Energy News

Natural Gas Market Update – 2/15/2018

 

Storage Report – 02/15/2018

Thursday’s storage report cited a withdrawal of 194 Bcf, while estimates centered around a 188 Bcf pull. Last year for the same week there was a withdrawal of 120 Bcf and the 5-year average withdrawal is 154 Bcf.

Working gas in storage was 1,884 Bcf as of Friday, February 9th, 2018, per EIA estimates. Inventory was reported at 577 Bcf (-23.4%) less than last year for the same week and 433 Bcf (-18.7%) less than the 5-year average of 2,317 Bcf.

 

 

Natural Gas Trends:

March NYMEX: Settled Thursday down less than a penny at $2.58/Dth.

Seasonal Strips:  The upcoming summer strip (APR18-OCT18) settled Thursday at $2.701/Dth, down 5.0 cents from the week prior. Next year’s winter strip (NOV18-MAR19) settled Thursday at $2.917/Dth down 5.8 cents from last week.

12 Month Strip: Settled Thursday at $2.765/Dth, down 5.9 cents from the week prior.

Summary: This week’s EIA storage report withdrawal of 194 Bcf came in above the projected draw of 188 Bcf and the market displayed little reaction to the news, remaining virtually flat.
Although demand for natural gas has been up over the last few weeks, the market is staring at increased production numbers and a warming trend which should keep prices from increasing. NOAA forecasts for the end of February show a return to normal-to-above-normal temperatures for the eastern 2/3rds of the country immediate to the end of March trading, which is also the end of winter trading.

Natural Gas Market Update – 1/4/2018

Storage Report – 01/04/2018

Thursday’s storage report cited a withdrawal of 206 Bcf, with estimates calling for a withdrawal of 220 Bcf.  Last year for the same week there was a withdrawal of 76 Bcf and the 5-year average withdrawal is 99 Bcf.

Working gas in storage was 3,126 Bcf as of Friday, December 29th, 2017, per EIA estimates.  Inventory was reported at 192 Bcf (-5.8%) less than last year for the same week and 192 Bcf (-5.8%) less than the 5-year average of 3,318 Bcf.

Natural Gas Trends:

February NYMEX:  Settled Thursday down 12.8 cents at $2.880/Dth.  As of this writing the market is trading at $2.784/Dth.

Strips:  With the Bomb cyclone trampling the northeast, warmer weather is just a few months away as the summer strip (APR18-OCT18) settled Thursday at $2.740/Dth, down 6.4 cents from the week prior.

12 Month Strip:  Settled Thursday at $2.809/Dth, down 2.1 cents from the week prior.

Summary:

This week’s EIA storage report came in with a withdrawal of 206 Bcf while estimates had centered around 220 Bcf.  New Year’s Day was a record setter with the U.S. burning 143 Bcf for the day compared to the prior daily record of 142 Bcf consumed during the Polar Vortex of 2014.

We expect there are going to be a few more reports of triple digit withdrawals in the coming weeks which will deplete inventory quickly as the report reflects the prior week’s activity.

The market has all but shrugged off the numbers as we look forward.  The increased demand is already being seen in the spot cash market as suppliers must fill additional gas quantities required.

Weather patterns are changing with more than 75% of the country showing normal to above normal temperatures in the 6-10 day outlook according to NOAA and a continuation of that pattern for the 8-14 day forecast, which should return demand to seasonable numbers.

Production has been hit with well head freeze offs, but is expected to rebound very quickly as the market is looking at last year’s ramp up and record daily production numbers and anticipates that the market will be well supplied through 2018.

Poll Results: Ohio Voters Against Re-regulation to Monopoly Utilities

At this point it is old news, that the largest electric utilities in Ohio have been in discussions regarding “restructuring” competitive markets within the state. Despite their efforts to change the current seven-year construct, Ohio voters may be the biggest political snag in their way.
Based on a poll conducted in January and by Fallon Research and Communications, and first reported by The Cleveland Plain Dealer, Ohio voters are very much in opposition of a return to a regulated market construct that would allow monopoly utilities. The telephone survey was conducted in January polled a panel of 800 Ohio voters about key supporting issues. The results favoring energy choice and objection to monopoly utilities were consistent across party affiliation, gender, age, and location.

Results from Fallon Research’s Poll & The Plain Dealer’s Report:
More than 91 percent would oppose any law change allowing FirstEnergy or Columbus-based AEP to build new power plants and raise monthly rates to pay for them. AEP wants to do exactly that, build wind and solar farms and maybe new gas turbine plants while selling off or closing its old coal units.
Nearly 79 percent would oppose any legislation that did away with a customer’s choice to shop for power suppliers. Dozens of independent suppliers now compete for customers through a state-maintained “Energy Choice” website. A return to old-style regulation could end that kind of competition, say independent power companies, forcing customers to return to their traditional electric utilities for electricity as well as delivery.
Nearly 62 percent said they would oppose paying extra every month to support older power plants that cannot compete well against modern gas turbine plants. FirstEnergy has persuaded state regulators to do just that — though the latest subsidy does not mention its power plants. Federal regulators objected to earlier, more expensive proposals that spelled out exactly how the extra fees — amounting to an extra monthly consumer bill every year — would be spent.
Nearly 60 percent of voters would object to the creation of special subsidies for one fuel source — in this case FirstEnergy’s nuclear power plants, which are expensive to operate and do not always compete well against gas turbine plants. The idea has been adopted in New York and Illinois, but has been challenged as anti-competitive. FirstEnergy is considering asking for such a subsidy but has not made a final decision.
AARP and the Alliance for Energy Choice, a group representing independent power producers funded the statewide poll. The Alliance spokesperson, and former chairman of the PUCO, Todd Snitchler spoke on the results of the poll commenting that, “The results of the poll clearly demonstrate that talk about a need for re-regulation or changes to Ohio’s energy landscape, is pointed in the wrong direction.

Fallon Research and Communications. (2017). Ohio Voters on Energy Choice 2017. The Cleveland Plain Dealer [Distributor]. Retrieved from http://www.cleveland.com/business/index.ssf/2017/02/ohio_voters_want_energy_choice.html.

 

Did Christmas come early for the coal industry?

Robert Murray, CEO of Murray Energy Corporation, the largest underground coal mining company in the US based in St. Clairsville (OH) has been one of the most outspoken people in the “war on coal”. Although pleased with the outcome of the election, his excitement is tempered by an underlying reality of how quickly things have changed in the power generation sector.
Mr. Murray would probably like Santa to deliver everyone a lump of coal in their stockings (as a good thing) this year, but is also keenly aware that natural gas and renewables (wind/solar) are taking a larger and larger piece of the generation pie. In fact, in 2007 coal represented 48.5% of the main fuel source for generation, today (through June 2016) it is sitting just under 30%.
Interesting that he doesn’t see the jobs coming back but is also concerned as more LNG and exports are on the horizon, that in turn will drive up natural gas pricing and coal will still be in demand as the main baseload, low cost fuel source for some time to come.

 

For more details:

http://www.powermag.com/coal-magnate-tells-trump-to-lower-his-expectations/?printmode=1

 

 

Natural Gas Producers’ Bankruptcies and its Impact on Gas Production

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As of May 16th – 77 natural gas and oil producers in North America have filed for bankruptcy since 2015, and 35 of those have done so since the start of 2016…

A recent study conducted by PointLogic Energy explored how much production is represented by these 77 companies, where they are located and the overall impact it is having.

The analysis concluded that 4.4 billion cubic feet per day of gas production and 307,000 barrels per day is represented by the bankruptcy companies.  The production of these companies represents 5.4% and 3.6% of the lower-48 states’ gas and oil production respectively.

 

Some major takeaways from the review:

  • The volume of gas attributed to the companies in bankruptcy is much larger than the corresponding volumes of oil.
    • For Example: In Texas 7.5% of natural gas production is bankrupt while only 2.8% of oil production is represented.
  • There are regional winners and losers: Of the major producing states, Texas, Wyoming, Oklahoma and Louisiana bear the brunt of bankruptcy related volumes. The Northeast and Gulf of Mexico appears largely unscathed.

The overall takeaway when reviewing the companies that have filed for bankruptcy is that they are highly weighted to natural gas, rather than oil products.

So what does it mean going forward? If oil prices recover and producers increase drilling we will likely see an increase in associated gas production, regardless of what natural gas prices are doing. Rising gas production from the associated oil production will inflict even more troubles for the bankrupt market segment with storage constraint worries. The remaining summer looks to be a difficult price environment for natural gas producers, especially in the Texas, Oklahoma, Wyoming and Louisiana regions.

 

Is Tesla becoming the “Big-Box Store” of Energy?

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If you shop at a big-box or wholesale store, you know you can get just about anything you could ever need, and things you think you need, (or want, or think you might need) but really don’t.  Tesla’s latest news is their bid for Solar City, the nation’s largest residential solar company.  Elon Musk, as reported, is the Chairman and largest single shareholder in both entities, and the “deal” ($2.5B) still has to be approved by the SEC.

 

In the big scope of things, here’s how it would break down:

  1. Sun shines (power transformed) by your “Tesla” solar panels installed by “Solar City”
  2. Electricity powering your home also is stored in your “Tesla” Powerwall battery system (Giga-factory in Nevada)
  3. Your Powerwall is charging up your “Tesla” car in the garage (batteries included) manufactured by “Tesla”
  4. When you are bored, take a trip on “Tesla” Space X (rocket ship) to Mars (batteries included)

 

No Utility System needed….click the links below for more details:


http://www.energymanagertoday.com/125437-0125437/

http://bigstory.ap.org/article/5eff8a7c05024bcd85a3d6843432d53e/apparent-conflicts-interest-may-dog-tesla-solarcity-deal

http://www.energymanagertoday.com/drama-aside-tesla-acquisition-of-solarcity-makes-sense-0125228/

 

PJM Capacity Auction: Bad News for generators, Good news for customers

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PJM capacity auction results for the planning year of June 2019 to May 2020 announced 5/24/16, were down significantly, almost 40% across most PJM markets from the prior year.   BAD news for generators as it means less revenue to them, but GOOD for consumers in lower costs.

PJM procured 167,306 MW of power at a clearing price of $100 per MW-day in the majority of the region, down from $164.77 per MW-day last year.  It met a reserve margin of 22.4%, meaning that PJM has excess capacity in the amount of 22.4% of expected peak demand.  It is also the highest reserve margin in PJM auction history, ensuring reliability and availability of power for customers during the term.


PJM Capacity Cost Graph - 6.22.16


The results were somewhat surprising considering PJM’s capacity performance (CP) program. Under this program, which was approved last year, power producers that agreed to deliver electricity whenever PJM determines it is warranted would receive higher capacity payments. PJM’s thought or hope was that the increased revenue would result in generators re-investing into their plant infrastructure, secure fuel contracts, and thus increasing reliability during peak demand periods. However, non-performance under this program results in significant penalties. Penalties that did not exist under the old base capacity program.

The 2019/2020 auction is only the second such event to adhere to PJM Capacity Performance program. In this year’s auction, 80% of the resources had to clear according to “capacity performance” with the remaining 20% clearing under the old capacity product “base capacity”. Next year’s auction for 2020/2021 will move to 100% capacity performance.
The takeaway from this year’s auction and the decrease in price is that there would appear to be adequate generation to meet demand, with more coming on-line.

 

Apple to enter the wholesale electricity market?

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That’s right, last week the technology giant filed for permission with federal regulators to sell electricity to consumers on the grid. Apple Energy as it will be known, is mainly intended to feed its own data centers, however, it wants to be able to take surplus power it produces and sell it back to other industrials at market based rates. Apple currently owns or controls generation facilities that qualify for such a task.

As a leading innovator Apple CEO, Tim Cook said, “We take the same innovative approach to the environment that we do with our products.” The Apple mission is to power every one of its facilities using entirely green energy, solar, wind, hydro, and thermal. In 2015, 93% of its energy came from renewable.

Apple says the investment in renewable energy is paying off and they won’t stop innovating as the amount of renewable energy available to them grows.

Who knows? In the near future you might be charging your apple cell phone with apple power.

 

Days of Our Lives (PPA Update)

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Copyright-Delta-Whiskey-Creative-Commons

Does anyone remember “as sands through the hourglass, so are the Days of our Lives”? This is what it seems to be as the “Battle in the Buckeye State” has become with FirstEnergy and AEP Ohio and the approval of their respective rendering of the PPA’s. What had captured national attention from investors and regulators watching from the wings has now garnered the attention of the Feds. Specifically, the Federal Energy Regulatory Commission (FERC). The approval by our PUCO has now been put on hold by FERC for additional review and scrutiny for various reasons.

What seems to be at the heart of the issue is that both proposals put the consumers into a position that they are not able to mitigate or get out of having to pay (non-bypassable) charges that these PPA’s would have triggered.


To learn a little more:

 

Understanding Commodity Markets

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We’ve all been there before. While driving along we notice gasoline prices are lower than usual, so we pull in, top it off, and take advantage, despite the fact that we still have half a tank left. Then, the next morning we drive by that same gas station and see prices dropped an additional 10 cents. Or, we skip filling up and see gasoline prices have jumped 30 cents… So what gives?

The same volatility occurs in the natural gas and electric market. When dealing with commodities we are often damned if we do and damned if we don’t.

Energy prices are constantly on the move, and much like gasoline prices, a myriad of reasons come into play. Supply and demand is not always what moves the market. Factors such as storage levels, weather, a full moon, a trader having a bad day can swing the pendulum. Obviously I joke with the latter two but the point remains, it’s difficult to understand why these movements happen.

In today’s market I would assume that “energy saving” calls have picked up frequency in recent weeks. Why? Because marketers will develop a pitch based on the market being up or down. If the market goes up, they claim it’s a good time to get out. If the market goes down, they claim it’s a good time to get out. According to them, you should always be signing up. Yes, rates today might be lower than last year, but comparing your price then, to today, is not telling the whole story…

Just like mortgage rates, they change over time. Years ago 8% was the norm, whereas rates today are now below 4%. Did you make the wrong decision, pay too much, or get ripped off at 8%? No, at the time that was the market, and markets shift in time.

Buying in a down market is easy, you buy savings but understanding all that lies below the surface within that price is key. Energy components, operational changes, contract terms, program options, are all things to consider when jumping back in. Simply picking a rate is a short sighted reaction to a complexity that goes much deeper.

To learn more about your options, the market, and the things you can do to adjust costs, contact your energy representative. Your business is important, make sure you are asking the right questions. An in depth review and explanation is what it deserves, not just a “pick your price” approach in a commodity world that’s as volatile as the local gas station.