Nov 15, 2021 1:27:23 PM

U.S. Henry Hub gas prices closed last Friday $3/MMBtu higher compared to a year ago. The higher natural gas prices can be attributed to several factors such as  exporters sending gas to Europe and Asia and fracking holding off on new drilling.  According to the EIA, the average U.S. household that relies on natural gas for heating will pay 30% more for the fuel this year. Eversource Energy stated that average natural-gas customers in Connecticut can expect to see their bills increase by about 14% this month and an increase by as much as 21% in Massachusetts. James Daly, Eversource’s vice president of energy supply, said “Demand for natural gas and power is increasing substantially over where it was a year ago. We’re seeing a bit of upward pressure on natural gas prices here to respond to the very high demand and the prices in Europe.”  LNG export facilities have been at near maximum capacity with exports hitting a record 19.2 billion cubic feet a day in March, which is about 71% during the pandemic and up about 17% from the pre-pandemic peak. The largest U.S. LNG exporter, Cheniere Energy Inc. set a record for shipments in the third quarter, with 141 LNG cargoes between its two Gulf Coast facilities. However, the biggest natural-gas producers have vowed to keep investments in production growth low such as  EQT Corp. , Chesapeake Energy Corp. , Antero Resources Corp. Antero Chief Executive Paul Rady said, “We’re staying away from growing."

Byron and Dresden nuclear plants which supplied 20% of Illinois’s in-state electricity generation last year will continue operating rather than retire this fall as previously planned. Exelon operates six nuclear power plants including Byron and Dresden. Illinois has more nuclear generating capacity than any other state and nuclear power plants accounts for 58% of Illinois’s in-state electricity generation in 2020. Illinois Senate Bill 2408 (S.B. 2408), signed into law on September 15, 2021 targets the state's goal to 50% clean energy by 2040 and 100% clean energy by 2050.  The law also states that the  remaining fossil-fueled generation plants will reduce carbon emissions in stages starting in 2030 and to be completed by 2045. The EIA states that in 2020, 18% of in-state generation in Illinois came from coal; natural gas-fired plants generated another 14%.

PJM expects to have over 185,000 MW of resources to meet the forecasted peak demand of approximately 133,000 MW. PJM’s all-time winter peak is 143,295 MW, set on Feb. 20, 2015.  PJM President and CEO Manu Asthana said, “Keeping the power flowing under anticipated winter conditions is the core mission for PJM and our member companies. We understand the critical importance that electricity plays in the daily lives of the 65 million people we serve.” PJM performs annually, winter readiness assessments such as data collection on: fuel inventory, supply and delivery characteristics; emissions limitations; and minimum operating temperatures. PJM initiated an analysis that resulted in numerous additional improvements to its winter preparedness, taking in consideration the 2021 February freeze in Texas and the efforts are as follows:

  • Incorporating critical-load business rules and expectations into emergency operations procedures to assist transmission owners in identifying and prioritizing electric service for critical facilities in emergencies
  • Collecting more information from suppliers about any fuel, environmental or weather-related limitations that could impact winter operations, while also including wind and solar generators in these requests
  • Further enhancing information-sharing with the natural gas industry

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General Market Update

  • The December 2021 NYMEX Henry Hub traded to $5.670/MMBtu, down $0.53 (-8.5%) from the previous Wednesday. The price of the 12-month strip averaging December 2021 through November 2022 futures contract was down $0.26 (-5.5%) to $4.561/MMBtu.
  • Boston’s Algonquin Citygate price went up $0.37 (+6.5%) to $6.02/MMBtu last Wednesday. Transco Zone 6 NYC price increased $0.13 (+2.4%) to $5.57/MMBtu. 
  • Pennsylvania’s Eastern Gas South fell $0.09 (-1.7%) to $5.20/MMBtu. Tennessee Zone 4 Marcellus spot price decreased $0.09 (-1.7%) to $5.22/MMBtu.
  • SoCal Citygate price decreased $1.11 (-16.1%) to $5.79/MMBtu last Wednesday. The price at Northern California PG&E Citygate fell $1.17 (-15.7%) to $6.26/MMBtu week over week. 

Utility Highlight

  • The upcoming Price to Compare for First Energy Potomac Edison in Maryland, Residential No Electric Heat rate class (RSNH) is $0.06386/kWh, in effect from December 1, 2021 to December 31, 2021.
  • Negative Headroom in the POTED – RSNH territory is now present in the shorter periods for contract with 3 and 6 month term.  Headroom of negative $0.07503/kWh is likely for the 3 month period and headroom of negative $0.06389/kWh is likely for the 6 month period; respectively.

  • The current Price to Compare data for First Energy Potomac Edison in Maryland (POTED), General Service Commercial Small (GSCS) is $0.10085/kWh, in effect from December 1, 2021 to December 31, 2021.
  • Negative Headroom in the POTED – GSCS market is now present in the shorter periods for contract with 3 and 6 month term.  Negative headroom of $0.02583/kWh is likely for the 3 month period and negative headroom of $0.01355/kWh is likely for the 6 month period; respectively. 

Storage

  • For the week ending October 29th, 2021, the EIA reported net injections into storage of 63 Bcf, which is more than last year’s net injection of 27 Bcf this week last year and more than the 5-year (2016-2020) average net injections of 38 Bcf.
  • Working natural gas in storage totaled 3,611 Bcf, which is 313 Bcf (-8.0%) lower than last year’s working gas totals of 3,924 Bcf at the same time and 101 Bcf (-2.7%) lower than the 5-year average of 3,712 Bcf.  Total working gas is within the five-year historical range.

Supply/Demand

  • Average total supply of natural gas rose 0.1% week/week.  Dry natural gas production increased by 0.5%, while net imports with Canada decreased by 6.2% compared with the previous week. 
  • Total US consumption of natural gas rose by 5.7% since last week.  Natural gas consumption for power generation decreased 3.0%, industrial sector consumption increased 2.9%, residential-commercial consumption increased 31.5% week over week, and exports to Mexico decreased 8.3% compared to last week.
  • US LNG exports increased week over week, with 22 vessels departing US ports for a combined 80 Bcf.

Weather

  • A warm weather pattern for the Western United States is forecast for the 8-14 day period starting November 19th.  The middle of November 2021 brings a warm weather pattern for the Western States that are East of the Mississippi River along with the Southern States. 
  • The Midwestern States, Great Lakes States, Middle Atlantic States and New England States are forecast for near normal temperatures.  The state of Alaska is forecast for below normal temperatures.  Southern California has the highest probability for much above normal temperatures. 
  • In the 8-14 day window from November 19th through November 25th, the Northern Pacific Coast States, Rocky Mountain States, Texas, Florida and the Southern States are forecast for above normal precipitation. 
  • California, the Four Corner states and the Midwestern states are forecast for below normal precipitation.  There are some bands of normal precipitation probability forecast across the Middle Atlantic States and New England States.

 

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