Strategic Energy Newsletter

February 2024

Hi !

"The more traditional fuel sources we have relied on as a nation - coal, oil, and natural gas - I'm hoping they can allow us the financial springboard to move to the next generation of energy sources: renewables and alternatives.”

Lisa Murkowski

United States Senator from Alaska

Azi Feifel

COO PROSPECT RESOURCES

Trends in the Energy Market

Current Market News

NYMEX futures have dropped dramatically to a multi-year low, resulting from over-supply and a very mild winter. March and April futures remain well under $2.00 / MMBtu.
As profits begin to fall, expect production to be shut down in some places resulting in rising prices.
The 30 day outlook shows above average temps across the northern US, with below average temps through the south.

Natural gas inventories remain 11% more than the same period last year and 15.9% more than the 5-year average.

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

And yet more...

Crude oil futures have been rising, with WTI contracts above $77 / barrel. Interest rates and the Red Sea conflicts have definitely impacted the rising market.
Economy - Recession indicators have reversed for the first time in a couple of years. Nonetheless, GDP growth is expected to sloww in Q2 and Q3. Inflation headwinds have. Sticky price increases may make it hard to achieve the Fed's 2% inflation target.
PJM 2024 electricity forwards have fallen fairly dramatically. Forwards for 2025 - 2028 have also fallen, though less significantly. There is definitely a correlation with falling NYMEX Henry Hub Natural Gas futures.

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 ♦♦♦

TAXES; RENEWABLE SPENDING

How a Tax Rule Could Aid Renewable Spending. Schneider Electric Says It Could Be Big. The company is using part of the Inflation Reduction Act to bring more capital into the renewable power generating industry.

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SHALE HIGH; REFINERIES LOW

Shale Patch M&A Might Be Booming, But Refineries Are Left Behind After a two-year hiatus, deal-making in the U.S. shale patch has hit high gear with the U.S. energy sector leveraging high stock prices to go on a $250 billion buying.

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IEA PERSPECTIVE ON GLOBAL OIL

The Oil Market Is Tightening to 2016 Levels Last week, the International Energy Agency reported that global oil demand growth is losing momentum, with demand growth clocking in at 1.4 mb/d in January, down from 2.8.

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U.S. OIL PRODUCTION

Charting the Course of U.S. Oil Production Despite facing significant challenges in recent years, the US remains the largest oil producer in the world and set a new annual production record in 2023. The narrative surrounding…

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CAPACITY

Retirements of U.S. electric generating capacity to slow in 2024 Operators plan to retire 5.2 gigawatts (GW) of U.S. electric generating capacity in 2024, a 62% decrease from last year when 13.5 GW was retired and the least in any year since 2008, according to the latest Preliminary Monthly Electric Generator Inventory. Coal and natural gas jointly account for 91% of the planned capacity retirements in the U.S. this year.

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US LNG
LNG sale and purchase agreements signed in 2023 support U.S. LNG projects Developers advanced three liquefied natural gas (LNG) projects to the construction phase in 2023, following the signing of sale and purchase agreements underpinning the projects. Developers signed contracts with buyers for almost 22 million metric tons per year of LNG last year, or about 3 Bcf/d of natural gas, according to data from the U.S. DOE and from company websites. The volumes contracted in 2023 totaled 52% less than the contracted volumes in SPAs signed in 2022.

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STICKER SHOCK

Are You Getting Sticker Shock From Your Electric Bills? NY Times Wants to Hear About It. Electricity prices have increased across the country in recent years, and we want to know about your bill.

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GRID & INFRASTRUCTURE
Tumbling US natural gas prices prove unstoppable, hurting producers For nearly a year, U.S. natural gas producers have slammed the brakes on production as prices fall. But, relentless output gains including from oil companies that pump gas as an oil byproduct have unleashed record supplies.

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