Q3 2015 Energy Market Outlook Energy Prices and Market Intelligence Q3 Update September 10, 2015 презентация

Содержание

Prices are near a three-year low, how did we get here? Natural Gas Production, Storage: Near-record pace. Power Sector Demand: Helped keep the downside limited. Summer Recap: Near the 10-year norm.

Слайд 1Q3 2015 Energy Market Outlook
Energy Prices and Market Intelligence Q3

Update September 10, 2015

Presenter: Jonathan Lee, Sr Energy Market Intelligence Manager, Ecova


Слайд 2Prices are near a three-year low, how did we get here?
Natural

Gas Production, Storage: Near-record pace.
Power Sector Demand: Helped keep the downside limited.
Summer Recap: Near the 10-year norm.
What’s on the horizon?
Natural Gas Pipeline Projects: Impact to volatility and basis prices.
LNG Exports: First LNG export facility coming online late 2015.
PJM Capacity Performance: FERC approved PJM’s new capacity structure.
2016 Budget Influencers
Downside Pressure: Gas production, healthy natural gas storage, weak winter demand, pipeline capacity additions.
Upside Potential: Gas-fired generation growth, LNG exports, EPA regulations, unexpected weather, reliability enhancements.

ENERGY MARKET INTELLIGENCE


Слайд 3Natural gas production running 7% higher in first six months of

2015 than 2014
Dry gas production expected to average around 74 bcf/day in 2015
Continued growth seen through 2016

STRONG NATURAL GAS PRODUCTION

EIA - September 2015

Boom largely due to shale production in PA, OH, and WV, which accounted for 2.4% of U.S. production in 2008 and now accounts for nearly 25%.


Слайд 4SHALE PRODUCTION GROWTH
EIA - September 2015
Marcellus leading the way, producing over

15 bcf per day in 2015.

Слайд 5Power sector demand growth
Pipeline infrastructure expansions
Liquefied natural gas exports
Exports to Mexico
Increases

in industrial demand due to chemical plant additions

FACTORS FOR INCREASED PRODUCTION

EIA - September 2015


Слайд 6Cost of production vs. the price of natural gas
Decline in oil

prices
Potential reduction in associated gas output
LNG market less attractive
Interest rate hikes
Environmental regulations

RISKS FOR SLOWING PRODUCTION

EIA - September 2015


Слайд 72015 STORAGE REPLENISHMENT
2015 Refill Rate:
Could push total supplies to record

high.

Слайд 8SUPPLY OUTPACING DEMAND
Gas production continues to outpace demand, which has put

downward pressure on natural gas prices.

Power Sector experiencing large increases in 2015, but expected to decline in 2016
Industrial demand anticipated to see continued annual growth

EIA – September 2015


Слайд 9RECORD GAS-FIRED GENERATION
EIA - September 2015
The proportion of electricity generated from

natural gas outpaced the previous five-year average by 5.1%.
During 2012, low gas prices led to record annual gas-fired generation at 24.9 bcf/day
EIA predicts 2015 annual power sector demand will average 25.2 bcf/day

Слайд 10The summer of 2015 was mostly in line with projections. The

West was hot and dry, while the rest of the country was near normal.

Increased power sector demand limited the decline in natural gas prices.

SUMMER 2015 RECAP

NOAA, AccuWeather; EIA - September 2015


Слайд 11FALL TEMPERATURE OUTLOOK
A cooler South Central is likely to persist through

Fall, while the is West, North, and East Coast are projected to be above-normal for much of the time.

NOAA, AccuWeather: September 2015

Fall Outlook


Слайд 12EARLY WINTER WEATHER OUTLOOK
NOAA, Farmers’ Almanac, AccuWeather - September 2015


Слайд 13El Niño currently has greater than a 90% chance of strengthening

through the winter, which could help CA drought, and keep the North drier and warmer this winter.

El Niño patterns, as shown below, primarily reach maximums during Dec-Feb and typically persist for 9-12 months.

EL NIÑO WINTER IMPACT

NHC/NOAA; AccuWeather: September 2015


Слайд 14NATURAL GAS PIPELINE PROJECTS
An estimated 33 Bcf/day of takeaway capacity expansions

by 2018

3.1 Bcf/day of expansions in 2014 to benefit Northeast
4.9 Bcf/day of expansions planned for 2015 to benefit Northeast
New England to see additional pipeline capacity in 2016


Слайд 15REX ZONE 3 EAST TO WEST
1.2 bcf/day into Chicago and Michigan.
EIA

- September 2015

One of the longest pipelines in the U.S., measuring 1,700 miles long.
Zone 3 fully bi-directional.
Only U.S. pipeline directly linking Rocky Mountain and Appalachian supply basins to consumers in the Midwest.


Слайд 16PIPELINE CAPACITY AND GAS BASIS Expected Changes 2015 - 2018


Слайд 17NATURAL GAS FORWARD CURVE
(NYMEX) – 4 September 2015
YOY Decline: 26.6%
Six-Month Decline:

9.6%

Слайд 18NATURAL GAS
$MMBtu (12-Month Strip) – 4 September 2015 – Short Term

Trading Channel

Слайд 19OUTLOOK: NATURAL GAS PRICING
EIA - September 2015


Слайд 20WHOLESALE ELECTRICITY
$MWh (12-Month Strip) – 4 September 2015


Слайд 21WHOLESALE ELECTRICITY YOY DECLINE
Rolling 12-Month Strip: 4 September 2015


Слайд 22OUTLOOK: COMMERCIAL ELECTRIC PRICING
EIA Average Retail Rates ($/MWh) - September 2015


Слайд 23PJM CAPACITY PERFORMANCE
PJM - September 2015
PJM’s goal is to strengthen grid

performance, but that will likely lead to increased costs for consumers.

Restructuring of PJM’s capacity market due to deteriorating resource performance and ongoing change in generation mix
Stems from the poor generator performance during the price spikes in January 2014
Phased In, but initially effective June 2016, with transitional auctions for planning years 2016/2017 and 2017/2018. Base auction for 2018/2019 to include
2016/2017 transitional auction results showed increases between 23%-63% from base auction (still below 2015/2016)


Слайд 24CLEAN POWER PLAN
EIA – 3 August 2015
Implementation of the Clean Power

Plan will cause natural gas and renewables to become a much bigger part of the U.S. generation mix.

Clean Power Plan goal to reduce carbon dioxide emissions from power plants
Carbon pollution from power sector set to be 32% below 2005 levels by 2030. (An increase of 2% from last year’s proposal)
States must submit initial plans to EPA on how they will meet the standards by Sept 2016 and final complete plan by Sept 2018
Must meet progressive goals starting 2022 through 2029. (Two year delay to start of program, originally 2020)
Coal expected to fall to 27% of generation mix by 2030, while renewables expected to double to 28%





Слайд 252016 ENERGY BUDGET PLANNING TIPS
#1: START WITH SITE SPECIFIC BASELINES
Energy market

influencers can vary quite a bit by region. Know the potential risks in each market and tailor your energy procurement buying strategy to meet your budget needs.
#2: ENGAGE STAKEHOLDERS EARLY AND OFTEN
Communicating the fundamental factors affecting regional energy markets can help reduce surprises when they occur (i.e. extreme winter of 2013/2014). It also develops further communication around energy procurement strategy, potential building enhancements, and cost-cutting initiatives.
#3: TRACK VARIANCES FOR COST AND USAGE
By tracking variances in cost and usage, you can better understand what’s driving the variance. Also analyze multiple levels (portfolio, regional/division, site) to identify trends or isolate poor performers.
#4: ADJUST AND COMMUNICATE AS NEEDED
The energy markets are in a constant state of change. Identify fundamental shifts in the market to evaluate whether the current strategy needs to be adjusted.



Слайд 26NATURAL GAS AND WHOLESALE ELECTRICITY ARE NEAR THEIR LOWEST LEVEL SINCE

2012.
Strong natural gas production weighing heavily on wholesale natural gas and electricity prices
POWER SECTOR DEMAND FOR NATURAL GAS TO INCREASE
With around 14,000 MW of coal-plant retirements scheduled for 2015, gas-fired generation will continue to grow and potentially introduce more volatility.
EL NIÑO STRENGTHENING INTO WINTER
El Niño typically brings warmer/drier conditions to the major gas consuming North during winter, which could reduce pipeline constraint related volatility in New York and New England
NATURAL GAS PRICE FORECAST
Wholesale natural gas prices are expected to slowly rise into 2016. At this point, upside risk is more likely than further downside moves


MAJOR TAKEAWAYS


Слайд 27
NEW! Energy Market Watch Newsletter
Subscribe today: http://www.ecova.com/news-media/energy-price-hub.aspx
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market trends delivered to your inbox

Слайд 28UPCOMING WEBINARS
INSIDE ENERGY & SUSTAINABILITY
How to Reduce Food Waste– October

8th, 2015 at 11a PST







Слайд 29Q&A
Questions, comments, suggestions? webinars@ecova.com


Слайд 30 Thank you!


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