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In This Issue

ISO-NE Tells FERC Gas Situation OK This Winter

PJM, ISO-NE: Gas Pipeline Opposition Could Put Power Reliability at Risk

Natural Gas and Oil Market Update

EIA - Weekly Natural Gas Storage Report

NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price

Tables

NOAA 6 to 10 Day Outlook
weatherweather
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.

 

Market Overviews

ISO-NE Tells FERC Gas Situation OK This Winter

Power Markets Today | October 28, 2016

New pipeline to help but future plant retirements loom

ISO-NE VP of System Operations Peter Brandien told FERC yesterday this winter will have some improvements from a reliability perspective. The region is getting about 340,000 DKTs of new pipeline capacity with the Algonquin Incremental Market project set to come online next month.

"We have some units that have indicated they're going to retire – we have those units this year," Brandien said. "So this is probably going to be my last, best winter."

While not all of the expansion is available to generation, especially when gas-utility demand is peaking on cold days, he added, a general rule of thumb is that 100,000 DKT can support about 500 MW of generation.

The expansion will give the ISO's operators some more breathing room this winter but the Brayton Point Power Station is set to retire by June 1, 2017, along with some other non-gas units. Total retirements add up to about 1,500 MW – nearly equivalent to all the extra capacity the AIM pipeline expansion was bringing into the region.

Beyond the retirements late next spring, other power plants have indicated they will retire in the coming years for a total of 4,200 MW. That includes coal, oil and nuclear capacity and another 6,000 MW of old coal- and oil-fired units are at risk of retirement in the coming years.

"The region's pipeline infrastructure will face continued constraints as heating demand grows and gas-fired generation replaces retiring units," Brandien said in prepared remarks to the commission.

"You ended your talk with somewhat of an ominous statement about the non-gas resources that you'll be losing in the next year, so – are there things you are doing now to give yourself more margin for next winter?" Commissioner Cheryl LaFleur asked him.

Brandien did not have a good answer, he replied, as the region does not seem to be motivated to invest in gas infrastructure. Policymakers there tend to be more interested in efficiency and renewables.

Efficiency has already helped the region's grid operators, with the extreme peak forecast for this winter being about 1,100 MW below the ISO's all-time winter peak. "We actually see our peaks coming down through the years," Brandien said, "but generation retirements are going to outstrip those activities."

While solar might not be thought of as the greatest resource for New England winters, it can be useful, keeping oil plants offline during the daylight hours and having them available for peak demand right as the sun goes down and just after, he added.

ISO-NE CEO Gordon van Welie has been making the same points in public talks recently, telling the New England Council in Manchester, NH, last month the ISO's winter operations are becoming precarious. They may become "unsustainable during extreme cold conditions" beyond 2019, he added.

The 2019 date is interesting because the winter that starts that December will be the first with the ISO's pay-for-performance rules, enacted after a few very cold winters earlier this decade. The ISO was facing the same kinds of situations back then as it is now and it appears those rules have not been enough to fix the precariousness of the power-gas balance in New England, van Wellie said.

Backups include RMR

The ISO may have to revert to reliability-must-run (RMR) deals with non-gas units to maintain winter reliability, he added. Other options include conditioning capacity-market revenues on generators' firm fuel supplies or revisiting scarcity pricing in the capacity and energy markets.

An effort to back pipeline expansion through retail power rates ran into legal roadblocks in Massachusetts and before FERC. Asked what the commission could do on the issue going forward, Chairman Norman Bay said he could not comment on specific cases.

"But I think that there's an important path forward in which we continue to talk to states, to state regulators as well as ISO New England," Bay said. "I think this is the kind of situation where cooperative federalism could be very helpful."

Read More:
http://www.powermarketstoday.com/public/ISONE-tells-FERC-gas-situation-OK-this-winter.cfm?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=104128553

PJM, ISO-NE: Gas Pipeline Opposition Could Put Power Reliability at Risk

Utility Dive | October 28, 2016

Local opposition to natural gas pipelines has steadily increased, seen in the protests over Duke Energy's proposed Atlantic Coast Pipeline Project. In Massachusetts' case, the opposition made its way up to the the court, which prohibited utilities from charging customers to recoup costs for pipeline construction. And Connecticut's environmental agency just canceled its request for proposals for new gas projects in a bid to boost carbon-free energy resources. 

Now some power sector officials say such opposition will hurt reliability in a region already struggling to build enough pipeline capacity to meet demand.  PJM and New England expect to meet demand this winter, but their forecasts to federal regulators each focused on the need for new pipeline capacity—as well as the difficulty in getting it built.

New England ISO Vice President of Operations Peter Brandien told FERC in testimony that In the event of a cold snap the grid has adequate generating capacity, "but our ability to meet electric energy needs is at risk if the natural gas infrastructure serving the region is unable to supply fuel to gas-fired generators."

PJM said the "vast majority" of pipelines in its territory are prepared for winter, with the exception of the Texas Eastern line. The TE Penn Jersey line, running from Pittsburgh to New Jersey, ruptured in April and is currently running at about 50% of capacity. A return to full service is expected in November.

Key Points:

  • Officials from PJM Interconnection and ISO New England say opposition to new gas pipeline capacity is putting their availability to procure fuel at risk, especially in the colder months when heating demand spikes. But looking ahead to the winter, both grid operators say they will meet demand, SNL reports.

  • PJM gave a winter forecast last week at the Federal Energy Regulatory Commission, predicting peak load of more than 135,000 MW, though it has almost 184,000 MW of capacity installed.

  • New England officials said the biggest threat to the grid would be an extended cold snap, citing a possible dearth of natural gas capacity to meet unexpected demand.

Read More:
http://www.utilitydive.com/news/pjm-iso-ne-gas-pipeline-opposition-could-put-power-reliability-at-risk/429160/

Natural Gas and Oil Market Update

Arrow

Natural Gas Prices Shake Off Inventory Build

The Wall Street Journal | October 28, 2016

Natural-gas prices ended higher Thursday after swinging between gains and losses, as a continued build in inventory failed to outweigh hopes for higher demand in the winter.

Futures for November delivery settled up 3.3 cents, or 1.2%, at $2.764 a million British thermal units on the New York Mercantile Exchange, and traded as low as $2.684/mmBtu earlier in the session.

The November contract expires Thursday, and the more active December contract settled up 3.2 cents, or 1.1%, to $3.068/mmBtu.

  Arrow

Oil Prices Edge Lower On Doubts Over Production Cut Deal

Reuters | October 28, 2016

Oil prices edged lower on Friday and were set for the biggest weekly losses in six weeks over doubts about whether oil producers will be able to agree on an output cut big enough to curb a global glut that has weighed on markets for two years.

Experts from the Organization of the Petroleum Exporting Countries and counterparts from other oil-producing nations such as Russia started two-day negotiations on Friday over an output-capping agreement expected to be presented at the end of next month.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Summary
Working gas in storage was 3,909 Bcf as of Friday, October 21, 2016, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 52 Bcf higher than last year at this time and 182 Bcf above the five-year average of 3,727 Bcf. At 3,909 Bcf, total working gas is above the five-year historical range.

NYMEX Natural Gas Week-to-Week Price Change NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price ($ per mmBtu)

NYMEX Natural Gas Week-to-Week Price Change - Five Yearly Snapshot

Disclaimer: The information contained in these reports is gathered from public and/or internal sources and is presented solely for the convenience of our customers and Newsletter Subscribers. Patriot Energy Group makes no representation or warranty, express or implied as to the accuracy or completeness of the information set forth in this newsletter, and Patriot Energy shall not have any liability to any person or entity resulting from use of this information in any way.
 
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