CT governor signs executive order for 100% clean energy target. Power prices increase, most of the country will see heat, and natural gas pipeline capacity is set to expand in Texas.
The October 2019 NYMEX Henry Hub forward contract increased to $2.445/MMBtu, a $0.22 (9.9%) increase from the previous Wednesday. The price of the 12-month strip averaging October 2019 through September 2020 futures contracts increased $0.10 (4.3%) to $2.474/MMBtu.
Natural gas prices have inched upward in most Northeast markets since last week. Boston’s Algonquin Citygate prices decreased $0.03 (-1.5%) to $2.02/MMBtu last Wednesday, but Transco Zone 6 NYC prices increased, rising $0.11 (6.2%) from $1.79/MMBtu to $1.90/MMBtu.
Pennsylvania’s Dominion South increased $0.10 (5.8%) to $1.84/MMBtu. Tennessee Zone 4 Marcellus spot prices increased $0.10 (6.0%) to $1.76/MMBtu.
California prices have risen, with Southern California prices seeing a steep increase due to abnormally warm weather. SoCal Citygate prices increased $1.11 (32.7%) to $4.51/MMBtu last Wednesday. Prices at Northern California PG&E Citygate increased slightly, rising $0.02 (0.7%) to $3.02/MMBtu.
For the NYC zone (J) in NYISO, the 12 Month ATC strip increased $0.62 (1.6%) to $38.50.The 24 Month ATC strip increased $0.66 (1.7%) to $38.86 and the Cal 2020 ATC strip increased $0.72 (1.9%) to $39.11.
For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $1.43 (3.6%) to $41.59. The 24 Month ATC strip increased $1.06 (2.6%) to $41.77 and the Cal 2020 ATC strip increased $1.13 (2.8%) to $42.24.
For the PEPCO zone in PJM, the 12 Month ATC strip increased $1.29 (3.9%) to $34.49.The 24 Month ATC strip increased $0.91 (2.8%) to $33.83 and the Cal 2020 ATC strip increased $0.85 (2.6%) to $33.94.
For the Houston zone in ERCOT, the 12 Month ATC strip increased $3.09 (7.1%) to $46.64.The 24 Month ATC strip increased $1.76 (4.4%) to $41.91 and the Cal 2020 ATC strip increased $1.73 (4.2%) to $42.95.
The upcoming Price to Compare for Rhode Island’s Narragansett Electric Company (National Grid) Residential rate class (A-16) is $0.10957/kWh, in effect from October 1, 2019 to March 31, 2020. This rate is an 18.6% increase from the current rate of $0.0924/kWh for the April 1, 2019 to September 30, 2019 price period.
TRUELight’s expert analytics and proprietary models indicate that headroom in the National Grid territory is now available in the 1, 3, 9 and 12 month terms. Headroom of $0.00566/kWh and $0.01392/kWh is likely for the 9 and 12 month terms, respectively.
Over the last week, the RHODEISLAND ATC 12-month strip increased, rising 6.1% to finish at $41.10/MWh yesterday. This time last year, the strip was trading at $45.36/MWh, which is 10.4% higher than this year.
Since the beginning of the year, the ATC strip has reached a high of $47.96/MWh on January 17, 2019 and a low of $38.12/MWh on July 5, 2019.
For the week ending August 30, the EIA reported net injections from storage of 84 Bcf, which is higher than last year’s net injections of 64 Bcf for this week and higher than the 5-year (2014–18) average net injections of 66 Bcf.
Working natural gas in storage totaled 2,941 Bcf, which is 383 Bcf (15.0%) more than last year’s working gas totals of 2,558 Bcf at the same time and 82 Bcf (-2.7%) lower than the 5-year (2014-2018) average of 3,023 Bcf. Total working gas is within the five-year historical range.
Supply and Demand
Average total supply of natural gas increased 1% week/week. Dry natural gas production remained the same while net imports with Canada increased 8% compared with the previous week.
Total US consumption of natural gas decreased by 1% since last week. Consumption for power generation decreased 3% week/week, industrial sector consumption decreased 1%, residential-commercial consumption increased 4%, and exports to Mexico increased 2%.
US LNG exports increased week/week, with twelve vessels departing US ports for a combined 43 Bcf.
Last Tuesday, Connecticut Governor Ned Lamont signed an executive order that urges state regulators to create a plan to produce 100% of the state’s electricity from zero-carbon sources by 2040. The order directs the Department of Energy and Environmental Protection (DEEP) and Public Utilities Regulatory Authority (PURA) to design the strategy to achieve this goal. Lamont’s action makes Connecticut the ninth state, in addition to the District of Columbia, to set a 100% clean energy target.
Natural gas prices at the Waha hub in the Permian Basin in western Texas have increased to their highest level since March 2019 as the Gulf Coast Express Pipeline readies for operation. The new pipeline, which is slated to begin service on October 1st, will provide much-needed takeaway capacity from the Permian natural gas production region to the Agua Dulce gas hub on the Texas coast. Limited pipeline infrastructure from the Permian Basin to refinery and export hubs near the Gulf Coast has kept a lid on gas prices in West Texas, but the Gulf Coast Express Pipeline and additional pipeline infrastructure projects in coming years should relieve transport constraints and provide upward pressure on these prices.
Almost the entire continental US will see above average temperatures in the 8-14 day window. The Northeast and the Great Lakes region will see the greatest chances for elevated temperatures, while the Northwest will see average temperatures for this time of year.
Precipitation will be above average in the northwestern region of the continental US, as well as most of the Midwest and southeast. Forecasts call for about typical precipitation levels in the Southwest and Mid-Atlantic regions, while New England and New York expect to see drier than normal conditions.
Forecasts call for activity in the Tropics, which make the weather forecasts from Texas east up the Atlantic coast more uncertain. The expectation of warm temperatures for most of the country could drive some late summer price volatility, but a tropical storm system could dampen that possibility.