Volume 11, Issue 21 | May 24, 2013

Editor's Note

The "Shoulder Season" is Over as Prices Rise

Week in Review for May 17-23, 2013

Over the past four weeks we have enjoyed mild spring temperatures, which resulted in minimal demand for either heating or cooling. We commonly refer to this time of year as the "shoulder season." During this time we experienced a small dip in prices for natural gas and electricity. However, it appears that the "shoulder season" has now ended.

During this seven-day report period the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 6.6%. The 12-month average price for peak power on the PJM rose 5%.

Two variables seemed to spark this week's price rally: the weather forecast and news related to a federal regulatory action.

On the weather front, the National Oceanic and Atmospheric Administration (NOAA) has released its forecast for the period of May 31 to June 6, 2013. The outlook calls for above-average temperatures east of the Mississippi, meaning that the first heat wave of the season is coming our way. The marketplace is very sensitive to weather forecasts. As temperatures rise, more natural gas is directed to the power plants instead of the natural gas storage fields.

The other variable that spooked the marketplace came from the regulatory arena. Last Friday, May 17, the U.S. Department of Energy announced the conditional approval of a second Gulf Coast terminal in Texas designed to export liquefied natural gas. The market place is very sensitive to this issue because exporting natural gas overseas is new to the U.S energy markets. Some industry watchers fear that a vibrant natural gas export model will place upward pressure on prices for our domestic energy supplies. These concerns tend to place upward pressure on energy prices.

Stay tuned. Summer doesn't officially start until June 21. But with hot weather forecast to head our way soon, it looks like our "shoulder season" is definitely over.


Spotlight on Wind Power

WGES Selected to Provide Groundswell 100 Percent Wind Power for its Community Power Program Bid

Advancing its vision to create economic prosperity locally and drive environmental sustainability, Washington, D.C.-based nonprofit organization, Groundswell, has selected Herndon-based Washington Gas Energy Services (WGES) 100 percent CleanSteps® WindPower for the current round of its Community Power Project and Community Power Programs for Homes. These programs enable local institutions and residents in Washington, D.C. and Maryland to apply their collective buying power to shift to clean energy while also reducing their costs and driving new neighborhood investment.
 
Groundswell facilitated a Community Power Project agreement between WGES, 23 houses of worship and 3 public charter schools in the Washington, D.C. metropolitan area who will each purchase 100 percent Green-e® Energy-certified WGES CleanSteps® WindPower for their annual combined electricity load of approximately 10 million kilowatt hours. By choosing wind power, the 26 organizations are avoiding the creation of a combined total of 7,000 metric tons of carbon dioxide, equivalent to eliminating the consumption of more than 790,000 gallons of gasoline or taking more than 1,450 cars off the road for one year.
 
“By leveraging their collective buying power, local institutions are expected to realize savings of up to 11 percent compared to commercial utility standard offer service, all while making a positive environmental impact,” said Will Byrne, co-founder and chief executive officer, Groundswell. “Alongside our valued partners, Maryland and Greater Washington Interfaith Power and Light (IPL), Coalition of Lutherans Advancing in Mission (CLAIM) and Friends of Choice in Urban Schools (FOCUS), through this new purchasing agreement with Washington Gas Energy Services, we’ve applied shared economic power to drive sustainability and reinvest in the community.”
 
Sixty-two percent of the institutions involved in the Community Power Project also elected to contribute to Groundswell’s weatherization fund for local, low-income families. The fund supports home energy efficiency projects that reduce energy consumption and save households money on their energy bills, while improving the comfort and health of their homes.
 
In addition to facilitating the Community Power Project, Groundswell has also selected WGES as clean power provider for the first round of its Community Power Project for Homes. From now until mid-August, families in Washington, D.C. and most of Maryland will have the opportunity to enroll in the initiative. Hundreds of families – many of whom are congregants of the participating 23 houses of worship and parents and educators from the three schools – will enroll and receive 100 percent WGES CleanSteps® WindPower. Residents of Washington, D.C. and Baltimore have the opportunity to make the switch from conventional power to wind power through Groundswell and save up to seven percent in electricity costs compared to residential utility standard offer service.
 
Residents can join the Community Power Program for Homes at www.groundswell.org/applycpphomes.
 
“We commend Groundswell for their environmental stewardship,” said Harry Warren, president of Washington Gas Energy Services. “As a leading competitive energy provider, we are committed to offering customers with options that include green products. It is rewarding to partner with organizations such as Groundswell who recognize that the choice of alternative energy products can produce a substantial and positive impact on our environment.”
 
In the District of Columbia, Maryland and Pennsylvania, businesses, organizations, government entities, institutions and individual residents can purchase their electricity and natural gas supply from retail energy providers. Customers in Virginia may purchase natural gas and customers in Delaware may purchase electricity from retail energy providers. To learn more about WGES and its CleanSteps® products, visit www.wges.com/commercialwind.


Natural Gas Fundamentals

Natural Gas Storage: Injection Number Close to Five-Year Average. Data Released May 23, 2013

 

 

Current Week

Last Week 

Net Change 

This Week Last Year 

Prior 5 Year Average 

 

Stocks (Bcf) 

Stocks (Bcf) 

(Bcf) 

Stocks (Bcf) 

Average (Bcf) 

Total Lower 48 

2,053

1,964

+89

2,733

2,137

Storage Update:  Although the storage injections were below average in April, the May injections have been closer to normal. In this week's report we saw an injection of 89 Bcf.

Last year at this time, we saw an injection of 75 Bcf. The five-year average injection for this time period was 90 Bcf.  Although this week's injection fell below expectations, the injection was still greater than last year and close to the five-year average.

Heads up: according to the 10-day forecast hot weather is on the way. The arrival of the hotter-than-normal temperatures will increase air conditioning demand. As a result, less gas may be available for injection into the storage caverns for the rest of the month. 

At this time the natural gas storage levels are 4% below the five-year average and 25% below last year's levels. If natural gas is pumped to the power plants instead of the storage fields, this storage deficit will be tough to erase.


Rig Count for Natural Gas

Weekly Drilling Rig Update: The active U.S. gas rotary rig count for natural gas released by Baker and Hughes for the week ending May 17, 2013 was 354 rigs. This was a increase of 4 rigs from the previous week. The count is 244 rigs lower than the count reported this same week last year. We are 62% below the five-year average gas rig count of 923.


NYMEX Natural Gas Monthly Settlements for the Past 12 Months

(Price per therm at the well-head)

This was the closing price of gas at the well head for each of the past 12 months. The closing price for a month occurs on the 3rd business day prior to the start of the month. 

June-12

$0.2429

Oct-12

$0.3023

Feb--13

$0.3226

July-12

$0.2774

Nov-12

$0.3471

Mar-13 

$0.3427

Aug-12

$0.3010

Dec-12

$0.3696

April-13

$0.3976

Sept-12

$0.2634

Jan-13

$0.3354

May-13

$0.4152


NYMEX Values per Month for the Forward 12 Months

Thursday, May 23, 2013

(NYMEX - Price per therm at the Henry Hub well-head)

June-13

$0.4261

Nov -13

$0.4385

April-14

$0.4247

July-13

$0.4307

Dec-13

$0.4536

May-14

$0.4243

Aug-13

$0.4322

Jan-14

$0.4610

12-month avg.

$0.4386

Sep-13

$0.4311

Feb-14

$0.4583

11/2013-03/2014

$0.45238

Oct-13

$0.4320

Mar-14

$0.4505

Crude Oil

$95/barrel 


NYMEX Graph for Natural Gas - 12 Month Average Price per Therm at the Louisiana Well-Head

(Excludes Interstate Transportation)


PJM Electricity

PJM Graph for Electricity - 12 Month Average Peak Power Price

On-Peak 1 Year Forward Price


Weather

Local Heating Degree Days*

 

Heating Degree Days** 

 

Nov - 12

Dec - 12

Jan - 13

Feb - 13

Mar - 13

April- 13 

 Actual

543

603

759

722

651

217 

 Normal

466

786

899

704

568

270 

 Departure from Normal

17%

23% 

16% 

3% 

15% 

20% 

Colder

Warmer

Warmer

 Cooler

Cooler

Warmer 

**Heating degree days are calculated by comparing the day’s average temperature to a 65 degree baseline. If the day’s average temperature is above 65, there are no heating degree days that day. If the day's average temperature is less than 65 degrees, subtract the average temperature from 65 to find the number of heating degree days for that day.