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Wednesday Feb 17, 2016   
As natural gas and oil prices hit multi-year lows heading into this winter there were many questions about how the supply stack would respond.  The questions mainly circulated around whether gas prices would rise high enough to induce the same level of coal and oil generation we had seen the previous two years.  As temperatures remained above normal and gas prices failed to get off the ground, it seemed that fuel switching would be a non-factor this winter.  However, this weekend we saw temperatures plummet in the East of the country. Despite ... » read more
Tuesday Feb 16, 2016   
The Pacific Northwest wind development industry has been contracting since the California “Bucket” rules were passed in 2011. The Bucket rules require California utilities to procure the vast majority of their RPS obligations from in-state resources. New long term deals from Northwest wind projects came to a halt immediately. After a seven year stretch where more than 4,000 MW of wind capacity was installed in BPA’s service territory, development of new wind in the Northwest came to a screeching halt. Since the middle of 2012 installed wind capacity ... » read more
Friday Feb 12, 2016   
If I were to tell a bedtime story about electricity, it would start with something like this, "Once upon a time the electricity people decided to put names to blocks of time.  Since hour ending 7 through hour ending 22 had a higher demand profile, it got the name 'heavy load'.  Hour ending 1 through 6 and 23/24 were lower in demand and acquired the name 'light load'.  From a price perspective, the higher the demand the more expensive the marginal cost of energy was, therefore the heavy load clearing price is greater than the light load clearing ... » read more
Thursday Feb 11, 2016   
In comparison to years past, the NEISO power market has struggled to get off the ground this winter with the strongest prices occurring on January 6th with a Mass Hub day-ahead clear of $66 for the On Peak Average (OPA). However, an interesting situation is unfolding in New England as the current load forecasts indicate we may see a new high clear for winter 2016, which so happens to be on a Sunday.  This is just another indication just how warm it has been this winter when a Sunday beats out a weekday in the middle of February.   Figure 1| ... » read more
Wednesday Feb 10, 2016   
Yesterday the HDD forecasts for the next 15 day fell slightly as the revised model runs indicated a quick thaw after the upcoming cold snap across the East this weekend.  NYMEX hub traded down around 5 cents in response the the increase in temperature outlook.  While the main focus remains on the upcoming demand event, we believe the true market risk is in the quick recovery and what it means for the remainder of the winter.   Figure 1| Daily Gas Weighted HDD Delta from Normal - by EIA Region  Overall the total US is on average ... » read more
Tuesday Feb 9, 2016   
As we start to move out of Winter and get closer to Spring, all eyes start turning to the California load and the solar profile to see how the middle of the day is going to shake out.  In years past, it has not been a big issue because the solar profile was not a big, but since last year's installed capacity increase we are going to see more and more solar generation hit the grid.  Figure 1 below, illustrates just how much solar is hitting the grid throughout the day and its impact to the next load in the CAISO footprint. Figure 1 | CAISO Solar, Wind and ... » read more
Monday Feb 8, 2016   
As expected the hydro generation in the Pacific Northwest shifted down over the weekend as the heavy load hours went from averaging 16,700 MW on the 3rd to settling in around 10,200 MW yesterday.  Figure 1 | Pacific Northwest Hydro Generation The reasons for the big shift down over the past couple of days is due to the lack of precipitation in the region as a high pressure system has moved in.  This has caused above normal temperatures along the Cascades and has kept the side flows at bay.   The next reason is that the Canadian flows have backed way ... » read more
Friday Feb 5, 2016   
With warmer weather looming and natural gas production ticking up due to increases in the Marcellus/Utica region, the front of the curve has shifted down quite a bit over the past week with the March contract going from $2.30 last Friday to settling at $1.972 this Thursday.   Breaking down the weekly information in a little more detail, here are the key drivers for such a move: Weather |  As we walked out the door last Friday, the March contract pushed up to $2.30 as the forecasts were calling for some arctic air to move down into the Midwest and ... » read more
Thursday Feb 4, 2016   
We have been watching SoCal closely this week as colder temperatures swept across the West of the United States. While the forecasts were by no means extraordinary, we did have our eyebrows raised as it appeared the SoCal gas system going to be tight considering the daily average temperatures that were in the forecast warranted roughly 4 BCF of Sendouts in SoCal Gas's system  The risk was twofold: First, withdrawals at Aliso Canyon had been limited as they entered into the 4th stage of the relief well drilling task to stop the leak in one of the wells. » read more
Wednesday Feb 3, 2016   
With front month contract trading below three dollar per mmbtu for a year now (as of yesterday, it is currently sitting at the $2.00 mark), it is not surprising to see gas drilling count taking another plunge. Gas drilling rig count in the US dropped to a new 5-year low of 121 count this past Friday. That is a 195 drop in gas rig count in just an year! Figure 1 | Natural Gas Drilling Rig Count in the United States, Year-on-Year Comparison The year-on-year drop is taking place across every shale. The largest decline is in Marcellus, followed by Haynesville, the ... » read more
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