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Thursday Jun 25, 2020   
The Pacific Northwest saw some nicer weather this week as temperatures shifted up into the mid 80's across the middle of the day while the overnight lows shifted up into the mid 60's.  Leading up to this little warm up, the region has been quite chilly when it comes to overnight temperatures and daytime highs for that matter and plenty of precipitation in the form of rainfall.  As a result of this weather pattern, the supply stack has seen plenty of hydro and wind generation fill the lower portion, which then takes the marginal cost of energy out of the thermal stack.  The graph below is a good illustration of how the hydro generation has played out over the past few weeks and what it looks like compared to last year's June output. Figure 1 | Pacific Northwest Flat ... » read more
Wednesday Jun 24, 2020   
There is always exciting things going on in the energy space, especially when it comes to the power markets.  Over the years, we have seen the supply stack get new capacity from renewable resources as well as natural gas-fired generators while coal plants were being retired.  At first, the renewable of choice was wind farms across the West and into the Midwest/SPP and Texas.  The days of Palm Springs and West Texas wind farms being the only game in town were long gone as the Pacific Northwest beat everyone to the punch and increased their capacity by placing turbines in the Columbia River Gorge as well as Walla Walla and Central Washington.  This was a natural fit with the hydro system providing flexibility around such assets.  Entities such as Grant County PUD ... » read more
Tuesday Jun 23, 2020   
The Aliso Canyon saga has been removed from the headlines as of recent. All the issues of COVID and the associated demand destruction has pushed previously relevant topics to the back page. But all is not forgotten. This past week SoCal Gas posted a notice that they intend to fill the beleagurered cavern to its allowable capacity of 34 BCF by July 3. That would be just prior to the ramp up in summer cooling load. Total SoCal inventory is running much higher than years past. On a 83 BCF complex maximum they are only 8 BCF from the top. At face value it is good news that there is ample in ground supply for the rest of summer. But a lack of storage injection capacity also means the SoCal system will be at the mercy of pipeline balancing once again. The demand destruction from the contagion ... » read more
Monday Jun 22, 2020   
The weather has been gradually improving from a sense of warmer temperatures showing up across the Lower 48.  It is good timing as the beginning of summer is now upon us with the Summer Solstice 2020 occurring over the weekend.  It is a bit weird to be at this point of the year without the antipication of school getting out and vacations being planned by families as the annual camping trip, flight to some desitnation or a membership at the local pool have all been put on hold with the virus epidemic that has continued to plague the world over the past 4-5 months.   Figure 1 | Summer Swimming Pool With everything a bit of a blur as many states that have opened up see their number of COVID 19 cases increase, the Summer of 2020 will be forever tied to the one that ... » read more
Friday Jun 19, 2020   
The slogan 'everything is bigger in Texas' has been heard for decades but it is not until you actually live in the state do you realize how true the words ring.  For example, you go out to dinner, order a burrrito or enchilada plate at your favorite local restuarant and a plate shows up with the biggest flour tortilla wrap or mounds of beans and rice accompanying the enchiladas smothered in green sauce.  If you stop for a 'coke' at the local gas station, you walk out with the biggest styrofoam cup that puts the 7-11 Big Gulp to shame.  The final reflection of the slogan is tied to the trucks traveling down the interstate during the morning or afternoon commute where the driver is wearing their cowboy hat as the tower over everyone who just happens to have a 'normal' ... » read more
Thursday Jun 18, 2020   
If you live in Portland, OR you will fully understand the title of today's blog after reading the next couple of opening lines.  Since I have lived in the Rose City, the month of June is always interesting as some years the beginning of the month is dry and cool while the end of the month can get quite hot.  The two week period in the middle seems to always bring precipitation right around the time of the Rose Festival, a city event that has two parades, military ships docking along the Willamette River and the crowning of the Rose Festival Queen.  If you enjoy a stroll through Washington Park's Rose Garden, you can see the names of all the former queens going back decades. Figure 1 | Rose City Festival Parade in the Rain With the COVID19 virus front and center, this ... » read more
Wednesday Jun 17, 2020   
The 'sky is falling' is a literature reference to an old folk take called Chicken Little.  The moral is in the form of a cumuative tale where a chicken believes the world is coming to an end and is authored by Henry Penny. The line has been passed into the English language as a common idiom indicating a hysterical or mistaken belief that disaster is imminent.  This is how the cash market felt yesterday as the Henry Hub settled down around the $1.38 mark, which is once of the lowest marks seen over the past two decades.   Figure 1 | Henry Hub Cash Settles The reasons behind such a drop have been discussed in our daily natural gas report that is apart of our North America Natural Gas and Power Fundamental Product offering. Production has moved to the ... » read more
Tuesday Jun 16, 2020   
In early May a decision was made by EQT, one of the largest natural gas producers in the Marcellus, to shut down 1.4 BCF of production. The note sent by the company indicated that this was an effort to manage their portfolio in the wake of the coronavirus demand destruction. The move was largely supportive of the EQT equity price. Since the action was taken the EQT share value has moved up 9%. The problem is that now the company is facing the decision to bring back the volume after the 45 day outage has been completed. But natural gas prices and demand conditions in Western Pennsylvania have not changed much. It sets up a difficult decision ahead for the company. Figure 1 | Pennsylvania Metered Production for 2019 - 2020 Besides the coronavirus demand destruction Western PA has had two ... » read more
Monday Jun 15, 2020   
Over the years, the cat and mouse game has been played where Production and LNG growth were front and center across the Lower 48.  There were times the former got out in front of the supply/demand balance while knowning it was just a matter of time before the latter would catch up by adding more terminals at established facilities. The LNG demand was driven by lower Lower 48 natural gas prices that helped move the spread out when compared against the Asian, European, India and South American markets.  That was until this past spring when everything came to a skreaching halt as the spreads collapsed and tankers that once were headed to the destinations listed above are now placed on hold. Figure 1 | LNG Daily Flows - Year on Year Comparison This is illustrated in the graph above ... » read more
Friday Jun 12, 2020   
At the end of March I wrote a blog related to COVID. Here was the opening paragraph: The Corona Virus (CV) and the related illness COVID-19 (C19) has unsettled and upended the world as we know it. People are socially distancing, businesses are closing, people are losing jobs, those with jobs are working from home, people are getting sick, and people are dying. This is like nothing we’ve ever seen before. In addition to the horrible personal toll this is taking on people’s health, lifestyle, and livelihoods, the CV and the measures taken to limit the spread of the CV and C19 are having tremendous impacts on markets. The US equity markets are down about 30% from the highs in February. Oil prices have fallen by more than 50%. Other energy markets are under pressure due to little ... » read more
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