It’s said that everything is bigger and better in Texas, and when it comes to the magnitude of negative natural gas prices, the Lone Star State recently captured the crown by a wide margin. By now, you’ve probably heard that Permian spot gas prices plumbed new depths in the past couple of weeks, falling as low as $9/MMBtu below zero in intraday trading and easily setting the record for the “biggest” negative absolute price ever recorded in U.S. gas markets. Certainly, that was bad news for many of the Permian producers selling gas into the day-ahead market. But every market has its losers and winners, and negative prices were likely “better” — dare we say much better — for those buying gas in the Permian. Today, we look at some of the players that are benefitting from negative Permian natural gas prices.
With storage inventories soaring to record-high levels and production remaining relatively flat, the U.S. natural gas market is in dire need of record demand this summer to balance storage. All eyes are on power generation to soak up the gas storage surplus. Low gas prices and increased gas-fired generating capacity makes natural gas the go-to generation fuel this year. However, in the largest summer demand market – Texas – natural gas is facing increasing competition from wind. Wind power still provides a much smaller share of Texas’s power than natural gas, but the addition of several big wind farms in 2015 gives wind a stronger footing in the Texas market this year. Today we take a closer look at the potential impact of growing wind generating capacity on natural gas demand, particularly in Texas.
There is still a lot of summer left in Texas. Some say summer in the Lone Star state runs from Cinco de Mayo through the middle of the high school football season, which sounds about right. But so far at least, a combination of moderate electricity demand and relatively high natural gas prices has resulted in a decidedly non-stellar gas power burn. That is good news for those eager to see the state’s—and the nation’s—gas storage levels rebound from unusually low levels after the hard, cold winter of 2013-14. In this episode of our region-by-region series on gas power burn vs. gas storage rebuilding, we look at the Electric Reliability Council of Texas region, where gas-fired generation is king.
The “polar vortex” of 2014 dipped far south enough to impact power markets in Texas. On Monday January 6th, the Electric Reliability Council of Texas (ERCOT) came dangerously close to initiating rolling blackouts as power demand increased due to record low temperatures and unexpected generation unit outages. Real time electricity prices spiked to over $5,000/ Megawatt Hour (MWH). The close call served as a sobering reminder for Texas regulators of the ongoing debate over how the State will meet future power generation requirements. Today we detail the “polar vortex” event and explain the implications for Texas power.