Weekly Energy Market Updates by Region - Archive




Issue week: August 6th, 2020  (Wk 32)





WEST In the spot market, volatility during the nightly ramp has subsided after Diablo Canyon came back online and the AC transmission line between the Pacific Northwest and California returned to full capacity. Throughout this week, mild temperatures and a solid supply stack have limited the upside in spot pric-es, but forward prices for Bal-2020 and CY2021 rose on higher NYMEX prices.

ERCOT  Buoyed by surging natural gas prices out the curve, term prices have risen this week. Meanwhile, real-time prices at all load zones save the South Load Zone, where outages due to Isaias have greatly increased conges-tion, have been relatively mild for August. Basis for the month to date is averag-ing around $100/MWh in the South, whereas the average for the other zones is just under $0.10/MWh. The ORDC adder for the month is averaging approxi-mately $0.25/MWh, well below the $46.13/MWh average for last August.

EAST Outages in multiple states in the wake of Tropical Storm Isaias have weakened demand and created uncertainty in today’s Real Time market throughout the region. So far today, PJM Western Hub is averaging $18.72/MWh, down slightly from this week’s average of $23.73/MWh. Despite the re-sidual impact of the storm and cloudier conditions in parts of ISO-NE, prices there have been generally stable.







On July 2, the Bureau of Indian Affairs ordered an oil pipeline that has moved crude oil through North Dakota since 1953 to shut down over a right-of-way dispute between the pipeline owner and the regional indigenous tribe. Then, only four days later, a federal judge ordered the Dakota Access Pipeline, which has also trans-ported oil from North Dakota for three years, to cease operations, pending a full environmental review by the federal government. Although the latter order was reversed on appeal just yesterday, the rapid succession of these particular government shutdown de-crees may end up making July 2020 a watershed month for oil-and-gas pipeline operation and development in the U.S. Legal challenges to planned pipelines are certainly nothing new. Environmentalists often attempt to delay new projects through ex-pensive litigation that, in some cases, makes development cost-prohibitive. Cancellations of the Atlantic Coast Pipeline and Consti-tution Pipeline, in addition to the recent Supreme Court decision to maintain the halt on construction of the Keystone XL Pipeline, are some of their triumphs from this year. Ironically, such wins for activists may prove pyrrhic victories, for pipelines are not only the cheapest but also the safest way for oil and natural gas to travel. Forcing a developer to shut down an oil pipeline, for example, actually raises the risk of a spill dramatically because that oil must be moved to market by truck or rail instead. Trucks, which can crash or overturn, carry a much greater risk of spillage (not to mention their environmental impact on roads, car-bon emissions, and noise pollution), and several derailments of oil shipments by train that caused explosions and fatalities in recent years caution against further expansion of that mode. An increase in demand for rail capacity to move oil and gas also encroaches on that capacity for other industries that rail their products to market—such as agriculture, metals, mining, and building materials—and increases their costs. Another irony is that, without oil and gas, not a single wind turbine or solar panel could be delivered or even made. Not only the steel, fiberglass, aluminum, and concrete used to manufacture wind turbines but also certain materials contained in solar panels are the products of energy-intensive mining or manufacturing processes that rely on these legacy fuels. When environmentalists manage to nix a planned pipeline, they arguably sabotage their own purported long-term goals, but the losing side at least is left to deal with a status quo to which it has been accustomed. However, if activists continue to succeed in shuttering established pipelines, U.S. oil and gas production and processing may endure significant and unpredictable disruption that can ripple through the broader U.S. economy.  




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