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Tuesday Jun 30, 2020   
The rally in the natural gas spot market stems from the grid ramping up its power burn demand from units sourced by the molecules on the pipelines.  Some of this demand stems from Mother Nature keeping the power profiles at summertime levels with the renewable penetration waning in places such as ERCOT and SPP as we move into a new month.  In our latest article published, 'How wide is net?', we detailed the key moving parts to the recent shift down and what it would take to move the needle back into the middle of the range of the current prompt month contact level.  At the end of the day it takes demand on the system and with the power burns hitting 38 BCF/d on Monday and estimated to top the 39.5 BCF/d mark for today, the June monthly average will exceed last year's level ... » read more
Monday Jun 29, 2020   
The old saying "when it rains it pours" could not be more fitting to a region that gets plenty of rainfall throughout the year.  That region, of course, is the Pacfic Northwest as another Water Year is coming to an end.  This weekend was not about how Mother Nature drops precipitation on the region at any given period from November of the previous year though the month of June. Instead, it is was about how much snowpack there is at the higher elevation, the lack of power demand on the grid, strong wind days and the circumstances around the transmission capacity reductions on the major lines heading into California.  As the end of the day, the events listed were more impactful to the Midc prices than any weather event Mother Nature could throw at the system in the form of a ... » read more
Friday Jun 26, 2020   
Despite the strong environmental ethic of its denizens, the Pacific Northwest has been a dead zone for renewable energy development over the last decade.  Of course the power system has its enormous hydro renewable resource base and a strong conservation ethic that began in the 1980s, with the passage of the Pacific Northwest Electric Power Planning and Conservation Act.  Despite the region's particularly good wind resource base, wind energy deployment in Oregon and Washington has been largely stalled since 2012. Current installed capacity has reached 6,200 MW.  This is a level that will impress your neighbor but we know that's a yawn in comparison to the installed capacity of  ERCOT, SPP, or MISO.  The PNW has no centralized power market or regional ... » read more
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
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