Volume 12, Issue 43 | November 21, 2014

Editor's Note

The Fight Is ON

Week in Review for November 14-20, 2014

Last week we experienced a surprise drop in energy prices, however, there was no stopping the Bulls this week. For this seven-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 6% closing at $0.405/therm while the 12-month average price for peak power on the PJM also rose 2%. 

This week's price spike was easy to understand as heating demand dramatically increased throughout most of the country. According to the Energy Information Administration (EIA), "consumption in the Northeast reached its third-highest recorded November level" on November 18th. 

Although winter does not officially start until December 21st, Old Man Winter showed up early this year. The weather gurus reported that more than 50% of the country was covered in snow this week, with many states experiencing temperatures 15°- 30° F below normal. To make matters worse, NOAA's weather forecast east of the Mississippi for the last week of November called for more cold weather. This nasty cold snap gets most of the blame for this week's price increase.

The other variable that supported this week's price surge came in the form of EIA's natural gas storage report. We saw our first withdrawal of the season this week with the EIA reported a withdrawal of 17 Bcf  from storage. This withdrawal was 70% larger than the five-year average. The news of the season's first withdrawal helped nudge energy prices up this week.  

According to the Bears these price spikes are to be short lived. They argue that the market fundamentals do not support a prolonged price hike. The Bears like to point to the fact that natural gas production is at an all-time high which means we should have plenty of gas to meet the demands of a normal winter.

Additionally, the Bears minimize this week's price increase by referencing the December weather forecast which was just released by Accuweather. This forecast said that beginning in early December, "a milder flow of Pacific air will replace the long-standing frigid air masses. The air will be more concentrated from the Pacific than the pole, which will have a big impact on temperatures across the Unite States." The  promise of  warmer weather in December helped minimize this week's price increase.

Stay tuned. The fight between the Bulls and the Bears is just beginning. As always, Old Man Winter will play a big role in determining the outcome.


Renewable Energy

Washington Gas Energy Services Recognized with EPA Green Power Leadership Award

Nov 19, 2014

National Award Honors Leading Green Power Supplier in the Mid-Atlantic Region

HERNDON, Va.--(BUSINESS WIRE)-- Washington Gas Energy Services, Inc. (WGES), a subsidiary of WGL (NYSE:WGL), announced today that it has received a 2014 Green Power Leadership Award from the U.S. Environmental Protection Agency (EPA). The annual awards recognize the country's leading green power suppliers for efforts to grow and advance the nation's voluntary green power market.

"Since 2002, Washington Gas Energy Services has been able to offer customers a growing and diverse portfolio of innovative clean energy options," said Laura Pagliarulo, manager, green products, Washington Gas Energy Services. "We are honored to receive this award from the U.S. Environmental Protection Agency, and look forward to upholding our role as a leader in the industry by continuing to provide our commercial and residential customers with efficient, green electricity and natural gas options."

EPA will present WGES with the award at a ceremony to be held on December 3, 2014, in conjunction with the 2014 Renewable Energy Markets Conference in Sacramento, Calif. In 2011, WGES was awarded a Green Power Supplier of the Year award by the U.S. Department of Energy.

"EPA is pleased to recognize Washington Gas Energy Services with a Green Power Supplier of the Year award for its leadership in expanding the nation's renewable energy industry," said EPA Administrator Gina McCarthy. "Through its support and development of new renewable energy capacity, Washington Gas Energy Services is helping to address climate change and put our country on a path to a future powered by renewable resources."

WGES has been a green power leader since 2002, when the company supported one of the first wind farms in the PJM grid. Today, WGES maintains its leadership by working to provide green power throughout the mid-Atlantic region, and offers a suite of Green‐e Energy certified local and national wind power products: WGES CleanSteps® WindPower, WGES PA WindPower and WGES National WindPower. All of the company's standard electricity offerings to residential customers include 5 percent wind power, above and beyond what is mandated by RPS. Since 2003, WGES customers have purchased approximately 4 billion kWh of wind power.

WGES customers can also opt to green their entire energy supply by choosing wind power and carbon offsets. To learn more about green power options from WGES, visit http://www.wges.com/windpower or http://www.wges.com/carbonoffsets.

About Washington Gas Energy Services, Inc.:

Washington Gas Energy Services, Inc. is one of the largest competitive energy providers in the mid-Atlantic region. Washington Gas Energy Services supplies electricity, natural gas and green energy options to commercial and residential customers in Delaware, the District of Columbia, Maryland, Pennsylvania and Virginia. In 2011, the U.S. Department of Energy (DOE) named Washington Gas Energy Services the Green Power Supplier of the Year in the non-utility category. Headquartered in Herndon, Va., Washington Gas Energy Services is an affiliate of Washington Gas, the regulated natural gas utility, and a subsidiary of WGL Holdings, Inc. (NYSE:WGL). www.wges.com

About EPA's Green Power Partnership:

The Green Power Partnership is a voluntary program that encourages organizations to buy green power as a way to reduce the environmental impacts associated with purchased electricity use. The Partnership currently has more than 1,300 Partner organizations collectively purchasing billions of kilowatt-hours of green power annually. Partners include a wide variety of leading organizations such as Fortune 500® companies, small and medium sized businesses, local, state, and federal governments, and colleges and universities. For additional information, please visit http://www.epa.gov/greenpower.

About the Green Power Leadership Awards:

The U.S. Environmental Protection Agency (EPA) co-sponsors the annual Green Power Leadership Awards in conjunction with the Center for Resource Solutions. EPA recognizes winners in the following awards categories: Green Power Partner of the Year; Sustained Excellence in Green Power; On-site Generation; Green Power Purchasing; Green Power Community of the Year; and Green Power Supplier of the Year. EPA's Green Power Partner awards recognize the exceptional achievement among EPA Green Power Partners who distinguish themselves through green power procurement, market leadership, overall green power strategy, and overall impact on the green power market. EPA's Green Power Supplier awards recognize green power suppliers for outstanding efforts, initiatives and programs that significantly advance the development of green power sources serving the voluntary market. The Awards are held in conjunction with the Renewable Energy Markets Conference. For additional information please visit http://www.epa.gov/greenpower/awards/.

 

Washington Gas Energy Services
Lauren Belisle, 703-739-2424 x111
lbelisle@brightlinestrategies.com
or
U.S. EPA
Melissa Klein, 202-343-9859
klein.melissa@epa.gov


Natural Gas Fundamentals

Natural Gas Storage Update: First Withdrawal Of The Season

 

 

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 

3,594

3,611

-17

3,795

3,838

The injection season, traditionally running from March 1st to November 1st, is officially over as we saw our first withdrawal of the season. The Energy information Administration reported a withdrawal of 17 Bcf from storage this week.  

This season's first withdrawal was 70% larger than the five-year average of 10 Bcf thanks to the early arrival of below normal temperatures. However, thanks to the record gas injections we enjoyed this past summer, analysts feel we will have plenty of storage gas to get us through the heating season, even though storages are still 6% below the five-year average. 

 


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 November 14, 2014 was 350 rigs. This was a decrease of six rigs from the previous week. The count is 20 rigs lower than the count reported this same week last year. We are 51% below the five-year average gas rig count of 713.


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. 

Dec-13

$0.3818

Apr-14

$0.4584

Aug-14

$0.3808

Jan-14

$0.4407

May-14

$0.4795

Sept-14

$0.3957

Feb-14

$0.5557

June-14

$0.4619

Oct-14

$0.3984

Mar-14

$0.4855

July-14

$0.4400

Nov-14

$0.3728


NYMEX Values per Month for the Forward 12 Months

Thursday, November 20, 2014

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

Dec-14

$0.4489

May-15

$0.3754

Oct-15

$0.3800

Jan-15

$0.4649

June-15

$0.3767

Nov-15

$0.3869

Feb-15

$0.4611

July-15

$0.3786

12-month avg.

$0.4052

Mar-15

$0.4514

Aug-15

$0.3789

11/2014-3/2015

$0.4565

Apr-15

$0.3823

Sept-15

$0.3773

Crude Oil

$ 75/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

 372

453 

399

274 

46 

 Normal

 108

 314 

457 

406

202

34 

 Departure from Normal

 37%

   18% 

         1%

2% 

35% 

35% 

 Warmer

 Warmer

Cooler 

Cooler

Warmer 

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.