Volume 12, Issue 22 | June 13, 2014

Editor's Note

Good News Is Not Enough

Week in Review for June 6 - June 12, 2014

For this seven day period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) increased 1.5% closing at $0.464/therm, while the 12-month average price for peak power on the PJM rose less than 1%.

As usual, market analysts focused on the bad news this week instead of the good news. Bad news spooks the market and ultimately places upward pressure on energy prices.

For example, this week, we saw a natural gas storage injection of 107 Bcf (Please reference the storage article for more details). This was the fifth consecutive triple-digit injection of the season which was only the second time in history that we have enjoyed five consecutive injections over 100 Bcf. 

However, analysts were not impressed. With the cool spring temperatures in place over the last five weeks, analysts were looking for huge, record breaking injections. Even though these large injections have reduced the storage deficit by 15% since May 1, 2014 analysts were quick to report that the natural gas storage fields were still 35% below the five-year average. 

Here is the concern: The first day of summer arrives on June 21, 2014. If we have a hot summer the natural gas will be directed to the power plants instead of the storage fields. A hot summer  will likely worsen the storage deficit and thus place upward pressure on energy prices.

On the other hand, if  we have a cool summer and the industry continues directing large amounts of gas into the storage fields, perhaps the analysts will become more optimistic about our storage position heading into November. The market place likes good news, but apparently no one likes to report the good news.  If we can minimize the storage deficit in the next few months, we may see downward pressure on energy prices. Summer is the wild card.


Key Staff additions for Account Sales and leadership changes at Washington Gas Energy Services and WGL

 

 

Key Staff Additions for the WGES Account Sales Team

 

I am pleased and excited to inform you about some key staff additions to the WGES Account Sales team that have recently occurred:

  • Richard Walsh - Account Manager of Technical Sales
  • Clint Zediak - Director of Account Sales, North Mid-Atlantic Region
  • Brian Lenaghan - Director of Account Sales, South Mid-Atlantic Region

Rich Walsh

Rich joined the Washington Gas Energy Services (“WGES”) Account Sales Team in July 2013.  Rich has over 5 years of business development and direct sales experience in the energy sustainability industry.  Prior to joining WGES, Rich was with Sterling Planet as Manager of Business Development, and before that, Rich held business development positions with Strategic Sustainability Consulting, Staysail Management Group and Alive2Green. 

 

One of Rich’s primary responsibilities will be to provide technical sales support to WGES Account Managers, WGES Customers, and WGES Brokers/Consultants with regard to selling green products such as renewable energy credits (RECS) and carbon offsets .  Additionally, Rich will be “on point” for researching and assessing the viability of developing and co-selling (with WGES Account Managers and/or WGES Brokers) other technical energy products and services to the commercial market such as: solar power, demand response, energy management services, and commercial energy data services.

 

Clint Zediak

Clint joined the WGES Account Sales Team in March 2014.  Clint has over 16 years of industry experience.  Prior to joining WGES, he was the Regional Sales Manager for PPL Energy Plus in Pittsburgh, PA.  Clint has also worked at Exelon Corporation in their Philadelphia based office and Alliant Energy in Palo, Iowa.  

 

One of Clint’s main charters is to successfully expand WGES Account Sales operations in the commercial markets throughout Pennsylvania and Delaware.   The WGES Account Managers that will report directly to Clint are: Rich Felton, Mike Fischer, Don Ottensman, and Jaison Staab.

 

Brian Lenaghan

Brian joined the WGES Account Sales Team in April 2014. Brian has more than 20 years of sales management, marketing, and business operations experience.  He comes to us as the former President and Managing Partner for Patriot Pumps/Thompson Pump Midwest with operations located in Michigan, Indiana and Canada.

 

A key focus for Brian is to oversee the commercial sales operation in the Washington and Baltimore metropolitan area which would include expanding WGES product and service offerings to those markets. The WGES Account Managers that will report directly to Brian are:  Herndon, VA Office:  Steve Pritchett, Kent Peterson, Diane Ekonomou, and Pio Scarano.  Timonium, MD Office:  Les Lewis, Mark Mills, Karen Pinder-McDuffie, Laurie Muldoon and Nipa Clark.

 

Key Changes in Leadership at WGES and WGL

 

Dr. Louis J. Hutchinson III has joined WGL as its Chief Revenue Officer. The newly created executive position will lead all branding, revenue generation and customer retention efforts for WGL and its subsidiaries, including Washington Gas Energy Services. Lou brings more than 20 years in marketing and sales leadership positions in the technology and energy industries.

 

Prior to joining WGL, Lou served as senior vice president at Constellation Energy, overseeing the organization’s public sector and energy efficiency practice where he was responsible for driving exponential revenue growth over five years. Hutchinson serves on the Board of Directors for the Downtown Partnership of Baltimore. He holds a Bachelor of Science in Computer Science and Statistics from the George Washington University; and a Doctorate in Theological Studies and a Masters of Divinity Degree, both from Wesley Theological Seminary.

 

Last month, Harry Warren announced that he was stepping down as President of WGES, following nearly 30 years of dedicated service to WGES and Washington Gas.  Under Harry’s leadership, WGES has grown to be one of the largest and most visible retail suppliers of natural gas, electricity and renewable energy in the mid-Atlantic region.  During Harry’s tenure, WGES was consistently recognized for environmental stewardship and conservation efforts. 

 

Rick Moore, Division Head – Strategy & Business Development for WGL Holdings (the parent company of WGES), has been named Chief Operating Officer of WGES.  In this role, Rick is responsible for day-to-day operations, information technology, administrative and risk management functions.

 

Lou and Rick bring considerable experience and talent to the company; I look forward to working with them to continue to support your energy needs. 

 

As always, feel free to contact me or your WGES Account Manager if you have any questions. 

 

Sincerely,

 

Steven C. Clausman

Vice President, Sales


Natural Gas Fundamentals

Natural Gas Storage Update: Triple Digit Injection Not Enough. Data Released June 12, 2014

 

 

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 

1,606

1,499

107

2,333

2,483

This week's injection was 107 Bcf  which was the fifth consecutive triple-digit injection of the season. This was only the second time in history that we enjoyed five consecutive injections over 100 Bcf. 

This triple digit injection was 21% larger than the five-year average injection of 88 Bcf. However, analysts were not impressed. Analysts were expecting  an injection of 113 Bcf.  With the cool spring temperatures in place over the last five weeks, analysts were looking for record breaking injections.

We are still dealing with a very large storage deficit. The natural gas storage fields are 33% below last year's levels and 37% below the five-year average. We have a long way to go to refill the caverns to 3,400 Bcf by November 1st. We need  21 more consecutive injections above 85 Bcf if we want to overcome the deficit created by this past winter's huge heating demand.

The fear is that summer is on the way and that these large injections will dramatically decrease. If we have a hot summer, the natural gas will be directed to the power plants instead of the storage fields. This event would likely place upward pressure on energy prices.  

On the other hand, if  the industry can keep the weekly injections above 85 Bcf, we can continue to minimize the storage deficit and hopefully keep a lid on natural gas and electricity prices.


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 June 6, 2014 was 320 rigs. This was an decrease of 6 rigs from the previous week. The count is 34 rigs lower than the count reported this same week last year. We are 57% below the five-year average gas rig count of 743.


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. 

July-13

$0.3707

Nov-13

$0.3497

Mar-14

$0.4855

Aug-13

$0.3459

Dec-13

$0.3818

Apr-14

$0.4584

Sept-13

$0.3567

Jan--14

$0.4407

May--14

$0.4795

Oct-13

$0.3498

Feb-14

$0.5557

June-14

$0.4619


NYMEX Values per Month for the Forward 12 Months

Thursday, June 12, 2014

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

July-14

$0.4762

Dec-14

$0.4836

May-15

$0.4190

Aug-14

$0.4763

Jan-15

$0.4891

June-15

$0.4207

Sept-14

$0.4743

Feb-15

$0.4847

12-month avg.

$0.4643

Oct-14

$0.4736

Mar-15

$0.4741

11/2014-3/2015

$0.48170

Nov-14

$0.4770

Apr-15

$0.4235

Crude Oil

$106/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 Cooling Degree Days*

 
 
 


Cooling Degrees Day** 

 

May - 14

June 14

July - 14

Aug- 14

Sept- 14

Oct - 14

 Actual

  148

 

 

 

 

 Normal

 108

 

 

 

 Departure from Normal

 37%

 

         

 

 

 

 Warmer

 

 

 

**Cooling degree days are calculated by comparing the day’s average temperature to a 65 degree baseline.  If the day’s average temperature is below 65, there are no cooling degree days that day.  If the average temperature is greater than 65 degrees, then subtract 65 from the average temperature to find the number of cooling degree days.