Volume 13, Issue 3 | January 16, 2015

Editor's Note

Prices Are Looking Good

Week in Review for January 9-15, 2015

The lingering cold temperatures that arrived in January topped the headlines this week, and for now, halted the recent price collapse  For this report week, the average 12-month price for natural gas on NYMEX rose 4% closing at $0.317 therm while the 12-month average price for peak power on the PJM rose  3%. 

Most  of the price increase occurred on Wednesday,  January 14, 2015  after  NOAA revised their 8-14 day weather forecast. The new forecast called for colder than normal  temperatures east of the Mississippi for the period of Jan. 22-28, 2015. This forecast spooked the market.

Plus, on top of the new weather forecast, the Energy Information Administration  (EIA) released their weekly storage report which was slightly bullish.  The report announced the largest withdrawal of the winter heating season. This week's withdrawal was larger than the five year for the first time in seven weeks. The storage deficit actually increased this week. The storage levels ended the week 3.8 % below the five-year average. This news may have also spooked the markets.

However this one week of bad news is unlikely to dampen the spirits of the consumers who have been reveling in the recent price collapse that occurred prior  to this week.  The Bears and consumers are joyous over the fact that natural gas prices have dropped 18.5% since Nov.3, 2014 and electricity prices on the PJM have dropped 16% over the same time period.

Natural gas and electricity prices are trading near their second lowest level in ten years.  The ten year low occurred in the Spring of 2012. This is an attractive time to look at your early renewal strategy.


Energy Efficiency

EmPOWER Maryland Commercial and Industrial Grant Program

Commercial and Industrial (C&I) companies in Maryland  are eligible for grants ranging from $20,000 to $500,000 for energy efficiency projects.

To incentivize energy efficiency projects and reduce electricity consumption and greenhouse gases throughout the state of Maryland, The EmPOWER grant will support up to 50% of expenses for energy efficiency projects that have at least a 20% electricity reduction. Electricity reduction requirement needs to be demonstrated either on a building-by-building basis or treated space within a building basis (e.g., a commercial business that occupies one floor of a multi-floor building and that has its own meter). Publicly-owned and municipally-owned buildings are not eligible. 

To qualify, projects must be comprised of multiple eligible electricity efficiency measures.  Reducing electricity usage solely by switching to another fuel source does not qualify as an energy efficiency measurement. Examples of energy efficiency measures include:

  • Building insulation and envelope improvements
  • Lighting
  • Controls
  • Motors and variable frequency drives
  • HVAC upgrades
  • Refrigeration
  • Retro- or re-commissioning projects

Vendors or contractors are not eligible, however they can to assist a qualified applicant. To obtain a contractor referral list, you can contact David Clark at WGES by Friday, January 16 at david.clark@wges.com or 703-793-7539.

The application period ends January 30 2015 so act quickly.

For more details, visit EmPOWER[a1] http://energy.maryland.gov/Business/empowermdchallenge/index.html  


Natural Gas Fundamentals

Natural Gas Storage Update: Largest 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 

2,853

3,089

-236

2,571

2,966

December 2014 was warmer than normal. As a result,  the natural gas storage withdrawals during December were unusually small.  However the cold weather came back in January and the storage withdrawals have been much larger.  This week's reported withdrawal was 236 Bcf according to the Energy Information Administration .   

This was the largest withdrawal of the winter heating season. This week's withdrawal was larger than the five year for the first time in seven weeks. This week's withdrawal was 23% larger than the five year average of  191 Bcf. 

 As a result of this large withdrawal, the storage deficit actually increased this week.  The storage deficit increased by 1.7%. The storage levels are now 3.8 % 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 January 9, 2015 was 329 rigs. There was an increase of 1 rig from the previous week. The count is 28 rigs lower than the count reported this same week last year. We are 53% below the five-year average gas rig count of 703.


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. 

Feb-14

$0.5557

June-14

$0.4619

Oct-14

$0.3984

Mar--14

$0.4855

July-14

$0.4400

Nov-14

$0.3728

Apr-14

$0.4584

Aug-14

$0.3808

Dec-14

$0.4282

May-14

$0.4795

Sept-14

$0.3957

Jan-15

$0.3189


NYMEX Values per Month for the Forward 12 Months

Thursday, January 15, 2015

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

Feb-15

$0.3158

July-15

$0.3121

Dec-15

$0.3394

Mar-15

$0.3121

Aug-15

$0.3128

Jan-16

$0.3521

Apr-15

$0.3036

Sept-15

$0.3112

12-month avg.

$0.3173

May-15

$0.3043

Oct-15

$0.3136

11/2014-3/2015

$0.3139

June-15

$0.3075

Nov-15

$0.3225

Crude Oil

$46/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 Degrees Day** 

 

Nov - 14

Dec - 14

Jan - 15

Feb - 15

Mar - 15

April - 15

 Actual

  505

649 

 

 

 

 

 Normal

 466

786 

 

 

 

 

 Departure from Normal

8%

  17%

    

 

 

 

 Colder

 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.