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Tuesday Sep 28, 2021   
Yesterday's move up in the winter natural gas futures has taken the strip to new highs at $5.73. Concerns about meeting demand needs for this winter continue to drive the price higher and we have no expectation that the buying will stop any time soon. One of the biggest problems is the ongoing hangover from last winter. When the deep freeze hit Texas back in February it exposed just how fragile the delivery system for natural gas is under adverse weather conditions. For years the demand side of the equation took it for granted that the Lone Star State had the physical capabilities to meet all needs. But with the robust demand growth and recent slide in production volumes in the wake of the COVID pandemic the entire region is struggling to secure gas deliveries for the winter heating ... » read more
Monday Sep 27, 2021   
The Alberta power market saw its price action shift up again last week throughout the midday and into the evening ramp on moderate net load.  The chart below illustrates just how much the hourly settle shifted as the peak for the 23rd came in just under $480.00, which helped push the daily average up to $173.00. Figure 1 | Alberta Price and Transmission Summary – Hourly The one thing that is noticeable once again is the lack of transmission response given the higher price action as the BC flows did not move off the floor while MT flows were not much better.  Sask flows did respond but it was not enough to make a material difference.  This is due to the simple fact that there is a planned maintenance between the 18th and 25th, whcih is right in the wheelhouse of the ... » read more
Friday Sep 24, 2021   
On multiple occasions throughout the summer the Pacific Northwest has found itself constrained in its ability to find flex generation during moments of heavy demand, of which there have been plenty with significant heat waves all over the West in the PNW, down in California and the Desert Southwest, and up in Alberta.  One of the key drivers of these constraints has been the low generation numbers throughout the hydro system, where flows down the Columbia and Snake Rivers from January through September have been only 82% of normal and where the rains have been nearly nonexistent for much of summer.  The recent EGPS hydro discussion “Wind and Rain” discussed how the problems in the supply stack have been particularly pronounced over the last several weeks, starting in ... » read more
Thursday Sep 23, 2021   
It has been a few weeks since Hurricane Ida moved through the Gulf of Mexico and onto shore devastating the New Orleans region with high winds instead of the massive water surge Hurricane Katrina left in its paths way 16 years ago to the day.  The impact was for the current storm to bring down power lines while the historical one saw the levees damage and massive flooding that has since been addressed by reinforcing the walls of a city that is below sea-level.  Below is a list of some of the minor differences of the two storms that hit the ‘Big Easy’ and areas around it. Direction | Ida it hit straight on (known as the right front part of the hurricane) while Katrina was more at an angle hence dumping 28 foot storm surges in Mississippi not New Orleans Size | Ida ... » read more
Wednesday Sep 22, 2021   
ERCOT’s grid balancing has taken on a whole new meaning since the February 2021 winter event that saw both power plants and natural gas operators scramble to try and keep the lights on and/or the molecules flowing to neighborhoods and cities as heating demand was a necessity given the extreme cold temperatures that moved through the Lone Star State. Figure 1 | Texas Winter Event – February 2021 The event changed the course of the market that is still felt today as the ERCOT real-time settle has moved away from sending a price signal that skyrocketed to the cap on a given hour when operating reserves were in question or low enough to cross over the threshold that would warrant the Operating Reserve Demand Curve (ORDC) to kick in.  We have written extensively in previous ... » read more
Tuesday Sep 21, 2021   
The single biggest concern for the natural gas industry over the past year has been the lack of production response in the wake of the COVID epidemic. When Gulf natural gas and crude prices crashed during the spring of 2020 it put in motion austerity measures across the entire production community in the Lower 48 as questions arose due to the viability of a demand recovery. The cuts in capital programs put a halt to crude and natural gas drilling. Production volumes stagnated for over a year especially in West Texas and the Permian Basin. But as demand started to recover with the economy production lagged. The result was an imbalance where demand had outstripped the production capability. The result is a underperforming storage condition prior to the start of this winter's ... » read more
Monday Sep 20, 2021   
As the weather pattern rolls from the summer heat to the coolness tied to the fall season, the transition of such will deliver a power demand profile that incorporates more heating demand via electric heating systems that have been installed in almost every urban development projects across the country.  Such an uptick usually changes the hourly profile from that of escalating afternoon to evening ramp demand to that of a double hump image where the morning and evening ramp are more pronounced compared to the middle of the day. Figure 1 | CAISO Hourly Load Profile The top graph in Figure 1 is an illustration of the CAISO hourly load profile for the past ten days and the forecast for the next week or so.  The middle pane represents that of PGAE while the bottom pane illustrates ... » read more
Friday Sep 17, 2021   
By Tim Belden September 17, 2021 I was listening to the NPR show “All Things Considered” on Wednesday (9/15/21) when the lead story about “the grid” came on. The show had some interesting nuggets. It also reminded me that the electricity grid is a big punching bag for pundits to hit. How often have you heard stories about the “fraying grid” or our “aging electricity infrastructure”? I’m not an expert in electricity transmission. It’s some pretty complicated stuff. And I’m not saying that there are not any issues with the grid. There surely are. But what I am saying is that, more often than not, when I hear about issues with the grid in the mainstream media, they rarely present an accurate or balanced story. On ... » read more
Thursday Sep 16, 2021   
European and Asian forward market prices just keep marching higher.  EU storage inventories simply have not been able to muster much momentum rebuilding this summer.  The EU injection season started with inventories at a hefty deficit to normal levels following a cold winter; summer gas demand in both Europe and Asia was strong due to excessive heat driving cooling loads; and supply issues have plagued European and Russian production.  Though recent news has indicated some supply relief may be arrive this winter with the startup of Nord Stream 2 pipeline, there is significant doubt as to when those supplies will become available to the market and growing expectations they may come too late.  As winter forwards have surged, several European countries have begun adopting ... » read more
Wednesday Sep 15, 2021   
As everyone has one eye on the Gulf of Mexico storms, the power supply stack outage storm is ready to hit the market as we cross over from the first half of September to the back half.  Such a storm has been around for years where it comes and goes in both the spring and fall portions of the calendar year and covers pretty much most of the Lower 48. Figure 1 | Lower 48 Nuclear Outages – Year on Year Comparison The graph above illustrates the megawatt volume tied to the Lower 48 nuclear fleet that has units offline each and every day.  The dark black line represents the current year while the other colored lines are tied to the five previous years with the data set tied to equivalent units.  Stated another way, if a nuclear unit has been retired and is not represented ... » read more
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