Volume 13, Issue 4 | January 23, 2015

Editor's Note

Looking Good

Week in Review for January 16-22, 2015

In last week's newsletter we reported that the arrival of cold temperatures had halted the recent collapse of energy prices, with natural gas prices on the NYMEX rising 4% and the price for peak power on the PJM rising 3%.  However, this week, prices retraced themselves as the average 12-month price for natural gas on NYMEX fell 6% closing at $0.298/therm, while the 12-month average price for peak power on the PJM also fell 3%. 

Although the Bulls and Bears have wrestled to a draw over the last two weeks, the Bulls have dominated the Winter season to date. From November 3, 2014 to January 22, 2015 natural gas prices have dropped 23% while electricity prices on the PJM have dropped 19% over the same time period.

However, do not be lulled to sleep as NOAA's recent forecast  predicts colder-than-normal temperatures east of the Mississippi for the rest of January. In addition to the cold weather forecast, the natural gas storage deficit has actually increased for the second week in a row, with storage levels ending the week 5.5% below the five-year average. 

For now, both natural gas and electricity prices are trading at very attractive levels thanks to record high supplies from the natural gas wells and the unusually warm temperatures we enjoyed in December. With natural gas and electricity prices trading near their second lowest level in ten years 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: Another Big One

 

 

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 

2,637

2,853

-216

2,438

2,790

As you may recall, December 2014 was warmer than normal and thus the December withdrawals were unusually small. However, January 2015 has been cold and the recent storage withdrawals validate this fact. This week's withdrawal of 216 Bcf was the second largest withdrawal of the season and was 22% larger than the five year average of 176 Bcf.

As a result of the recent cold snap, the storage deficit  increased by 1.7%  for the second week in a row.  Storage levels ended the week  5.5 % 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 16, 2015 was 310 rigs. There was a decrease of 19 rigs from the previous week. The count is 55 rigs lower than the count reported this same week last year. We are 55% below the five-year average gas rig count of 702.


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 22, 2015

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

Feb-15

$0.2835

July-15

$0.2950

Dec-15

$0.3269

Mar-15

$0.2827

Aug-15

$0.2960

Jan-16

$0.3409

Apr-15

$0.2817

Sept-15

$0.2944

12-month avg.

$0.2984

May-15

$0.2845

Oct-15

$0.2975

11/2014-3/2015

$0.2831

June-15

$0.2890

Nov-15

$0.3089

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.