More Related Content Similar to David Givens Boston LDC Forum 2013 Presentation on New England winter gas and power markets (20) David Givens Boston LDC Forum 2013 Presentation on New England winter gas and power markets 1. London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Rio de Janeiro,
Singapore, Beijing, Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto and Johannesburg
illuminating the markets
Energy and commodity price benchmarking and market insights
2. Winter 2013 impact on gas-fired generation in New
England
Boston, Massachusetts
Presented at the 18th Annual Northeast LDC Gas Forum
David Givens, Head of Gas and Power Services, North America
June 10, 2013
3. illuminating the markets
• Gas price rebound magnified in region last winter
• Physical constraints abound
• Exceptionally favorable reversal from 2012 for sellers
to power plants in New England
• Hands off approach by FERC in favor of club
regulation
Topics to be covered
Copyright © 2012 Argus Media Ltd. All rights reserved.
4. illuminating the markets
• Report prices in all world markets for
◦ Natural Gas and Power
◦ LNG
◦ NGL and LPG
◦ Crude and Refined products
◦ Coal and Petroleum Coke
◦ Fertilizers
◦ Emissions
◦ Petrochemicals
• Rapid growth in spot and term contract indexation,
swaps market indexation
• 500 staff globally with numerous offices
Who is Argus?
Copyright © 2013 Argus Media Ltd. All rights reserved.
6. illuminating the markets
• 100 daily, 80 bid
week indexes across
US & Canada
• Companies
transacting cash-
settled requests for
purchase (RFPs)
against Argus
indexes
Argus Natural Gas Americas
Copyright © 2012 Argus Media Ltd. All rights reserved.
7. illuminating the markets
Price gains in northeast US outpace west
Copyright © 2012 Argus Media Ltd. All rights reserved.
• Algonquin Citygates
◦ $9.90/mmBtu
◦ ↑ 70pc since 2010
• Transco New York
◦ $7.00/mmBtu
◦ ↑ 20pc since 2010
• Pacific Gas & Electric
◦ $3.90/mmBtu
◦ ↓ 25pc from 2010
0
2
4
6
8
10
12
Argus daily spot prices January to April
2010 2011 2012 2013
Source: Argus Media
8. illuminating the markets
• Colder weather in winter 2012-13 vs. 2011-12
• Reduced LNG imports
• Production declining from Sable Island gas field
offshore Nova Scotia
• Delayed startup of Encana’s Deep Panuke gas field
offshore Nova Scotia
Colder winter, lower LNG imports hit northeast
Copyright © 2012 Argus Media Ltd. All rights reserved.
9. illuminating the markets
• Algonquin Gas Transmission taking more supply from
Millennium and Tennessee Gas pipelines
◦ winter 2012-13 50pc of Algonquin supply
◦ winter 2010-11 25pc of Algonquin supply
• Daily capacity constraints at major compressor
stations on Algonquin’s northbound mainline
• Merchant coal plants in the money
Flow patterns shift in New England in 2013
Copyright © 2012 Argus Media Ltd. All rights reserved.
10. illuminating the markets
• Six days in Jan-Feb when New England gas-fired
generation exceeded 150,000 MWh/d
• Gas prices weakened
◦ Algonquin 11-Jan: $4.615
◦ Algonquin 29-Feb: $3.255
• Power grid was reliable
2012 winter unfavorable for spot trade
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11. illuminating the markets
Steady gas use in Jan-Feb 2012 for New England power
Copyright © 2013 Argus Media Ltd. All rights reserved.
0
100
200
300
400
4-Jan 18-Jan 1-Feb 15-Feb 29-Feb
'000MWh/day
Source: ISO-NE
Coal Gas Oil Total
12. illuminating the markets
CT hub real-time stronger
Copyright © 2013 Argus Media Ltd. All rights reserved.
0
50
100
150
200
250
3-Jan 17-Jan 31-Jan 14-Feb 28-Feb
$/MWh
Source: ISO-NE
2013 2012
13. illuminating the markets
Gas accommodates swings in winter 2013
Copyright © 2013 Argus Media Ltd. All rights reserved.
0
90
180
270
360
450
'000MWh/day
Source: ISO-NE
Coal Gas Total Oil
14. illuminating the markets
Iroquois Zone 2 illustrates deliverability
Copyright © 2013 Argus Media Ltd. All rights reserved.
0
10
20
30
40
3-Jan 17-Jan 31-Jan 14-Feb 28-Feb
$/mmBtu
2013 2012
15. illuminating the markets
Algonquin Citygates show constraints
Copyright © 2013 Argus Media Ltd. All rights reserved.
0
10
20
30
40
3-Jan 17-Jan 31-Jan 14-Feb 28-Feb
$/mmBtu
2013 2012
16. illuminating the markets
Tennessee Zone 6 conditions not as severe
Copyright © 2013 Argus Media Ltd. All rights reserved.
0
7
14
21
28
35
3-Jan 17-Jan 31-Jan 14-Feb 28-Feb
$/mmBtu
2013 2012
17. illuminating the markets
• Fuel inventories low after cold January
• Daily re-offer provisions utilized
• More than 6,000 MW of gas- and oil-fired generation
unavailable 8-9 February
• In response to generation and transmission
outages, ISO needed more generation, and “more
than half a dozen” generators informed the ISO that
they could not get gas
New England was vulnerable in February
Copyright © 2012 Argus Media Ltd. All rights reserved.
18. illuminating the markets
New England gas-fired generation varies
Copyright © 2013 Argus Media Ltd. All rights reserved.
65
95
125
155
185
3-Jan 17-Jan 31-Jan 14-Feb 28-Feb
‘000MWh/day
Source: ISO-NE
2013 2012
19. illuminating the markets
MWh/day 2012 2013
Winter gas-fired generation finds inflection point
Copyright © 2013 Argus Media Ltd. All rights reserved.
Source: ISO-NE
Avg 131,879 117,819
Median 133,304 113,307
High 157,187 180,222
Low 81,232 66,510
Total MWh
(Jan-Feb)
19,531,071 18,242,384
20. illuminating the markets
2012 2013
Estimated revenue from gas-fired generation differs
Copyright © 2013 Argus Media Ltd. All rights reserved.
Estimate based on ISO-NE output data
16-Jan $8,021,771 24-Jan $36,701,517
4-Jan $6,860,574 23-Jan $36,385,056
Jan-Feb. total $266,267,193 Jan-Feb. total $675,717,818
21. illuminating the markets
• “Addressing gas dependence is our highest priority”
-- Kevin Kirby, vp, market operations
• Day-ahead power scheduling advanced two hours to
10am starting 23 May
• Other changes later this decade
◦ As fuel costs change
‐ Hourly (rather than daily) offers
‐ Intra-day offer modifications (rather than only prior to the
operating day)
◦ Capacity markets
◦ Non-delivery penalties
ISO New England response
Copyright © 2012 Argus Media Ltd. All rights reserved.
22. illuminating the markets
• Last few percentage points of grid reliability
• Last miles to the citygate
• Regional variations apparent
• No appetite for common energy scheduling day
FERC gas-power coordination docket
Copyright © 2012 Argus Media Ltd. All rights reserved.
23. illuminating the markets
• Expectation of a connection from EBB data to which meter
serves a specific generator
• Lack of your lifetime experience and understanding of the
systems in the region
• Overtakes in evening power peak followed by undertakes
to avoid pipeline penalties during morning power peak
• Requests for more gas cycles or more information about
status of grid, construed as discriminatory
FERC gas-power coordination discussion
Copyright © 2012 Argus Media Ltd. All rights reserved.
24. illuminating the markets
Some markets lack typical contango
Copyright © 2013 Argus Media Ltd. All rights reserved.
5.50
5.75
6.00
6.25
6.50
2014 2015 2016 2017 2018 2019
$/mmBtu
Algonquin Dracut
25. illuminating the markets
• Independent market valuation to support investment
and trading decisions
◦ 63 hubs assessed daily across North America
◦ Wide range of data sources used for liquid hubs & periods
◦ Locational, time spreads used for illiquid hubs & periods
• Monthly, quarterly, seasonal, calendar contracts
• Minimum 7-year forward curves
Copyright © 2012 Argus Media Ltd. All rights reserved.
Argus forward curves
26. illuminating the markets
• Weather, LNG shortages supported gas, power prices
• Power plant sales had superior margin per mmBtu
• But markets work, and sales eventually curbed
• Unease over lack of automated fuel supply solution
suggests return to trading profitability
Key Takeaways
Copyright © 2012 Argus Media Ltd. All rights reserved.
27. illuminating the markets
• Argus Media US natural gas indexes
• ISO New England data on real-time prices, generation
stack by source
• Presentation to FERC, 16 May, 2013; ISO New England
Winter Operational Experiences and Regional
Actions, Kevin Kirby, VP, market operations
• FERC Dockets ER13-895-000, ER13-895-001
Sources
Copyright © 2012 Argus Media Ltd. All rights reserved.
29. David Givens
Head of Gas and Power Services, North America
david.givens@argusmedia.com
1-202-349-2891
Washington, DC
www.argusmedia.com
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