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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
Wednesday Dec 5, 2018   
The month of December has started out with a nice chill in the West as the Pacific Northwest is seeing temperatures drop down below freezing in many of the demand areas when you take into account the wind chill element.  As a result of such temperatures, the overall rescom demand has increased as well as the power load profiles.  For example, over the past week the Seattle/Tacoma rescom demand has moved up .200 BCF on a system that was looking at .455 BCF/d of heating demand at the end of November.  If you move in both directions on the pipelines tied to British Columbia and WA/OR, a similar pattern is existing for Vancouver, BC and the Portland/South WA areas when it comes to the rescom demand.  On the power burn side of the equation, the Northwest Pipeline (NWP) ... » read more
Tuesday Dec 4, 2018   
We have been involved in California energy markets for over 20 years and we can only recall one or two years out of the twenty where there was not some sort of crisis that threatened the states reliability. This year is no different. Both PG&E and SoCal Gas continue to suffer from conditions that could threaten the reliability in the state.  The woes in the southern part of the state are well documented. The SoCal Gas system continues to be under siege with maintenance and forced outages. The Border receipts that feed the distribution are now restricted to 2.5 BCF per day which is .6 BCF less than last year. That is putting even more strain on a system that has its major storage facility out of regular service. The only way Aliso Canyon is allowed to be used in the natural gas ... » read more
Monday Dec 3, 2018   
Now that November is in the books, we will be turning our attention to the month of December and the new calendar year.  As it stands right now, the first full week of the new month is going to be getting cold across the majority of the Lower 48 starting with the Pacific Northwest and Rockies.  By mid-week, the Midwest and South Central are showing colder temperatures which will then trickle over to the East by week's end. Figure 1 | South Central Daily Average Temperature Forecast w/deviation coloration from normal What you will realize quickly in each one of the regions is the blue coloration seen this upcoming week and next weekend is met with quite a bit of orange and red coloration the following 5-7 days.  Such a change will feel like a spring day in many parts of the ... » read more
Friday Nov 30, 2018   
Natural gas is the most volatile commodity which trades in a deep liquid market. Periods of calm are punctuated with occasional explosive price increases, usually with memorable names – “the polar vortex” or “the bomb cyclone” are two of the more recent stand outs. These events lead to sudden, massive increases in the short-term prices as fortunes are made (or lost). The 2018-2019 natural gas withdrawal season has already earned its place on that list. As always the fundamentals led the way: we began the heating season with inventories at approximately 3.2 TCF, the lowest level in over 10 years (beginning of November inventories have ranged from 3.7 to 4.0 TCF in recent years). Further, weather forecasts showed a cold start to heating season. Indeed, through ... » read more
Thursday Nov 29, 2018   
It’s finally time that winter jackets begin to get their seasonal position on the coat rack. The cold front that blew into New England over Thanksgiving weekend caused temperatures to drop into the teens affecting both power and gas prices throughout the region as Algonquin Citygate's settles climbed into double digits. With everyone making sure their furnace was running full blast, residential demand for natural gas tightened up the pipeline network. Let’s first take a look at the major factor affecting the AGT gas price: temperatures. Figure 1 shows temperatures in Boston compared to the AGT gas price. As temperatures cooled down and heating demand increased we can see that the gas price naturally rose. However, at the 40 degree level prices began to increase significantly ... » read more
Wednesday Nov 28, 2018   
As November comes to an end, there is a lot going on in the market as the Winter 2018-19 season is in full swing.  Everyone has been watching the weather forecasts to determine if the colder start to the season is going to continue or will Mother Nature revert back to above normal temperatures across the Midwest and Eastern portion of the Lower 48.  When it comes to the South Central, the factors are endless as we have seen production constraints in West Texas due to limitation on specific pipelines, freeze-offs earlier in the month and now some warmer weather and an abundant amount of gas in the Permian and Waha gas hub sectors.  Both hubs have traded down since the Thanksgiving weekend, where each have seen negative trades in the cash market.  This has ... » read more
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