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In This Issue

PJM, Members Ready To Meet Winter Electricity Demand

Turbines are Spinning at the Nation’s First Offshore Wind Facility

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


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


Market Overviews

PJM, Members Ready To Meet Winter Electricity Demand

Yahoo Finance! | December 15, 2016

PJM Interconnection, which manages the high-voltage power grid for 61 million consumers in 13 states and Washington, D.C., expects to have sufficient resources to meet forecasted demand for electricity this winter.

"PJM and our members have taken steps to prepare for this winter's operations, from participating in drills to examining incidents that could impact reliability," said Michael E. Bryson, vice president – Operations. "With the added strength of resources meeting the stricter Capacity Performance requirements, we are in a better position to handle the cold weather."

Bryson said PJM prepared for the season by studying "worst-case" scenarios such as the impacts of gas pipeline failures. (Natural gas is in higher demand in winter because of both its use for home heating and electricity generation.) PJM also worked with generation owners on cold weather preparedness, a fuel inventory survey, resource testing and a drill for emergency procedures. Communication and coordination between PJM and natural gas pipelines continues regularly throughout the winter.

Capacity Performance resources – generation, demand response and energy efficiency – must produce electricity when called upon regardless of weather or extreme system conditions. If they do not, they face significant non-performance charges. PJM procured Capacity Performance resources to meet more than 60 percent of expected needs. All resources will be required to meet Capacity Performance standards by June 1, 2019.

PJM expects to have 183,665 megawatts of electric resources to meet the forecasted peak demand of 135,548 MW.  Last winter, when temperatures were milder than average, the winter peak of 130,680 MW was set on Jan. 19, 2016. PJM's all-time winter peak is 143,295 MW, set on Feb. 20, 2015.  

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Turbines are Spinning at the Nation’s First Offshore Wind Facility

ISO Newswire | December 15, 2016

On December 12, 2016, Block Island Wind Farm announced that it had begun delivering electricity to the grid—a historic occasion for both the region and the US. The facility represents the first offshore wind farm in the nation and is paving the way for similar projects to harness New England’s significant offshore wind energy potential. As of December 1, three offshore wind projects representing 2,054 megawatts (MW) were requesting interconnection to the regional power system. Federal and state efforts are helping spur the growth of this new industry. Recent Massachusetts legislation, for example, allows the state to procure approximately 1,600 MW of offshore wind, and several offshore wind projects across the country are receiving grants from the US Department of Energy.

The wind farm, located 16 miles off the Rhode Island mainland near Block Island, comprises five wind turbines, each of which is capable of producing 6 MW of zeroemission electricity. The facility’s 30 MW of total capability will be more than enough to replace the diesel generators that previously powered the island; about 90% of the facility’s output will be exported back to the mainland via a new underwater transmission cable to help meet regional electricity demand.

In February’s Forward Capacity Auction, the wind farm won supply obligations committing it to provide electricity when called on by the ISO during the June 2019 through May 2020 period. The auction is an annual process to procure the resources that will be needed to meet projected future regional demand. A total of 27 MW of energy was procured from wind resources.

The wind farm’s commercial operation caps an eighth year development effort. After the project’s initial proposal in 2008, a lengthy period followed to secure permits and financing. Construction began mid2015 and was completed this fall, after which a testing phase began. Learn more about the project in a presentation by Jeffrey Grybowski, Deepwater Wind CEO, to the region’s Consumer Liaison Group in September.

Facilitating the integration of wind energy in New England

The region could reach more than 6,500 MW of wind energy by 2023 if all the onshore and offshore wind projects currently proposed in the ISO Generator Interconnection Queue are developed. However, one obstacle to connecting more onshore wind energy is the need for new or improved transmission lines and facilities because these projects are typically located in more remote areas where the transmission system was originally built to handle a much smaller demand for electricity.

Many recent and ongoing ISO projects are helping to accommodate adding more onshore and offshore wind energy in New England. For example:

  • In 2016, we engineered a revolutionary method of accounting for the variable “fuels” powering wind resources and certain hydro resources, which can now be efficiently dispatched and set realtime prices.

  • We’ve found ways to speed up our engineering studies of proposed wind power projects.

  • We’ve also streamlined the process for Elective Transmission Upgrades (ETUs)—transmission lines funded by private parties—which may help support state efforts to integrate more wind and renewable energy.

  • In September, the ISO also released results of an economic study requested by regional stakeholdersto evaluate the economic impacts of hypothetically adding several thousand megawatts from offshore wind facilities. The study suggests the region could see sizable economic and environmental benefits.

Read More:

Natural Gas and Oil Market Update


Natural Gas Little Changed on Inventory Data, Weather

The Wall Street Journal | December 15, 2016

Natural-gas prices flipped between gains and losses after storage data showed an unexpectedly large draw from inventories, but worries about warm weather continued to weigh on the market.

Futures for January delivery fell 1 cent, or 0.28%, to $3.530 a million British thermal units on the New York Mercantile Exchange, reversing losses earlier in the day.

The U.S. Energy Information Administration said in its weekly report that natural gas stockpiles fell by 147 billion cubic feet in the week ended Dec. 9. Analysts and traders surveyed by The Wall Street Journal expected a decline of 130 billion cubic feet.


Oil Prices Turn Positive on Technicals, OPEC Delivery Cuts

Reuters | December 15, 2016

Oil prices reversed earlier losses and turned slightly positive on Thursday after failing to break below technical support levels and as OPEC members told customers they would cut crude supplies as part of the cartel's agreement to reduce output.

Earlier in the day, prices fell to the lowest level in a week as the dollar rallied following an increase in U.S. interest rates.

The dollar neared a 14-year high against a basket of other currencies after the U.S. Federal Reserve on Wednesday raised rates for the first time in a year and hinted rates could rise more quickly than investors had anticipated in 2017.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 3,806 Bcf as of Friday, December 9, 2016, according to EIA estimates. This represents a net decline of 147 Bcf from the previous week. Stocks were 50 Bcf less than last year at this time and 186 Bcf above the five-year average of 3,620 Bcf. At 3,806 Bcf, total working gas is within 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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