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Tuesday Aug 14, 2018   
This year, we are seeing many regions across the country have a change in dispatch strategy for coal fired power plants. Not only are we seeing total output drop due to retirements, the year on year change in the relationship between fuels generation has caused natural gas to move further into the base-load bucket.  Power burns, as a result have remain buffered from any large swings in the net load. Weekday to weekend power burns are not as volatile as they were in years past. This has been a big reason why the power burns remain 4.5 BCF per day above last year's levels so far this month.  Figure 1 | PJM Coal Output for 2017 - 2018 But in order to continue the gains for subsequent years, we need to see additional natural gas generation brought online as well as ... » read more
Monday Aug 13, 2018   
Over the past couple of weeks, the natural gas prompt month has moved up $0.15 or so to end the week just under $2.95.  This leaves the speculative participants wondering if they should be selling since it the number mentioned is only $0.05 away from the top of the range ($3.00).   Figure 1 | Prompt Month Henry Hub Natural Gas Settles - Daily Some of the key drivers are tied to the overall demand on the grid via Power Burns, Mexican Exports and the Industrial growth across the Lower 48.  The power burns are tied to both Mother Nature as well as new facilities coming online such as Middleton Energy Center (TETCO) and Lordstown (DTI).  Over the past 18 months, we have seen numerous power plants tie into the grid as the lower priced Marcellus/Utica basin was sending ... » read more
Friday Aug 10, 2018   
In the last 18 months we’ve seen a proliferation of “one to multiple” renewable deals where one project has multiple off-take agreements for a single project. This is a great development. Large projects can presumably come in with a lower levelized cost of energy. Often times a large project has an anchor tenant who takes more than half of the output, and then the project must find one or more smaller buyers to take the rest (sometimes leaving a small portion merchant). As more corporate buyers come to the marketplace we see demand for smaller chunks. So corporate buyers either organize themselves to purchase from a project or a project lines up multiple buyers on its own. The aggregation trend in renewable procurement is likely here to stay. It is a natural development ... » read more
Thursday Aug 9, 2018   
Last week we spoke about the carbon pricing that NYISO is considering implementing in order to reach renewable goals. This week we will move north to ISONE which has drastically different plans for the future. The smaller grid chooses to take what some might consider a more practical approach as it continues to develop combined cycle power plants. These are already a proven technology that can reduce carbon emissions as a result of their extremely efficient operations. Figure 1 taken from the ISONE State of the Grid shows that historic development and future plans are depending heavily on natural gas for energy needs. However taking a closer look, perhaps they are putting too many eggs in one basket. Figure 1 | State of the Grid ISONE But natural gas is abundant, cheap, efficient, and ... » read more
Wednesday Aug 8, 2018   
The past few weeks have been pretty exciting in the Western natural gas and power markets as we have seen SoCal Citygate index just under $40 the last week of July while August has shown us that Midc and Mead need the power when their respective loads hit a certain level.  The Desert Southwest is not too far behind given that Phoenix and the surrounding areas have seen their fair share of hot summer days.   Figure 1 | Phoenix Temperatures - Daytime High/Low  In this week's Gold Package Newsletter Article we took a look at how the West has unfolded and who some of the winners and losers have been throughout this wild ride.  As it stands right now, despite the Midway-Vincent nomogram constraint still showing up, the generators within NP15 seems to be in the ... » read more
Tuesday Aug 7, 2018   
One of the pricing dynamics we have seen for most of the summer is that the cash markets, in many areas of the country are quick to move over the forward strip. In California for example, both SoCal and PG&E Citygate cash markets are trading over the whole winter strip. Based on the shape of that curve, natural gas operators should take all they can out of the ground to maximize the value of what is in the ground. A similar cash dynamic is happening in the Gulf. Henry Hub cash markets have moved over the forward futures values which sets an incentive to take volume out of the ground. This has been the case over the past three years and has transformed the Gulf market for storage services from a two season to four season product.  Figure 1 | Henry Hub BOM and ... » read more
Monday Aug 6, 2018   
If your focus in the Western power and natural gas markets, you have been privy to some major excitement over the past couple of years.  Making sure we keep this short (as we know California has had a lot of things happen over the years, both by choice and just some bad luck), lets start in 2015 when the Aliso Canyon storage facility had a leak at one of the values at a wellhead.  It took engineers months to drill a parallel well and tunnel over to stop the leak. By that time, every political and regulatory agency were involved, which made it clear the facility would never be the same. During the time of Aliso Canyon and its leak, the State of California's renewable portfolio continued to grow with both utility-scaled solar facilities popping up everyone along with the behind ... » read more
Friday Aug 3, 2018   
The proposed Wind Catcher facility, seen in Figure 1 below, consists of 2,000 MW of wind turbines planned for the Panhandle of Oklahoma coupled with the 350 mile Wind Catcher Connection transmission lines which will move power to Tulsa in eastern Oklahoma. The project is being developed by Invenergy and is slated to be sold to AEP's  Public Service Co. of Oklahoma and Southwestern Electric Power Co. subsidiaries to serve customers across Louisiana, Arkansas, Texas and Oklahoma. The project will be using 800 GE 2.5 MW turbines to get to the capacity mentioned above. If/when completed, Wind Catcher would be the largest wind facility in the US and the second largest in the world. The project web site indicates that the projected commercial operation date is mid ... » read more
Thursday Aug 2, 2018   
New York is considering implementing a carbon tax as soon as 2021. It will be the second state/ISO in the United States to add carbon pricing, the other being the California.  This is a logical steps for the state's push towards its high renewable goals set forth over the past couple of years. With 50% of electricity to come from renewable energy resources by 2030 and lofty emissions goals, the state still has a long way to go. Long before the recent policy changes, New York foreshadowed these events with its attitude towards natural gas.  Back in 2016, Constitution Pipeline was denied of a water permit, which effectively blocked its development. This was among the first times a pipeline project that had already been approved by the FERC had been ground to a halt by a ... » read more
Wednesday Aug 1, 2018   
Over the past couple of months, we have discussed the ERCOT wind profile on an hourly/daily/monthly basis and its impact in the marketplace.  Before we get into some of the details, it should be stated that the max generation (wind) output has increased from 15.9 GW to over 17.3 GW since December 2016. Figure 1 | ERCOT Wind Max Generation Cumulative Output Looking at the figure above, you can see the step up values in and around the end of Q3/Q4 as developers rushed to get their facilities up and running prior to the end of the year.  So far this year, the max cumulative max capacity has not increased, but what did increase was the overall wind capacity factor in Q2.  The capacity factor is when you take a period's average and divide it by the cumulative max value for that ... » read more
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