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Wednesday Mar 17, 2021   
With global LNG demand market prices running at multi-year highs, U.S. LNG exporters are chomping at the bit to get as much gas out on the water as possible.  Recent days’ volumes are closing in on record highs and prospects look strong for those levels to be maintained through the summer.  Although spreads to ship into winter markets are even stronger than summer, U.S. exporters will have to wait to jam more volume into the market for new capacity to come online, which is not slated to happen until the end of this year.    Feedgas deliveries to U.S. LNG export terminals have returned to the 11 Bcfd level not seen since mid-December, when the single-day record high was set.  Following that event, January exports were fairly strong, though with sporadic ... » read more
Tuesday Mar 16, 2021   
In the past week we have heard a number of comments about the Texas demand destruction and how the state's economy has yet to make a full recovery in the aftermath of the energy crisis. The is being touted as reason why power burns have not performed anywhere near year ago levels. While it is true that the power burns in the EIA South Central have been a big disappointment this month it has nothing to do with ERCOT demand. If you look at the on peak demand versus temperatures for the past three years, this month is right on par with consumption in 2019 and 2020. So why is there a big drop off in the power burn component in the region? The burns are posting 1.6 BCF less than last year when COVID was impacting the economy.  Figure 1 | ERCOT On Peak Demand versus Houston ... » read more
Monday Mar 15, 2021   
The weather event this weekend had several micro systems brewing as the Midwest, Ohio Valley and Northeast all transitioned back into the winter mode after spending the past week basking in a spring-like setting.  Down in the South Central region, the wind gusts persisted as both ERCOT and SPP continue to deal with the volatile renewable resource across their respective footprints.  Over in California and the Pacific Northwest, we saw a combination of sunny skies and spurts of precipitation in the form of rainfall as temperatures were moderate as the clock changed to daylight savings.  The Rockies and Plains region was the area that received the most attention as the forecast was calling for a massive snow dump that would leave the mountains with over 4 feet of snow and ... » read more
Friday Mar 12, 2021   
As winter moves on to spring, weather turns milder, the sun comes out, and load declines, balancing the CAISO supply stack becomes a complicated problem. Because of the prevalence of solar, it’s useful to think about the daytime stack in three buckets:  Morning Ramp, Midday, and Evening Ramp.  It is the Midday period that catches the eye each and every day due to the massive influx of behind-the-meter and utility-scaled solar output there is on the grid.  The balancing act for the power demand profile is tricky as each hour is supplied with hydro, solar, wind, thermal, or nuclear generation, as well as imports from surrounding regions. The seasonal change affects this stack in more ways than one. Not only does load decline and solar increase, but snow stops piling up ... » read more
Thursday Mar 11, 2021   
The one market that continues to take a backseat to both California and ERCOT is the Southwest Power Pool (SPP).  The name is a bit deceiving as one might attribute the footprint to the Desert Southwest, New Mexico and Nevada as these are the states that are tucked into the geography of the United States-Lower 48 as California stretches north to south and is identified by itself. Since the east and west electric grids are basically separated for reliability purposes, this leaves the former with say two-thirds of the country and since ERCOT's situation of being isolated from the rest of region has come to light over the past few weeks we have a similar situation as the latter where SPP is tucked away in the southwest corner of the outlined East region (left image) in Figure 1. Figure ... » read more
Wednesday Mar 10, 2021   
Just a few weeks after ERCOT set a 'theoretical' winter power demand record the thermal fleet was going to be pushing out generation that would have topped any record setting high water mark during a heat wave in July/August.  As we know, due to Mother Nature blasting the Lone Star State with extreme cold temperatures, such a scenario never came to light. As we settle into the month of March 2021, the grid could not be more 'polar' opposite as the power supply/demand picture is now showing the thermal fleet facing the potential for new low-side generation records.  Today through Sunday hosts the likelihood for hourly thermal generation levels drop to unprecedented lows as wind and solar surge to record highs. The upcoming event is not simply a function of weather ... » read more
Tuesday Mar 9, 2021   
Each quarter of the year we get to review a summary of the financial performance of the publicly traded natural gas production firms when they report quarterly earnings. The first quarter of the year is particularly important because they go over the volumetric forecast for the rest of the year. This can then be aggregated across the industry to create a production expectation. It is particularly useful in the Marcellus and Utica production zones where the incentives are aligned. The earnings presentations and subsequent transcripts also provide other useful information. It is a check on infrastructure, maintenance and hedging performance for the balancing equations.  The big three in the Northeast production are Cabot Oil and Gas, Range Resources and EQT. Together they make up over ... » read more
Monday Mar 8, 2021   
The Pacific Northwest is quite unique when it comes to the energy sector, specifically the electricity sector as the hydro system comes into play each and every month.  Prior to the solar penetration in California, Mother Nature was already placing the original renewable resource at the forefront of everyone's mind. The science was all about figuring out when the snow was going to melt off the mountainsides and push enough water through the turbines that the transmission lines were full down to California and you needed to price coal and natural gas units offline to make sure the system balances.  This meant that the bilateral price for both the heavy and light load Midc would gap down from the $20-$30 level to low single digits.  This was the volatility that set the region ... » read more
Friday Mar 5, 2021   
While ERCOT has been busy grabbing all the headlines over the past several weeks, Texas was not the only region impacted by what is now being referred to by many as Winter Storm Uri.  On Tuesday, February 16, almost three quarters of the continental U.S. was under cover of snow.  With that in mind, let’s take a quick look at how different ISOs across the country were impacted by the events of February 13-17.  Figure 1 | U.S Snow Cover from Winter Storm Uri, Tuesday February 16 Source: NewsNation It’s been recounted ad nauseam how the combination of spiking energy demand due to the cold, along with weather-induced supply disruptions from wind to natural gas brought ERCOT to the brink of collapse.  But how did other regions fare?  Figure 2 shows ... » read more
Thursday Mar 4, 2021   
A couple of weeks make a big difference when it comes to balancing the grid across the Plains and the Lone Star State.  It has been well documented in the press and at the hearings in front of the State Senate committee on how close the ERCOT's electrical grid was to going dark as the frequency was at dangerous levels for over four minutes.  At nine minutes, the generators that were still operating would have been basically forced to turn off to make sure they were not permanently damaged to which it would take weeks if not months to replace key parts and get them back onto the grid.  What we have not heard much about is the balancing act the SPP operators had to incur as they watched their thermal fleet suffer along with their respective wind turbine blades ... » read more
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