’s recent failed carbon tax ballot measure, there is a whisper that the Washington governor is taking a look at “no new gas” policies in addition to the planned coal retirements. Oregon will likely take a run at cap-and-trade in the upcoming legislative session. The strong opposition to fossil fuels in California, Oregon, and Washington will have direct impacts on new capacity additions and the reliability of the grid. Energy storage is     quickly the last resource standing ... » read more
Thursday Dec 6, 2018   
Power burns from natural gas have come in stronger year over year. While some may point to weather, it is only partially to blame. Market fundamentals have also shifted causing structural changes to the supply stack with natural gas gaining ground as a percentage of the fuel mix. Focusing on just the PJM ISO, the structural shift in power generation becomes more apparent. Approximately 10 GWs of nameplate capacity have been added in the form of combined cycle power plants for this ISO alone. These facilities are extremely efficient and run constantly providing baseload generation. Assuming this displaced coal generation, the additional builds would have increased gas consumption from power by just over 1 Bcf/d assuming a 6.5 heat rate with plants running at 75% of nameplate ... » read more
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