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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
Tuesday Jun 16, 2020   
In early May a decision was made by EQT, one of the largest natural gas producers in the Marcellus, to shut down 1.4 BCF of production. The note sent by the company indicated that this was an effort to manage their portfolio in the wake of the coronavirus demand destruction. The move was largely supportive of the EQT equity price. Since the action was taken the EQT share value has moved up 9%. The problem is that now the company is facing the decision to bring back the volume after the 45 day outage has been completed. But natural gas prices and demand conditions in Western Pennsylvania have not changed much. It sets up a difficult decision ahead for the company. Figure 1 | Pennsylvania Metered Production for 2019 - 2020 Besides the coronavirus demand destruction Western PA has had two ... » read more
Monday Jun 15, 2020   
Over the years, the cat and mouse game has been played where Production and LNG growth were front and center across the Lower 48.  There were times the former got out in front of the supply/demand balance while knowning it was just a matter of time before the latter would catch up by adding more terminals at established facilities. The LNG demand was driven by lower Lower 48 natural gas prices that helped move the spread out when compared against the Asian, European, India and South American markets.  That was until this past spring when everything came to a skreaching halt as the spreads collapsed and tankers that once were headed to the destinations listed above are now placed on hold. Figure 1 | LNG Daily Flows - Year on Year Comparison This is illustrated in the graph above ... » read more
Friday Jun 12, 2020   
At the end of March I wrote a blog related to COVID. Here was the opening paragraph: The Corona Virus (CV) and the related illness COVID-19 (C19) has unsettled and upended the world as we know it. People are socially distancing, businesses are closing, people are losing jobs, those with jobs are working from home, people are getting sick, and people are dying. This is like nothing we’ve ever seen before. In addition to the horrible personal toll this is taking on people’s health, lifestyle, and livelihoods, the CV and the measures taken to limit the spread of the CV and C19 are having tremendous impacts on markets. The US equity markets are down about 30% from the highs in February. Oil prices have fallen by more than 50%. Other energy markets are under pressure due to little ... » read more
Thursday Jun 11, 2020   
Over the past few months, many of us have made the transition from going to the local gym to finding some sort of solace in a online class offered by individuals tied to the club of choice or an instructor that has been creative enough to set yup there own video room with a backdrop cloth and music blaring in the background.  The energy is the same while the conversation is as virtual as it gets as each and everyone in the video session is feeling the burn from the workout. Figure 1 | Get the Online Membership Speaking of feeling the burn, the power markets heated up this week with temperatures rising in the Midwest, Ohio Valley and Northeast while the likes of the West and South Central remained above normal for this time of year.  Such a jump in temperatures naturally ... » read more
Wednesday Jun 10, 2020   
The shoulder season tends to be the time period that softness in the power demand profile is prevalent and with the evolution of renewables across the board, we have no choice but to talk about the daily marginal megawatt in terms of 'net load'.  The net load calculation is the first step to get closer and closer to the thermal portion of the power supply stack, which includes both natural gas-fired and coal generators.  To derive the net load, we take the original demand profile that is created by individual load serving entities within a balancing authority or from a macro ISO perspective.  Once we have this profile, the renewable wind and solar profiles are needed as we subtract them from the demand profile to come up with a new hourly profile that is less than or equal ... » read more
Tuesday Jun 9, 2020   
This year has been brutal for coal generation. The writing was on the wall for a collapse in output well before the virus lock down mandates were put into effect. The warm winter left natural gas storage inventory near 2 TCF which was .9 TCF above the previous year's level. Front month prices dropped to below $2 in an effort to incentivize additional demand. That move was successful in keeping gas generation well positioned in the dispatch at the cost of a lower coal presence. The demand destruction in the wake of the virus epidemic was just icing on the cake. Output from the coal fleet had to absorb the majority of that drop off as gas generation was the clear winner in the merit order. As a result both MISO and PJM set new record lows for output in March through May. The first ... » read more
Monday Jun 8, 2020   
The weekend has come and gone but it was not without a couple of water events that has the Paciifc Northwest reeling while the Gulf of Mexico region of the Lower 48 was hit with its first Tropical Storm to make landfall this year. Starting with the Pacific Northwest, the water year is a long season with many ups and downs.  There are times when the snowpack density runs off early due to warmer weather and never replenishes itself leaving the month of June quite dry. We sometimes get into an event where it rains nonstop during the month which results in abundant amount of un-calculated water that needs to go someplace.  Inbetween these two scenarios is the current situation as the snowpack density was left to the higher elevation levels this year and the colder weather through Q2 ... » read more
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