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Tuesday Aug 7, 2018   
One of the pricing dynamics we have seen for most of the summer is that the cash markets, in many areas of the country are quick to move over the forward strip. In California for example, both SoCal and PG&E Citygate cash markets are trading over the whole winter strip. Based on the shape of that curve, natural gas operators should take all they can out of the ground to maximize the value of what is in the ground. A similar cash dynamic is happening in the Gulf. Henry Hub cash markets have moved over the forward futures values which sets an incentive to take volume out of the ground. This has been the case over the past three years and has transformed the Gulf market for storage services from a two season to four season product.  Figure 1 | Henry Hub BOM and ... » read more
Monday Aug 6, 2018   
If your focus in the Western power and natural gas markets, you have been privy to some major excitement over the past couple of years.  Making sure we keep this short (as we know California has had a lot of things happen over the years, both by choice and just some bad luck), lets start in 2015 when the Aliso Canyon storage facility had a leak at one of the values at a wellhead.  It took engineers months to drill a parallel well and tunnel over to stop the leak. By that time, every political and regulatory agency were involved, which made it clear the facility would never be the same. During the time of Aliso Canyon and its leak, the State of California's renewable portfolio continued to grow with both utility-scaled solar facilities popping up everyone along with the behind ... » read more
Friday Aug 3, 2018   
The proposed Wind Catcher facility, seen in Figure 1 below, consists of 2,000 MW of wind turbines planned for the Panhandle of Oklahoma coupled with the 350 mile Wind Catcher Connection transmission lines which will move power to Tulsa in eastern Oklahoma. The project is being developed by Invenergy and is slated to be sold to AEP's  Public Service Co. of Oklahoma and Southwestern Electric Power Co. subsidiaries to serve customers across Louisiana, Arkansas, Texas and Oklahoma. The project will be using 800 GE 2.5 MW turbines to get to the capacity mentioned above. If/when completed, Wind Catcher would be the largest wind facility in the US and the second largest in the world. The project web site indicates that the projected commercial operation date is mid ... » read more
Thursday Aug 2, 2018   
New York is considering implementing a carbon tax as soon as 2021. It will be the second state/ISO in the United States to add carbon pricing, the other being the California.  This is a logical steps for the state's push towards its high renewable goals set forth over the past couple of years. With 50% of electricity to come from renewable energy resources by 2030 and lofty emissions goals, the state still has a long way to go. Long before the recent policy changes, New York foreshadowed these events with its attitude towards natural gas.  Back in 2016, Constitution Pipeline was denied of a water permit, which effectively blocked its development. This was among the first times a pipeline project that had already been approved by the FERC had been ground to a halt by a ... » read more
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
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