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In This Issue

No New England Price Spikes in Winter 2015/16, But Recipe For Volatility Remains

New Hampshire legislature doubles net metering cap to 100 MW

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

No New England Price Spikes in Winter 2015/16, But Recipe For Volatility Remains

Natural Gas Intelligence | April 14, 2016

For winter 2015/2016, trading at key points in New England didn’t see the same price spikes as in years past, but the underlying infrastructure constraints that have hampered the region on peak days could still lead to volatility in natural gas prices moving forward.

Prices peaked at $9.02/MMBtu at Transco Zone 6 NY (Transco) and at $8/MMBtu at Algonquin Citygate (AGT) during winter 2015/2016, according to Daily GPI prices. By comparison, the extreme cold during winter 2013/2014 sent prices as high as $125/MMBtu at Transco and $95/MMBtu at AGT.

“Natural gas pipeline capacity into Massachusetts hasn't increased much over the years, and has been stuck at 2.6 Bcf/d since 2007,” said Patrick Rau, NGI’s director of strategy and research. “That is enough to handle non-peak periods, but the problem is peak days. Demand during the coldest days of winter can far exceed that 2.6 Bcf/d.”

Erik Fabry, natural gas research analyst with Louisville, KY-based Genscape, said the price blowouts in New England the past two winters saw the “relatively price insensitive” residential/commercial demand eat up the limited supply, resulting in less gas-fired electric generation during peak periods as “less power is willing to compete” at high prices and thus transitions “over to fuel oil for the power stack.”

But the recent cold spell notwithstanding, the unusually mild temperatures during winter 2015/2016 saw the region avoid the extreme price spikes that have come during these peak cold periods.

According to Genscape, population-weighted average temperatures in New England from November-March were 4.85 degrees above normal during winter 2015/2016, compared with temperatures 3.02 and 3.78 below normal for 2013/2014 and 2014/2015 respectively.

In a note published last week, the Energy Information Administration (EIA) said wholesale electricity prices for New England, heavily influenced by gas prices in the region, also remained relatively low this past winter after experiencing similar volatility the past two heating seasons.

EIA attributed the reduced volatility to “a combination of increased deliveries of liquefied natural gas (LNG) into the region, a fuel adequacy winter reliability program and the warmest winter on record.”

As observed in NGI’s Forward Look data, LNG imports to New England put downward pressure on futures prices this winter.

But while the temperatures never dipped low enough to spark price blowouts during winter 2015/2016, the underlying structural demand remains strong, meaning New England still has the same mix of peak day heating demand and infrastructure constraints that could produce volatility moving forward. Genscape data shows average residential/commercial demand in the region trending upward the past five years, climbing to around 2.2 Bcf/d from just over 2 Bcf/d during winter 2009/2010.

Pipeline developers, meanwhile, have taken note, with a slew of new projects going before FERC aiming to cure the region’s peak-day infrastructure bottleneck, including the Spectra Energy-backed Algonquin Incremental Market expansion, Atlantic Bridge, Salem Lateral and Access Northeast projects, and the Kinder Morgan Inc.-backed Northeast Energy Direct expansion of Tennessee Gas Pipeline Co. LLC. These projects, like many others proposed in recent years, have had to contend with opposition from environmental groups and even from state governments.

“There are five new pipeline projects that would more than double in-bound capacity into Massachusetts by 2018, assuming they are all built, and are all built on time,” Rau said. “That will help, but winter prices should still be pretty volatile. For example, the current Algonquin Citygate forward curve has a maximum basis price of $4.26 for winter 2016/17, but that falls to $3.96, $3.81, and $3.71 over the next three winters. Better, but still volatile.

“The wildcard is how much will that new pipeline capacity be used for new baseload, especially among power producers? The more of that gas that is already spoken for, the less peak day capacity will be available, which contributes to volatility.”

Read More:

New Hampshire legislature doubles net metering cap to 100 MW

Utility Dive | April 14, 2016

New Hampshire is the latest state revising its net metering policy as utilities reach their state-mandated cap and the solar industry treads water to keep afloat.

The bill directs the New Hampshire Public Utilities Commission to study new programs to support distributed solar generation after the new 100 MW cap is reached. The bill's passage came the same day as the passage of Massachusetts' much-contested net metering bill, which increases the state's net metering cap by 3%. Even so, the Massachusetts bill reduces the retail rate credit for commerical and community solar projects to the wholesale rate after the 1,600 MW solar cap is reached.

Twenty-seven states have considered changes in how to compensate excess energy exported to the grid from distributed solar systems in 2015, according a report from NC Clean Energy Technology Center.

Hawaii and Nevada are two states that underwent extensive net metering policy changes that reduced net metering reumuneration or replaced it. California's utility regulators chose to uphold the net metering policy with a small non-bypassable charge with the provision to revisit the decision in 2019. Maine is looking to replace the policy entirely with a market-based "pay-for-production" program.

Key Points:

The New Hampshire Senate passed a bill to double the cap on net metering, which awaits Gov. Maggie Hassan (D)'s signature, PV Magazine reports.

The bill, H.B. 1116, which was passed by the House of Representatives a month ago, and aims to expand the cap to 100 MW, allocating 50 of those MW to the state's four electric distribution utility territories and the remainder to the three investor-owned utility territories.

Eversource Energy met the existing 50 MW cap in January in its territory, causing turmoil among local solar installers who said they had to lay off workers as a result, according to PV Magazine.

Read More:

Natural Gas and Oil Market Update


Oil Prices Drop on Growing Doubts About Impact of Any Output Freeze

The Wall Street Journal | April 14, 2016

Oil prices flopped late in Thursday’s trading session after being largely unchanged most of the day with opinions divided about recent U.S. inventory data and this weekend’s meeting between the world’s big oil exporters.

Light, sweet crude for May delivery settled down 26 cents, or 0.6%, to $41.50 a barrel on the New York Mercantile Exchange. It spent most of the U.S. trading session just barely in positive territory, and made its sharp turn into losses with less than 15 minutes left before the 2:30 p.m. EDT settlement.


Natural Gas Futures Pare Some Losses as U.S. Supplies Edge Lower

Market Watch | April 14, 2016

Natural gas futures pared some of their earlier losses Thursday after the U.S. Energy Information Administration reported that supplies of the commodity fell by 3 billion cubic feet for the week ended April 8. Analysts polled by Platts forecast a decline of 1 billion to a climb of 3 billion cubic feet. Total stocks now stand at 2.477 trillion cubic feet, up 956 billion cubic feet from a year ago and 849 billion cubic feet above the five-year average, the government said. May natural gas fell 3.1 cents, or 1.6%, to $2.005 per million British thermal units. Prices traded at $1.98 before the supply data.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 2,477 Bcf as of Friday, April 8, 2016, according to EIA estimates. This represents a net decline of 3 Bcf from the previous week. Stocks were 956 Bcf higher than last year at this time and 849 Bcf above the five-year average of 1,628 Bcf. At 2,477 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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