Strategic Energy Newsletter

March 2024

Hi !

"We see that Europe is going to need gas for a very, very long time. But the growth in Asia is definitely going to be bigger than the growth in Europe, basically driven by population growth.”

Saad al-Kaabi

QatarEnergy chief

Azi Feifel

COO PROSPECT RESOURCES

Trends in the Energy Market

Current Market News

NYMEX futures appear to have hit a resistance point and have risen mildly, at least for the near term. Prompt-month NYMEX settled at $1.66 / MMbtu on Monday, March 25.
Natural gas is holding steady, though rig count has fallen
A mass of very cold air is in place over the Northern Plains, while there is warmer air moving up the East Coast. Strong seasonal storms will accompany the cold air moving eastward.

Natural gas storage inventories remain very high; EIA estimates that storage will be nearly 2.3 Tcf at the end of March. Gas inventories are 678 Bcf greater than the five-year average and 411 Bcf greater than the same time last year.

The European LNG market continues to fall as supplies remain ample.

And yet more...

Crude oil futures have been rising, with WTI contracts near $77 / barrel. A recent Goldman Sachs report expects general commodity prices to rise 15% in 2024.
Economy - Wholesale inflation rose 0.6% in February, much more than expected. The hiring boom continued in February, but wage gains slowed down as U.S. added 275,000 jobs. 10-year treasuries inched higher, while the two-year yield slipped below 4.6% as the Fed continues to signal lower rates ahead. US home sales jumped 9.5% in February.
PJM forwards through 2028 have been inching up; 2024 is still a pretty good mid-market bargain. ERCOT markets remain backwardated. Court of Appeals for the Third Circuit vacated FERC orders allowing PJM to change capacity market rules for delivery year 2024/25.

Discuss with Azi

ComEd and Carbon-Free Resource Adjustments

Impacting Your Electricity Bill

The Carbon-Free Resource Adjustment (CFRA) was created by a provision in the 2021 Climate and Equitable Jobs Act, or CEJA, landmark energy legislation in Illinois. The CFRA was meant to give a subsidy over five years to Illinois nuclear power plants to support lower-cost carbon-free energy when market prices were below a certain level. Over its first year, the CFRA delivered a total of about $2.4 billion in credits to consumers. But now, with a lower market, the CFRA is resulting in highly inflated ComEd utility bills. Customers cannot budget for CFRA as the rate is only published monthly. It has become a quite onerous utility burden. Unfortunately this is built into the legislation and cannot be hedged away and smoothed.

ComEd CFRA

♦♦♦ CURRENT NEWS ♦♦♦

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ELECTRICITY:

Court Halts Completion Of Disputed Midwest Power Line

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EMISSIONS:

Gas Industry Leans On Emissions Tech As Climate Crackdown Looms

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ELECTRIC VEHICLE:

The Future Of Driving Is Electric. Sort Of.

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NATURAL GAS:

Natural-Gas Prices Won’t Stay Low for Long. An Export Boom Is Coming.

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POLICY:

U.S. Policymakers Must Adjust To Energy Transition Wake-Up Call

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PIPELINE:

Enbridge To Form Natural Gas Supply Venture Connecting Permian And Gulf Coast
Canadian pipeline operator Enbridge (ENB.TO), opens new tab said on Tuesday it would form a venture with I Squared Capital and pipeline firms WhiteWater and MPLX (MPLX.N), opens new tab to connect Permian supplies to the U.S. Gulf Coast to tap into strong LNG demand for exports.

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GAS PRICES:

U.S. Gas Producer Optimistic Despite Very Low Natural Gas Prices

Despite multi-year low natural gas prices in the United States, domestic producers continue to be optimistic about the long-term prospects of gas as a fuel, both in America and abroad.

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RIGS:

U.S. Oil, Gas Drilling Activity Slows

The total number of active drilling rigs for oil and gas in the United States fell by 5 this week, according to new data that Baker Hughes published on Friday.

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LNG:

An EU Carbon Tax Will Upend The Global LNG Market

The global LNG market could face a sea change in prices and trade flows later this decade if the European Union includes LNG in its carbon border tax. The EU’s…

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NG PIPELINE

Natural Gas Intrastate Pipeline Capacity Additions Outpaced Interstate Additions In 2023

In 2023, 5.2 billion cubic feet per day (Bcf/d) of natural gas intrastate pipeline capacity was added in the United States, according to the EIA's recently updated Natural Gas Pipeline Projects Tracker. Intrastate pipelines are within a single state (that is, they do not cross state lines) and are regulated by state agencies. Interstate pipelines cross state and international borders and are regulated by the Federal Energy Regulatory Commission (FERC).

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GRID RELIABILITY:
**Updated** U.S. Department of Energy Announces $18 Million for Flexible, Innovative Transformers

DOE announced an $18M funding opportunity for Flexible Innovative Transformer Technologies (FITT). Up to 9 projects will research advanced transformers to improve grid reliability and ease transformer supply chains.

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DISRUPTIONS:

Winter Storms Have Disrupted U.S. Natural Gas Production

Over the last four winters, winter storms Uri (February 2021), Elliott (December 2022), and most recently, Heather (January 2024) interrupted weekly U.S. natural gas production by more than 15 billion cubic feet per day (Bcf/d), according to daily estimates from S&P Global Commodity Insights. These declines were the largest interruptions to U.S. natural gas production during the past four years. Although the impacts of these disruptions appear more muted over the course of a month, winter storms Uri and Elliott still drove declines in monthly average natural gas production of 3 Bcf/d to 7 Bcf/d.

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