The prompt month NYMEX RBOB gasoline futures contract fell $0.031/gal to $0.914/gal February 11, 2016 following a notice by Genscape that Irving’s 300,000 bpd St. John, NB, refinery restarted a fluid catalytic cracking unit that went down earlier that week. Activity at the 70,000 bpd FCC, the refinery’s biggest gasoline-producing unit, returned to normal operating levels during the early morning of February 11, 2016 according to Genscape’s real-time infrared monitors.

Genscape notified its real-time data customers of the unit restart at 7:37 a.m. EST February 11, 2016 (see Figure 1). The unit appeared to be in hot-circulation during the unplanned outage, a state wherein no on-spec product is produced but a swift return to service is possible after necessary repairs are made, according to Genscape analysts. 

Gasoline prices rose February 9, 2016 and February 10, 2016 after the news of the unplanned FCC outage. At 2:35 p.m. EST February 9, 2016 Genscape alerted real-time data customers to the shutdown of the unit. Within a half hour, the prompt month NYMEX RBOB gasoline futures contract price rose nearly $0.03/gal to $0.931/gal (see Figure 2). This FCC upset likely contributed to stronger prices on February 10, 2016 with RBOB peaking at $0.971/gal cents during trading hours.

The FCC was recently shut for planned maintenance from September 15, 2015 to December 6, 2015. The maintenance was part of a planned turnaround known as Operation Falcon, the largest in company history, according to Irving. The Irving refinery produces up to 164,000 bpd gasoline and diesel products, according to data compiled by Genscape, making the facility a key supplier of these products to the U.S. East Coast (see Figure 3).

Genscape's North American Refinery Intelligence Service combines observations obtained from infrared cameras with in-house analytical and technological expertise to provide an unrivaled view into real-time operations at U.S. and Canadian refineries. Genscape currently monitors 74 percent of overall refinery capacity in the United States, including 92 percent of East Coast refineries, 79 percent of Midcontinent refineries, and 91 percent of Gulf Coast refineries. To learn more, or request a free trial of the North American Refinery Intelligence Service, click here.

NGL & petrochemical traders gain critical insight & transparency into North American NGL market with access to real-time alerts, news & events

February 17, 2016, Houston, TX – Genscape today announced that it is making its real-time natural gas liquid (NGL) news alert service available to market participants on the International Exchange (ICE) Instant Messaging platform (IM). ICE, a leading operator of global exchanges, clearing houses and data services, will provide critical, real-time NGL pipeline, ethylene cracker, and fractionator news alerts via instant message through ICE IM.

Genscape measures the fundamentals that drive the NGL market, enabling traders to leverage timely, critical alerts and updates in their daily trading and hedging decisions. Alerts available over ICE IM will provide real-time insight into the operational status of ethylene crackers, as well as NGL pipelines and fractionators at Mt. Belvieu, North America’s largest storage and processing hub for natural gas liquids. Alerts include changes in pipeline flows, elevated flaring, reduced operating rates, shutdowns, and restarts.

“We’re pleased to work with Genscape to provide our clients with important NGL data on ICE IM. This real-time data gives market participants actionable market intelligence to identify trading opportunities and to make more informed decisions,” said Brian Harrison, Vice President, Desktop Strategy, ICE.

Utilizing its proprietary, patented technology, Genscape captures real-time data on the entire NGLs supply chain – pipeline flows, fractionation and processing, and downstream petrochemical demand. By providing transparency to NGLs transportation flows, processing operations like fractionation, and ethylene crackers, Genscape is aiding in this market evolution with unbiased, measured market data and analysis. This quantitative fundamental data brings efficiency to the NGLs and petrochemical markets, as more market participants can make trading and business decisions with real data on the factors underlying price.

To learn more or speak to an expert about Genscape’s real-time, proprietary petrochemical and NGL monitoring, visit: genscape.com/petrochemical-ngls. For more information on ICE IM, please email technologyservices@theice.com.

To view the full press release, visit: Genscape's Real-time, Proprietary NGL Pipeline, Ethylene Cracker & Fractionator Alerts Now Available on ICE’s Instant Messaging Platform.

About Intercontinental Exchange

Intercontinental Exchange (NYSE:ICE) operates the leading network of exchanges and clearing houses, serving global commodity and financial futures, and equity markets. The New York Stock Exchange is the world leader in capital raising and equities trading. ICE is also a leading provider of data services across global markets. Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange, Interactive Data and Trayport. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at http://www.intercontinentalexchange.com/terms-of-use.

About Genscape

Genscape is the leading global provider of real-time data and intelligence for commodity and energy markets, driven to improve market transparency and efficiency. With thousands of patented monitors strategically deployed worldwide, Genscape is unique in its ability to collect and report proprietary market fundamentals in real-time or near real-time. Genscape delivers innovative solutions across a number of asset classes including: Oil, Power, Natural Gas and LNG, Agriculture, Petrochemical and NGLs, Maritime, and Renewables. Genscape clients often gain important insights, improve risk management, or increase operational efficiency. For more information, please visit: www.genscape.com

For all press inquiries please contact:

Jaimie Weiss
Senior Marketing Communications Manager
Office: +1 617 790 0959
jweiss@genscape.com

The April ICE Brent futures contract price spiked and then fell slightly February 12, 2016, following multiple Genscape notices regarding the shutdown and restart of BP’s 1.15mn bpd Forties Pipeline System.

The system was shut due to an issue at the Kinneil fractionation terminal. Kinneil, Scotland, is the location where the flow from the North Sea on the Forties pipeline system is stabilized for consumption. If issues arise with the gas fractionation trains, as Genscape detected, then Forties pipeline flow can be affected.

By 22:06 (GMT) February 12, 2016, the Brent price decreased $0.23/bbl to $32.66/bbl following a 21:51 (GMT) Genscape notice that the Kinneil Train 3 fractionation unit was restarting. Genscape subsequently alerted that Forties pipeline flow had resumed to below 400,000 bpd at 22:07 (GMT).

Earlier that day, Brent increased a cumulative 6.4 percent or $2.02/bbl to $33.40/bbl from 11:15 (GMT) to 19:28 (GMT) as the pipeline shut down events unfolded.

At 11:15 (GMT) on February 12, 2016, Genscape notified customers that the 550,000 bpd Train 3 gas fractionator at the Kinneil fractionation terminal was shut earlier that morning. Furnace stack activity decreased at the Train 1 and 2 gas fractionator, which have a combined capacity of 680,000 bpd. Within 40 minutes, the Brent price gained $0.30/bbl to $31.68/bbl on indications of decreased supply.

Next, at 15:00 (GMT) Genscape alerted customers to decreased flow along the Forties pipeline as decreased power consumption was detected at the Netherley pumping station upstream from Kinneil.

By 16:10 (GMT), Brent rose to $32.44/bbl from $31.33/bbl, a 3.5 percent increase of $1.11/bbl. At that time, a third notice was sent to customers stating all three Kinneil trains were offline, as the train 1 & 2 gas fractionator was completely shut at about 12:00 (GMT) after a period of decreased activity. After 25 minutes the Brent benchmark rose another $0.46/bbl to $32.90/bbl.

Genscape Forties pipeline flow shut shortly after at 16:30 (GMT). At 17:04 (GMT), notice of a complete shutdown of the Forties system was sent to customers. Brent rallied an additional $0.78/bbl to $33.40/bbl by 19:28 (GMT), a gain of 2.4 percent.

Operational issues at the Kinneil fractionation terminal caused production restrictions to be put in place, according to various sources. Decreased Forties supply delayed the loading of scheduled cargoes and resulted in higher bidding from Vitol for supply, according to Reuters.

Additionally, maintenance is scheduled for Jetty 1 at Hound Point from March 1 to March 12, 2016, according to Platts. VLCCs will not be able to load at the port during that time, closing arbitrage shipments to Asia. About 84 percent of crude exports at Hound Point load at Jetty 1. Jetty 2, which can accommodate Aframax and smaller-sized vessels, will remain open. The port ships Forties crude to overseas markets.

Genscape's Forties Supply Chain Service provides insightful alerts as they happen. They not only highlight variations in the real-time pipeline flow, but also underline events that affect the key operating units at Kinneil and Grangemouth. The daily snapshot of oil storage, pipeline, shipment, and refinery activity provides a valuable overview of Forties exiting the system. Genscape has an extensive in-the-field network of high-tech, proprietary monitors that provide real-time tracking and measurements of production levels, cargo shipments, outages, and other key factors. To learn more, or request a free trial of Genscape's Forties Supply Chain Service, please click here.

In recent days, tankers chartered by several European companies such as Total, Litasco, and Cepsa were monitored loading crude at Kharg Island, a major Iranian loading port, according to Genscape. The vessels are bound for European destinations, marking the first crude shipments to take the route in four years.

Following the lifting of economic sanctions against Iran on January 16, 2016, several European oil companies have started negotiations to buy crude from the country.

On February 5, 2016, Genscape identified Distya Akula (IMO 9087972), a Suezmax chartered by Litasco, loaded about 1mn bbls and is thought to be heading to Constanta, Romania, according to several London tanker brokers’ chartering information. Genscape believes this to be the first Iranian oil shipment to an European country after the lifting of the sanctions.

Moreover, on February 14, 2016, Iranian officials announced that three tankers chartered for European destinations would load within the next 48 hours. Genscape monitored two cargoes bound for Europe that have since loaded at Kharg Island: VLCC Atlantas (IMO 9389899), chartered by Total, departed on February 15, 2016, with around 2mn bbls of crude and is now also heading to Northwest Europe via the Suez Canal, with a final destination yet to be declared. Monte Toledo (IMO 9271573), a Suezmax chartered by Cepsa, left Kharg Island on February 15, 2016, with around 1mn bbls of crude and has a declared destination of Algeciras, Spain. About 80 percent of Iranian exports are loaded at Kharg Island, according to Genscape.

More recently, Eurohope (IMO 9173745) loaded around 1mn bbls at Kharg Island on February 16, 2016, and declared Constanta as the initial destination upon departure. This would make the ship the second loading at Kharg Island bound for Constanta in less than a week.

Iranian officials welcomed a recent agreement between some OPEC members and Russia to keep a ceiling on oil output, but has not committed to limit the production. “We have repeatedly said that Iran will increase its crude output until reaching the pre-sanctions production level,” said Mahdi Asali, Iran’s OPEC representative, according to Sharq Daily.

Genscape expects to see more tankers loading Iranian crude for European destinations in the next few weeks and will continue to track the growth in Iranian output to help market participants assess the impact of changes in flow on regional markets. Genscape monitors Middle East Crude exports daily using its Genscape Vesseltracker data together with market intelligence sources to identify the loadport of each departing crude tanker and track it through to its final destination. Using Genscape Vesseltracker data, the Middle East Waterborne Crude Report, published on Wednesdays, illuminates the flows coming out of the Middle East producing countries so that traders and analysts can better gage markets in Asia, Europe, and the Americas. It provides traders and analysts with insight and analysis to better forecast short-term price shifts by enabling them to anticipate the arrival of crudes from the Middle East. This weekly report offers new transparency and helps market participants inform market positions, improve decision making, and gain insight on key market drivers. To learn more about the Middle East Waterborne Crude report, or to request a free trial, please click here.

Genscape and Vesseltracker have combined their extensive proprietary energy monitoring networks to launch the world’s most comprehensive and accurate picture of global shipping. To learn more about Genscape Vesseltracker, or request a free trial, please click here.

In a winter season marked by weak wholesale power prices resulting from mild temperatures, low natural gas pricing and record wind generation, the variability of wind generation is a significant driver of wholesale price volatility. As recently as Tuesday, February 23, 2016, a miss in ERCOT’s wind forecast resulted in five-minute North Hub prices spiking over $1,000 during the evening demand peak.

As new wind generation continues to assume a greater percentage of the generation supply stack there is increased opportunity for market participants to capture this volatility through Genscape’s superior forecasting and fundamental supply stack analysis. 

Wind Generation in ERCOT and the PTC

Late 2015 saw a number of new wind farms added to ERCOT, ahead of the expiry of the renewables Production Tax Credit (PTC) at the end of the year. The PTC was extended in December for another five years, galvanizing wind projects already in the development pipeline for the next few years. Under the PTC, utility-scale renewable power resources are able to claim a tax credit of $23 per megawatt hour for the production of electricity from wind, solar, and other renewable means. In a wholesale power market, this enables renewable power production to remain profitable even in normally uneconomic situations such as negative price dispatch. This tax credit coupled with the meteorological conditions in West Texas has had a substantial impact on the ERCOT generation stack.

The growth in wind generation as a means of power production within ERCOT over the past 15 years can be observed below in Figure 1. This graphic shows the annual proportions by fuel-type of new generation interconnections as measured in MWH capacity according to data from the most recent ERCOT Seasonal Assessment of Resource Adequacy (SARA). As evidenced in the figure below, wind generation (in blue) has comprised a growing percentage of new generation interconnections on an annual basis over the last 15 years. This growth has been particularly notable since 2012 with wind generation comprising the majority of new generation interconnections in nearly all of those instances.

ERCOT Wind Variability and Impact on Power Prices

Over the past several months, days with the highest North Hub locational marginal prices (LMPs) were associated with errors in the wind forecast. More specifically, when wind generation verified weaker than both the day ahead and real-time forecast, correlations were noted with higher prices. Figure 2 illustrates such an example with actual wind generation verifying 13.25 percent weaker than ERCOT’s bal-day forecast for hour ending (HE) 18. This helped buoy North Hub LMPs to over $200 despite actual load verifying weaker than forecast by 1.89 percent (Figure 2). On this particular day, high pressure quickly built into the footprint from the West, causing wind across West Texas (where the bulk of ERCOT wind farms are located) to abruptly weaken. This high pressure system worked in tandem with the typical afternoon dissipation of the LLJ to yield a 7 GW drop in wind only 12 hours. Interestingly, the significant over performance of wind generation over the early afternoon hours drove very weak real-time pricing, thinning out the supply stack and making the grid very sensitive to supply and demand inefficiencies over the evening hours.

Another situation involving both wind forecast errors and sharp increases in North Hub’s LMPs occurred on January 8, 2016. In this particular example, wind generation verified over 3,000MW below ERCOT’s day-ahead forecast (Figure 3 below). The resulting under-commitment of generation resources led to sharp increases in North Hub LMPs through the morning demand peak. While not directly related to volatility of the low-level jet, the cause of this major forecast blunder was the result of errors in the predicted location of low pressure near the panhandle of Texas. Despite only a narrow miss in the predicted location of this area of low pressure, the tight clustering of wind farms in western Texas makes wind generation very sensitive to spatial forecast errors. As this region will continue to be the focal point for new wind farm projects, the sensitivity of wind generation to spatial forecast errors will continue to increase.

Pricing Impacts of Increased Wind Generation

As evidenced in the example from January 8, 2015, the necessity to build out wind generation facilities in locations that favor strong and consistent wind patterns has led to a tight clustering of wind generation facilities in West Texas. As a consequence of this tight grouping of wind generation facilities, tight bands of wind that deviate from forecasted patterns by as little as 50 miles can lead to large misses in the wind generation forecast. Despite the obvious advantages of harnessing renewable resources for power generation, there are inherent disadvantages when actual wind generation strongly deviates from forecasted levels. In a review of the 500 strongest North Hub real-time power prices in ERCOT since 2013, it was found that roughly 80 percent of those instances occurred on days when wind generation verified below ERCOT’s short-term wind power forecast, or STWPF (see Figure 4). 

Not surprisingly, this robust buildout of wind generation has had obvious impacts on wind generation within ERCOT, the first of which has been a large increase in the monthly average of hourly wind generation between May 2009 and December 2015. The increase in the monthly average of hourly wind generation over this period exhibits a strong positive trend of nearly 4 GW. Mirroring that trend is an increase of the standard deviation in the monthly average of hourly wind generation. This trend indicates that as wind generation totals have increased, the average variance in hourly wind generation has also increased. This variance in hourly wind generation can and does drive significant deviations in wind generation from one day, or even hour, to the next and has had notable impacts on the ERCOT market. 

The cumulative implication of these trends is that as we can expect to see continued growth in wind generation facilities in the ERCOT footprint, we can also expect to see increased volatility in wind generation output. This wind volatility will have a strong impact on both bullish and bearish pricing events within the ERCOT system. 

Genscape’s team of meteorologists enhances Genscape's Power Market services by providing on-demand, up-to-date forecasts and a unique perspective on how weather conditions impact electricity demand, with accurate load forecasts up to 15-days out and analysis of weather conditions that drive demand for the major power markets in the contiguous United States.

Genscape has the most complete, real-time monitoring of the U.S. power grid, with accurate and timely data on capacities, flow, and utilization. Genscape's Power IQ Market Intelligence Service provides access to market-specific analysis and price forecasts, allowing for more informed trading decisions.

Wind is one of the fastest growing and most difficult to predict forms of electric power generation. It is also a significant factor in driving congestion and price volatility in many regional markets. Now power traders in key wind regions can receive the most comprehensive and skillful forecasts thanks to WSI and Genscape's market intelligence unit. WSI WindCast IQ helps traders gain a clearer understanding of the expected wind power generation within an ISO. Click here to learn more or request a free trial of Genscape's Power Market Services.

On Wednesday, February 16, 2016, utility solar generation in California hit a new record of 6,486 MW, according to California ISO. Utility generation surpassed that again on Monday, February 22, 2016, when output reached 6,551 MW in the state.

Part of this record-breaking trend is being driven by environmental conditions, including sun angle, longer days, higher temperatures, etc., and Genscape expects it to continue through Summer 2016 in CAISO. When considering the combined effects of sun angle and weather variables, solar generation in the state should peak in the June/July timeframe. Genscape expects that California utility output will hit 7,500 MW by July, and that the peak in generation may be pushed out into the late-August/September timeframe when taking increased build-outs into account.

The largest solar builds tend to happen during calendar Q1, when companies are attempting to get ahead of peak demand times and get the most out of the year, and Q4, when they are trying to capitalize on tax incentives and benefits before the close of the year.

When solar generation hits such high levels, especially during peak load times, the uneven distribution between the northern and southern regions of the state leads to low overall energy prices and can result in congestion crushing prices, especially in the south. The added impact of wind generation in the late spring and early summer, when wind capacity factors are at their highest, can even contribute to negative real-time energy prices. Additionally, large increases in solar, especially this time of year, pushes other distribution, usually thermal, out of the supply stack.

Genscape monitors 2,720 MW of utility-scale solar generation that reaches the CAISO grid. Additionally, Locus Energy, a Genscape company, monitors 792 MW of solar generation in California, across the residential, commercial, industrial, and utility sectors. Rooftop solar, including residential, commercial, and industrial, also eats into demand. The low load that was seen on Sunday, February 21 was independent of the strong solar generation that was seen at the utility level.

Genscape's Power IQ Market Intelligence service combines proprietary modeling technology with fundamentals based analytics to create daily reports that allow customers to make more informed buy/sell decisions in order to manage risk, minimize cost, and enhance profitability. Each day, Genscape's team of analysts, meteorologists, and technologists prepare early morning reports and interact extensively with users. Click here to learn more or request a free trial of Power IQ.

A Day in the Life of a Genscaper– Market Intelligence Spotlight!

This post is part of a series showcasing Genscape's talented and diverse group of employees. We feature these periodic, casual employee interviews to better illustrate the culture of innovation and multidisciplinary collaboration at Genscape. This week we're introducing a few members of the Market Intelligence (MI) Team.

Read below to get a sneak peek into our fabulous Genscapers!

What does our Market Intelligence team do?

The MI team uses advanced, fundamentals-based analytics and historic data mining to create daily price and congestion forecasts that help clients make more informed buy/sell decisions.  The core of this forecasting process consists of Genscape’s proprietary monitoring data, where model forecasts are recalibrated every day to actual price outcomes and power plant and transmission flow levels.  Through this process, analysts gain insight into the drivers of congestion and price and deliver that insight to Genscape’s clients.

Meet Diana Chiyangwa! – Director, PJM Desk

Explain your role at Genscape.  What do you do?

I am the lead of a team of six analysts that are forecasting short terms prices for the PJM market as well as providing extremely valuable insight about various tradeable packages to market participants.

How did you land at Genscape?  What were you doing prior?

My first job right out of college was at Genscape. After graduating from MIT, where I received an S.M. in Technology (Energy) and Policy, I was hired to be a Product Developer.  After about two years, I moved over into Operations and have been an Analyst since.  

What’s exciting you the most about Genscape’s future?

The sheer potential of what could be done here is extremely exciting.  The amount of data that Genscape holds across all its different business verticals can be transferred/translated/transformed into extremely valuable insight across so many industries.   

If you could switch your job with anyone else within the company, who would you choose?

I would switch with Antwan Robinson, Genscape’s Senior Technician – he builds the monitors in the lab, and I think that would be fun!

What advice would you give to recent new hires?

Be curious – Never stop asking questions about the job and the people around you. You will learn so much, make great connections in the industry and have a fantastic time!

What is the best vacation you’ve ever been on?

Zanzibar – In one place, I got to experience the most beautiful sandy beaches, talk to the Maasai people, learn history of slave trade, and see some of the most stunning architecture that brings together so many cultures (Arabic, Indian, and African etc). I could go on but it was just altogether one on my most valued life experiences.

What book did you read last?

The last book I read was White Teeth by Zadie Smith. I love her fun and witty writing style.

What celebrity do people think you look like?

Kellie Shanygne Williams who plays Laura Winslow as in Steve Urkel’s girlfriend in Family Matters.

Meet Cy McGeady! - Power Market Analyst, MISO Desk

Explain your role at Genscape.  What do you do?

I am a Power Market Analyst on the Midwest ISO (MISO) desk. On a daily basis I conduct extremely in depth fundamentals-based analysis and modeling of the short term wholesale power markets. As a team we publish reports daily and follow up with phone calls to our customers, who represent all types of market participants, and deliver custom advice and insight into the markets. On a longer term basis, I work to improve the quality of our analytics. I do this by working closely with our development team to improve our products and modeling tools; I also pursue this goal by conducting research of my own into market questions and mechanics.

How did you land at Genscape?  What were you doing prior?

I joined Genscape this past May following my graduation from the University of Rochester. I had an Economics degree and wanted to be involved with the energy industry. Genscape has given me the opportunity to immerse myself in the field and build a very potent understanding of the energy economy.

What’s exciting you the most about Genscape’s future?

The fact that the commodity and energy industries have historically been so opaque; Genscape is the leading edge of a move to provide quantitative insight into the physical level of all commodity markets. The energy economy in particular is changing rapidly and the need for better and never before accessible intelligence is growing.

If you could switch your job with anyone else within the company, who would you choose?

I would like to spend some time at a new company Genscape has recently acquired, Locus Energy. Their work is on the distributed solar power industry, a field that is rapidly growing and will be a major force in disrupting the current, and in my opinion antiquated, utility model of the power distribution industry.

What advice would you give to recent new hires?

Be prepared to learn a lot very quickly from your direct team members but also be aggressive in learning from the extremely knowledgeable Genscapers on different teams, departments and product verticals.

Do you have a favorite quote/motto/personal mantra?

Whatever is worth doing at all, is worth doing well.

What book did you read last?

The Brothers Karamazov, which was exceptionally dense but well worth the effort. I am now rereading The Big Short, which along with the new film, is a thrilling story and a really informative look at one piece of the 2008 financial crisis

Meet Armagan Yavuz! – Senior Power Market Analyst, NY ISO Desk

What’s your role at Genscape?

I am a Power Market Intelligence Analyst for the New York ISO region. My job is to forecast Day-Ahead and Real-Time markets’ prices, flows of electricity, and congestion. I provide consultation to power traders with short and long-term power market forecasts.

How did you land at Genscape?  What were you doing prior?

I worked in Demand Response sector for about 2 years, and then managed a generation portfolio for another 2 years. I wanted to get more involved in the entire power/energy markets, rather than only focusing on generation. I always had interest in how the overall market ‘breathes’, and Genscape is the best place in the industry to get all-inclusive exposure to energy markets. I presented my interest in Genscape and was offered a job!

What’s exciting you the most about Genscape’s future?

Genscape continuously looks for new ventures and is growing rapidly.  Genscape is well respected in the industry and I am excited to be a part of one of the country’s biggest and best energy consultation and forecasting companies.

What advice would you give to recent new hires?

I would encourage them to take initiative and think outside of the box. We always look for and appreciate new ideas here. The learning curve can be a little steep at first, so they should ask a lot of questions.

Do you have a favorite quote/motto/personal mantra?

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln

Meet Joshua Senechal! - Meteorologist, Electricity Demand Forecaster

Explain your role at Genscape.  What do you do?

I’m a Meteorologist working with the Market Intelligence team. My role is to forecast the demand for electricity across several of the major power markets. This involves the analysis of both real-time and forecast weather conditions and determining the potential impacts on energy demand. Additionally, I participate in the creation of both medium and long-range weather forecasts as well as assist the analyst team with any weather and demand related questions.

How did you land at Genscape?  What were you doing prior?

I landed at Genscape after spending over a year in Iowa forecasting the weather for the agricultural markets. It was in this initial role that I was able to hone my forecasting skills as well as gain a fundamental understanding of the commodity markets and their close relationship with the weather.  My interest in working for Genscape originated with a blog post I found online that had been written by one of Genscape’s Power Market Analysts. After doing some research into the company, I was very impressed by Genscape’s fundamentals-based approach to the energy markets and felt my meteorological background would serve as an important asset.

What’s exciting you the most about Genscape’s future?

What excites me most about Genscape’s future is its increasing presence as a focal point for the energy and commodity markets. Through focused efforts to increase the granularity and ingenuity of its products, Genscape has asserted itself as a leading provider of market intelligence. As the energy sector continues to evolve, I’ll have the opportunity to work for a company that will play a pivotal role shaping this evolution.

If you could switch your job with anyone else within the company, who would you choose?

I would choose the Research and Development (R&D) team. Having an opportunity to enhance the building blocks of Genscape’s proprietary data offerings would be an exciting challenge to undertake. It would also be extremely interesting to get to see the developmental phases of some of the very products us analysts use on a daily basis.

What advice would you give to recent new hires?

I would encourage new hires to explore other verticals of the company and familiarize themselves with other aspects of the business. New hires bring a fresh perspective than can prove advantageous not only for their own role but also for other areas of the company.

What is the best vacation you’ve ever been on?

The best vacation I’ve ever been on was my ski trip to Utah back in 2004. As a native New-Englander, it was my first time experiencing “Ice-free” skiing, and the steepness of the terrain was an incredible challenge.

What celebrity do people think you look like? 

Josh Duhamel.

We’re always looking for passionate, motivated people to join the Genscape team. Interested in working in a fast-paced, collaborative environment in locations across the world? Check out our careers page for your next opportunity!

U.S. Gulf Coast storage inventories have increased nearly 7mn bbls so far in 2016, and could continue to build as market participants seek storage there as an alternative to Cushing, OK, where stocks are near maximum capacity.

As of February 19, 2016, Gulf Coast stocks, including those in Houston, Beaumont-Nederland, TX, and Corpus Christi, TX, reached near 75mn bbls, only 739,000 bbls shy of the record high level reached in October 2015. On January 5, 2016, Cushing inventories surpassed a previous record high level by 125,000 bbls.

Due to extensive storage expansion, capacity utilization at Gulf Coast storage locations was lower the week ending February 19, 2016 at 58 percent compared with capacity utilization during the October 2015 high. At that time utilization was 62 percent. The inventory peak in October 2015 also followed a record-high at Cushing.

The 2015 stock high at Cushing, set April 14, was followed by inventory builds in the Gulf Coast and West Texas region. Of the Gulf Coast-monitored storage locations, stocks at Beaumont-Nederland were the first to hit a record high the week ending September 25, 2015, and other terminals followed.

Beaumont-Nederland inventories were also the first to hit record levels after Cushing inventories surpassed the previous high on January 5, 2016. Similar builds are likely to occur in other Gulf Coast storage locations, as they did in late 2015.

Lower waterborne crude loadings have also contributed to the recent increase in Gulf Coast stocks. As of February 19, 2016, Gulf Coast domestic waterborne loading volumes were 34 percent lower than the beginning of the year and 36 percent lower than 2015 average loading volumes. Additionally, less loadings have left the Gulf Coast. As of February 19, 2016, 80 percent of loadings were destined for other Gulf Coast ports, compared to 42 percent for the week ending January 1, 2016.

Since the crude export ban was lifted in December 2015, a handful of waterborne shipments have shipped from the Gulf Coast for destinations in Europe. However, these shipments are being displaced from preexisting destinations, such as refinery markets in eastern Canada. Therefore, total outgoing waterborne volumes from the Gulf Coast has not significantly increased since the ban was lifted.

Genscape's U.S. Gulf Coast Crude Storage Report delivers critical storage-level information for crude oil stocks at the most significant port cities in PADD 3: Houston, Nederland, and Corpus Christi a full day ahead of EIA estimates. Click here to request a free trial of the U.S. Gulf Coast Crude Storage Report.

Additionally, Genscape's Cushing Crude Oil Storage Report offers insight into the largest concentration of above-ground storage on earth two days ahead of the EIA and provides much more granular information to assess oil storage by owner or purpose. To learn more or request a free trial of the Cushing Crude Oil Storage Report, click here.

Crude stocks in St. James, LA, climbed 1.9mn bbls to a record high the week ending February 26, 2016 and could continue to increase if crude demand falls further at U.S. Midcontinent refineries that source crude from the U.S. Gulf Coast.

The week ending February 26, 2016, stocks in St. James were about 1.0mn bbls higher than the previous record-high set November 20, 2015, according to Genscape. A refined products glut in the Midcontinent has led to decreased refinery run rates there and in part caused tanks at St. James to fill. For example, Valero Energy cut production at the Memphis refinery in early February to combat relatively weak profits, according to market sources. Sources at the time estimated the refinery may decrease crude processing by 25 percent.

A Valero spokesperson declined to comment on refinery operations.

Capline weekly average flow rates for the week ending February 26, 2016 marked the lowest utilization since October 30, 2015, supporting decreased run rates at the Memphis refinery.

The storage build at St. James was also likely influenced by a weaker Louisiana Light Sweet differential. The return of a major seller to the Louisiana crude market caused the differential for Gulf Coast benchmark LLS to decrease slightly over the week ending February 26, 2016, as it was heard to trade at WTI plus $2.40/bbl last on February 28, 2016. The prior week, LLS was assessed at WTI plus $2.55/bbl.

Genscape's St. James Supply Hub Report provides a comprehensive look at the factors driving the state of play in this key hub every Tuesday at 10am ET. Get unrivaled insight into highly accurate crude oil storage levels at St. James. Click here to request a free trial.

Additionally, Genscape's North American Refinery Intelligence Service gives subscribers a comprehensive view of refinery utilization by product class around the U.S. and Canada. To learn more or request a free trial of the service, click here.

Low crude prices and narrowing price spreads have persisted to cause the once-burgeoning U.S. crude-by-rail industry to slow considerably, but the unfavorable rail economics have led to the growth of a new market: loaded and unloaded crude tank-car storage.

Declining demand for shale crude shipped on rail recently left some companies with a surplus of tank-cars, which have been stored due to a lack of leasing or buying interest, tank-car sources said.

“For a lot of people, it just makes more sense to park (the tank-cars) and write them off as a non-used asset,” one source said.

Storage rates for unloaded hazardous tank-cars vary by region and length of time, but currently the majority are priced in the $5 to $9 per car per day range, the source said. A standard timeframe for a storage lease agreement is three to six months, he said. The in and out switch fees also differ by region, but typically run from $100 to $350 per car.

Rates are more expensive to store tank-cars loaded with crude due to the higher risk involved in storing loaded tank-cars and extra measures required, such as increased security at the rail-yard.

Storing crude in tank-cars is a recent play that some market participants are using to try to take advantage of the current contango price structure of the NYMEX light sweet crude contract of about $3/bbl between the April and June contracts. This is also advantageous as crude stock tanks fill across the country because off ample supplies.

“People are looking to store (tank-cars) wherever they can put them,” a source said. “Companies looking for loaded storage will go anywhere since not many offer it, and it can get expensive.”

Loaded storage is currently being offered in Snowflake, AZ, at $11/day per car, $7/day per car in Tennessee and as pricey as $52/day per car in Cedar Rapids, IA.

Taking into account several factors, including 725 bbls in a rail-car, it would cost roughly $1.49/bbl to store a car with crude in Snowflake during the month of April. The monthly storage fee would be close to $0.45/bbl, the monthly tank-car leasing rate would be about $0.48/bbl and the price also includes an In/Out charge, or the cost to park the tank-car and remove it from the storage yard, of about $400.

The total storage cost per barrel during May would be close to $0.93/bbl with the absence of the in/out fee. The total two-month storage price would equate to close to $2.42/bbl. The rail-car storage fees does not include the cost to rail the crude to or from a storage yard.

If that same car was taken out of storage in June, it stands to reason that the crude that was held in the tank would increase in value by about $3/bbl, due to the contango market of West Texas intermediate crudes, which most other crudes use as a pricing basis. This means the storage play would be about $0.50/bbl profitable.

Instead of storing crude in a rail-car, another option is to send it on rail to coastal refineries. But, narrow price spreads and competing foreign imports have made that option less profitable. For example, railing crude to the U.S. East Coast from North Dakota would be uneconomic, considering the freight for a unit train costs on average about $10.50/bbl without fees, according to Genscape.

Crude-by-rail loadings decrease

Almost as quickly as the crude-by-rail phenomenon grew in recent years – leading to a backlog of crude tank-car orders as refiners on the coasts sought to rail in as much shale crude as possible – overproduction globally caused crude prices to plummet and arbitrage spreads to crash. 

Higher global crude production – with the shale revolution in the United States contributing – caused crude prices to tumble, as domestic benchmark West Texas Intermediate fell from over $100/bbl in early 2014 to the mid-$20s/bbl range in February.

The collapse in crude prices resulted in narrower key pricing spreads that refiners on the coasts utilized in order to decide whether it was more advantageous to rail-in domestic shale barrels or look for foreign waterborne sources for their crude.

The spread between the Cushing, OK-based NYMEX crude contract and the international ICE Brent crude contracts narrowed from nearly $15/bbl at the beginning of January 2014 – a disparity which encouraged refiners to rail Bakken across the country – to under $1/bbl in early March. The spread flipped to a WTI premium over Brent in mid-January for a brief time before reverting back.

As the NYMEX crude/ICE Brent spread has narrowed, crude-by-rail has slowed as the spot market for rail-delivered crude dissipated and crude tank-car loadings tumbled. Most of the crude currently being shipped from North Dakota are a result of contract deals done when economics were more favorable, sources said.

During February 2016, crude loadings at the 12 Genscape-monitored rail terminals in North Dakota averaged about 347,000 bpd, down from 551,000 bpd in January 2014.

With little demand for railed crude, demand for crude tank-cars fell, as well, causing short-term leasing rates to decline to their lowest in years, according to sources.

Genscape assessed unheated 30,000-gallon and 31,800-gallon rail-cars on March 8, 2016, at $300/month and $350/month, respectively, for six- to 12-month leases. The heated coiled and insulated 29,000-gallon cars were assessed at $375/month.

In October 2014, the going markets for all three tank-cars were over $2000/month, according to Genscape’s assessments.

Genscape's PetroRail Report tracks the number of trains moving and the number of cars per train by using proprietary monitors, resulting in a highly accurate calculation of product volumes. To learn more or request a free trial, click here. 

Crude inventories at Cushing, OK, reached a record high for the week ending March 4, 2016, but the pricing market did not respond conventionally to the news of added supply. Instead of falling, the price of West Texas Intermediate (WTI) rose as some market participants anticipate global production cuts.

Cushing stocks have topped the 2015 high set April 14, 2015, 19 times this year, according to Genscape. On March 4, 2016, Cushing stocks were more than 3.5mn bbls higher than in April 2015. The record-high surpassed the previous one set March 1, 2016 by less than 100,000 bbls.

Capacity utilization at Cushing also hit a record high March 4, 2016, topping the March 2011 utilization record by less than one percent. As of March 4, utilization of operational tank capacity remained less than 80 percent, which Genscape considers to be an operationally maximum level.

Since 2011, close to 32mn bbls of storage capacity has been added to the storage hub.

Price market shrugs off Cushing stock builds

Despite the record-high inventories, WTI crude prices rose $1.32/bbl to $38.09/bbl on March 7, 2016 in the first three hours after the data for March 4, 2016 was published, according to the NYMEX Light Sweet Crude Oil futures contract, which has a locational basis of Cushing.

A lower-than-expected midweek Cushing change may have contributed to the WTI strength. Even though stocks reached a record high, the rate of stock increase between March 4, 2016 and the prior measurement on March 1 was the second lowest rate in a month. Additionally on March 7, 2016, Patoka, IL, stocks – another storage hub in PADD 2 – declined by more than 1.0mn bbls for the week ending March 4.

The price increase March 7, 2016 furthered a rally that has been in play since mid-February 2016. The front month WTI price increased as much as 47 percent from a low of $26.06/bbl on February 11, 2016 primarily on announcements of production freezes. Market participants have expectations that a March meeting of OPEC and non-OPEC countries could result in production cuts.

The price rally since the middle of February 2016 has not been the result of any structural fundamental change in the market, but rather based on the perception that the fundamentals are likely to improve, said Dominick Chirichella, founding partner of the Energy Management Institute.

If a March meeting does not result in a production cut agreement as expected, and production quota is adhered to, the price of WTI may decline.

“Only time will tell as supply continues to outstrip demand with Iran adding more oil into the market and U.S. shale oil declines, but only slowly,” Chirichella said.

U.S. crude and refined product in storage is at all-time highs and continues to build, global production of crude oil is still greater than demand, and some refiners have started to cut run rates with refining margins squeezed. Once supply and demand return to a more balanced position, it will take time to drain inventories of crude that have built over the past 1.5 years.

Cushing capacity expansions

Even though capacity utilization hit a high March 4, 2016, utilization is expected to decline with new capacity additions. As of March 4, 2016, Plains All American was the only Cushing operator with new capacity under construction. Three tanks, a total of 810,000 bbls of capacity, have completed final testing phases and could come online any day, according to Genscape. “I would expect them all to be online before the end of March,” Marcus Waldner, Genscape’s oil storage manager, said.

Plains also recently started construction on 540,000 bbls of additional storage capacity. “Right now we have their completion date roughly estimated for September 2016” Waldner said.

Cushing pipeline capacity imbalance – Will it get worse before it gets better?

Another thing to watch in terms of pricing impacts is the potential for Cushing to become bottlenecked. In fact, the potential for Cushing to become bottlenecked is higher now than it was in 2012, in that there is more incoming pipeline capacity than take away capacity to the tune of +646,000 bpd. In the last year, an additional 225,000 bpd incoming pipeline capacity has been added to Cushing via SemGroup’s White Cliffs, Tallgrass’ Pony Express and Magellan's SCOOP connection.

The situation may get worse before it gets better as the 190,000 bpd Platteville, CO, to Cushing Saddlehorn pipeline is expected to be completed by mid-2016. Additional outgoing pipeline capacity via Plains’ 200,000 bpd Cushing to Memphis, TN, Diamond Pipeline isn’t expected to be completed until late 2016. Should these projects stay on schedule, the Cushing pipeline capacity imbalance will grow to +836,000 bpd before settling at +636,000 bpd once both projects are complete.

However, the likelihood of a bottleneck in the near future is relatively low as most of the incoming capacity is underutilized due to declining U.S. production. Should production increase in these areas the capacity imbalance could again become a problem.

Genscape's Cushing storage data is collected using infrared cameras, aerial diagnostics, and other proprietary measurement techniques. This approach translates into highly accurate, advance notice of the actual oil storage levels at Cushing. To learn more or request a free trial of Genscape's Cushing Crude Oil Storage Report, please click here.

Iran’s crude exports have broadly increased in line with the country’s expectations announced in mid-January, when economics sanctions related to its nuclear program ended. Destinations for Iranian crude exports have also diversified in recent months as the country tries to regain market share.

Total Iranian waterborne exports gradually increased over the past two months, reaching a record 45.8mn bbls in February 2016, according to Genscape’s monitoring of crude shipments from the Middle East Gulf. 

Total Iranian waterborne exports in January 2016 increased month-on-month by 0.26mn bpd and February saw another increase of 0.22mn bpd, reaching an average of about1.58mn bpd. 

This corresponds with Iranian officials’ announcement when sanctions ended to ramp up crude exports by around 0.5mn bpd. Roknoddin Javadi, the managing director of Iran’s national oil company, NIOC, said on March 9, 2016, that Iran had reached 1.8mn bpd of production, according to Press TV.

Iranian officials said they intended to achieve output of 2mn bpd by the middle of the new Iranian year, beginning on March 20, 2016, which would put the target date for that around September 2016, according to Press TV.

Iran has also seeked to diversify its crude buyers by gaining back market share lost in Europe after sanctions began. Since mid-January , European oil companies Cepsa, Total and Lukoil have completed deals to buy Iranian crude, while four tankers with Iranian crude have headed to refineries in Algeciras, Spain, Le Havre, France, and Constanta, Romania.

Several other tankers were chartered by European companies to load crude in Iran during March 2016, according to ship broker reports. These include the VLCCs, Achilleas and Solana, which can carry 2mn bbls each. The ships were chartered by Total for European destinations.

Genscape will continue to track the growth in Iranian output as it happens to help market participants assess the impact of any changes in flow on regional markets.

Genscape monitors Middle East Crude exports daily using its Genscape Vesseltracker data together with market intelligence sources to identify the loadport of each departing crude tanker and track it through to its final destination. The weekly Middle East Crude Report published Wednesdays includes complete details on every departing shipment and will continue to track the dynamics on oil flows as it happens to help market participants assess the impact of any changes in flow on regional markets. 

Genscape and Vesseltracker have combined their extensive proprietary energy monitoring networks to launch the world’s most comprehensive and accurate picture of global shipping. To learn more about Genscape Vesseltracker, or request a free trial, please click here.

Using Genscape Vesseltracker data, the Middle East Waterborne Crude Report illuminates the flows coming out of the Middle East producing countries so that traders and analysts can better gauge markets in Asia, Europe, and the Americas. It provides traders and analysts with insight and analysis to better forecast short-term price shifts by enabling them to anticipate the arrival of crudes from the Middle East. This weekly report offers new transparency and helps market participants inform market positions, improve decision making, and gain insight on key market drivers. To learn more about the Middle East Waterborne Crude report, or to request a free trial, please click here.

Over the last several weeks, the price of ethane at Mont Belvieu has risen sharply, increasing ethane’s premium over natural gas from 2 cents per gallon in February to over 6 cents today.  This move gives producers increased incentives to recover ethane and make it available to the market.

Ethane made a similar price move in October, when ethane climbed to a 6 cpg premium over natural gas.   Genscape data shows the price move led to a reduction in ethane rejection of over 130 mb/d over the two months that followed.  

The rise in ethane versus natural gas price is consistent with long-term fundamentals.  With rig counts continuing to fall, NGLs production is expected to make only modest gains through 2019 while ethane demand is expected to increase by 500-700 mb/d, depending on the start-dates of new ethylene crackers and export infrastructure.  This means that the additional demand will largely need to be met by ethane that is currently being rejected.  This will require a higher ethane price to encourage producers and midstream operators to pull it out of the natural gas stream, transport and fractionate it, paying potentially as much as 25-30 cpg to reach far away or infrastructure constrained barrels in the Bakken and Northeast.  

Whether the longer-term market dynamics is what is driving the price action today is debatable.  Given the level of attention the ethane balance has gotten in the wake of recent oil price declines, industry conferences, and quarterly earnings calls, it’s possible that significant buying has come from the back of the curve – consumers interested in securing their future supply and/or traders positioning later in 2016 or beyond.   

Ethane exports have increased recently:  one reporting service contributed the price rise to the new ethane capability on Mariner East I, postulating it is leading to lower deliveries to the Gulf Coast.  However, Genscape data  reflects that the increase in ethane exports is primarily being met by less rejection in the Northeast.  Residue gas pipelines connected to the Sherwood and Houston processing plants have been showing steady decreases in ethane content in the gas stream over the last two weeks.  Additionally, Genscape’s monitoring of the ATEX pipeline confirms that volumes have remained in the 100-110 mb/d level over recent weeks. 

Looking more closely at today’s fundamentals, we see that the sharp move in ethane comes at a time when demand in Mont Belvieu is quite high:  petrochemical plants have been operating at strong rates all quarter, with Genscape’s proprietary monitors showing capacity utilization averaging over 95 percent for the last four months.  Genscape has seen this contributing to inventory draws in the first quarter, bringing stocks back to a days-of-supply value around 25, similar to that in September.  In March, demand has likely moved even higher, with the run up in propane values shifting the cracker feedslate further toward ethane.   Small delays in planned outages at ethylene crackers may also have brought additional buying. 

Conditions such as this with high demand and relatively low stocks can make markets vulnerable to rapid price increases, particularly if unexpected supply disruptions occur, as participants bid higher to find supply.   Genscape’s infrared cameras revealed that the 293 mb/d Trains 1-3 at Targa’s Cedar Bayou fractionator have been at reduced rate since March 7, and the TCEQ reported Lone Star’s new 100 mb/d Train III at their Mont Belvieu fractionator is shutting down for 14 days of maintenance, all leading to lower availability of purity ethane.

The price move will surely encourage more ethane availability in Mont Belvieu, but how much and when?   In the Weekly Rejection Report published on March 14, 2016, Genscape reported that outside of the Northeast only 15 mb/d of ethane has come out of rejection over the last two weeks, so far much smaller than the 130 mb/d we saw in Q4.  This is largely a function of time:  many producers make recovery decisions on a monthly or quarterly basis, which would mean significant new supply would not hit the market until April.  However, production declines in areas with cheaper transportation are contributing to less ethane availability at the same price-point:  recoverable ethane in South Texas is now about 250 mb/d, down over 25 percent  from 350 mb/d in mid 2015.  At a 6 cpg premium, there is approximately another 50-75 mb/d of ethane that may be economically recovered. However, if ethane were to rise to approximately a 10 cent-per-gallon premium to natural gas, it would be economic to recover approximately 250 mb/d of additional ethane across PADDs 2 and 3.

Interestingly, increased ethane supply will come precisely at a time when demand is expected to fall.  Ethylene crackers are poised for a major turnaround season beginning in April, with approximately 10 percent of cracking capacity expected offline in Q2.  In Genscape’s Monthly Ethane Supply and Demand balance published in early March, ethane inventories were expected to build approximately 3 million barrels during Q2:  with greater ethane recovery, the build could be significantly greater.  However, inventory builds should be short-term.   With the ethane curve in contango, pulling ethane out of rejection today to put into storage for use later may make sense:   cavern capacity is looking plentiful as LPG inventories draw to lows and some believe the supply won’t be getting any cheaper once new ethane-cracking and export capacity comes online in the second half of this year. 

Genscape's NGLs Production Forecast provides the most accurate, detailed five-year forecasts in the industry, available two months before EIA estimates are published. Genscape’s forecast, broken down by NGLs product type, combines EIA, state, natural gas pipeline flow and gas quality data to deliver a comprehensive forecast of NGLs production from gas processing in the Lower 48. Click here to learn more about Gesnscape's NGLs Production Forecast. 

Genscape's Monthly NGLs Supply and Demand Balance Reports combine Genscape’s proven NGLs production forecast with a market demand outlook to yield an inventory outlook for the U.S. and relevant regions. The demand outlook incorporates Genscape’s proprietary data on pipeline flows, cracker operations, and capital improvements with information from industry organizations, company statements, and government agencies. Click here to learn more about Genscape's Monthly NGLs Supply and Demand Reports.

Winter 2015-16 featured anomalous warmth across a vast expanse of the nation, with the strongest departures from normal focused along the northern tier. As a result of persistently mild conditions, energy demand was notably bearish, with significant reductions in year-over-year peak demand observed in nearly all major U.S. power markets. According to NOAA, gas-weighted heating degree days (GWHDDs) totaled a mere 2,288, 15 percent weaker than an average winter season. 

Overview

The warm influences associated with El Niño left an indisputable mark on North American weather patterns through the winter season. In terms of average temperature, December 2015 registered as the warmest on record in over 120 years with an incredible temperature departure of over +6°F. In portions of the Midwest and East, anomalies approached 12-15°F above normal! Progressing into January, the jet stream amplified, offering increased variability to the pattern.  The highlight of January was a powerful blizzard, which unleashed record-breaking snows upon the Mid-Atlantic region. During February, an impressive cold snap impacted New England. On Valentine’s Day, Boston saw a low of -9°F accompanied by wind chills near -30°F. During the last week of February a severe weather outbreak ravaged portions of the Southeast and Mid-Atlantic. 

East Coast

December 2015 exceeded forecast expectations, verifying as the warmest on record for the all of the states along the East Coast, including the entirety of NYISO, NEISO, and PJM. Temperature anomalies ranging from 10-15°F above average led to weak heating load and an extremely bearish demand month overall. This record shattering warmth eased for January and was even replaced by some cool anomalies in the Southeast as an active weather pattern helped suppress temperatures.  Despite cool weather in the Southeast, and occasional colder than average episodes, temperatures elsewhere along the East Coast remained near to above normal for January and February, warmer than forecast and bearish for demand.

Midwest and Lower Mississippi Valley

Little in the way of sustained cold developed for the MISO footprint during winter, helping drive much weaker demand compared to the previous two winters. A forecast signal for strong warmth across the Upper Midwest verified well, helping keep heating load in check during the winter season. December was particularly warmer than average, with several MISO states setting new records for warmth during the month. Peak demand came in mid-January at over eight percent weaker levels compared to the prior winter. February was generally warmer than average as well, offering little in the way of a late winter surge in heating load. MISO South did not see the forecasted cooler than average temperatures materialize, however the overall impact on demand was minor.

Plains

Winter got off to a bearish start across the region thanks to temperatures that were consistently mild through December, with most of the region verifying 4-8°F above normal. Volatility began to emerge in January, with ERCOT and SPP reaching their peak winter load during the month, although at much weaker levels compared to the prior winter. Both power markets saw year-over-year peak load declines of over 10 percent. Warm anomalies returned in full strength for the month of February, driving exceptionally weak energy demand. Temperatures averaged 3-6°F above normal across much of the region, with localized warm anomalies exceeding 10°F in the Dakotas. The winter temperature forecast verified well for the Plains, while Texas was warmer than anticipated. 

West

The typical El Niño signal failed to materialize for the West Coast in December, with strong precipitation anomalies across the Pacific Northwest and weak anomalies in NorCal, while the Southwest remained mostly dry. The signature intensification of the subtropical jet stream began in January, with valley rains and mountain snows offering promising drought relief for California, while the Pacific Northwest and Interior West remained mostly seasonal. February began with a similar trend, but strong warm anomalies accompanied a significantly dry period to close out the winter, resulting in substantial snow melt across the west. Nonetheless, this winter brought significant year over year improvements in snowpack, drought, and hydropower conditions for California and much of the greater west.

Weather can have a large impact on power demand and generation, especially with the seasonal extremes seen across the U.S. in the summer and winter months. Being able to anticipate weather patterns for the season ahead can help market participants make more informed trading or business decisions. Click here to download Genscape's full Winter 2015-2016 Weather Outlook now.

Genscape's Power Market services provide accurate, timely data on capacities, flow, and utilization for power. Clients gain increased market transparency to make more informed daily business decisions. Click here to learn more or request a free trial of Genscape's suite of Power Market services.

In recent weeks, congestion along a line in southern Texas – LOMA_A_L_FRES1 – has been observed a number of instances in the real-time (RT). Despite the fact that this constraint is relatively small and isolated within the ERCOT footprint, the RT pricing impact of this constraint has been significant, to say the least. Largely attributable to the location of this constraint, RT congestion in and around this area has the potential to drive prices at the Silas Ray generation resource node in Brownsville, TX up to $4,380.00 (1/27/16 HE 20). The strong pricing at this node in turn drives an extremely bullish impact on South LZ prices which, in recent instances, have climbed to $337.39 (2/23/16 HE 19).

The first time this congestion showed up in the RT in recent history with significance* was on January 11, 2016. Figure 1, below, is a screenshot from Genscape’s Nodal Market Intelligence (NMI) tool– a comprehensive web-based application for congestion trading and analysis – which proved very effective in identifying the transmission drivers and pricing impacts of this constraint. As the figure shows, one line in the Brownsville, TX area – LAUREL_P_ISAB01 – was out of service that day, which redirected power flows and drove the congestion along the LOMA_A_L_FRES1 line. On subsequent days, another line outage, the PAREDES – MV_CNTRA 138 Kv line, which entered outage on 1/21 and remains out through 4/22, compounded the issue such as on 1/27/16 (shown below). As displayed via the SPP heat map on the NMI screen shot below, prices at the Silas Ray node became very strong as a result of the congestion. 

What we’ve found is that, in addition to transmission outages at LAUREL_P_ISAB01 in the area, a combination of strong load and weak generation in the Brownsville, TX area has been a primary driver of this congestion in the RT. The chart below highlights RT pricing at the Silas Ray node, congestion on the LOMA_A_L_FRES1 line, generation at the Silas Ray unit via Genscape’s Power RT data, and temperatures in Brownsville, TX**. Also on the graph are red bars which mark the high/low temperature thresholds that were established for risk of LOMA_A_L_FRES1 congestion in the RT due to outage along LAUREL_P_ISAB01. The circles on the chart below that indicate the RT impact when these thresholds were crossed. 

As evidenced in the graph above, when temperatures in Brownsville, TX crossed 47° or 80° F (indicating strong heating/cooling load), the LOMA_A_L_FRES1 line had a high frequency of congesting in the RT (as indicated by the red circles). There were only a few instances when these temperature thresholds were passed and the congestion did not occur in the RT; weekends when the LAUREL_P_ISAB01 line was in service (as indicated by the purple circles) as this outage was a rolling intraweek outage and also when generation at Silas Ray was sufficient enough in the RT to offset the congestion risk (as indicated by the blue circles). With this information available, we found a much stronger ability to predict this congestion in the RT with increased accuracy and confidence. 

In more recent weeks, transmission outages in the valley have changed and the congestion along the LOMA_A_L_FRES1 line has become significantly more sensitive with a transmission outage along the LAUREL_LA_PAL11 line replacing the LAUREL_P_ISAB01 outage (NMI screen shot above). As the chart below indicates, a new temperature threshold of as low as 72° F when coupled with weak generation at the Silas Ray generation resource has recently been established for this constraint in relation to the new LAUREL_LA_PAL11 line outage. With the LAUREL_LA_PAL11 line due to be on rolling, intraweek outage through April 8, 2016, this data will continue to prove a valuable combination in monitoring and predicting this volatile constraint.

This summary is an example of the analysis that Genscape’s ERCOT Power IQ analyst team undertakes on a daily basis around transmission and generation risks. In addition to Power IQ's proprietary price and powerflows model (SEER), the analysts are able to leverage the Nodal Market Insights platform coupled with Genscape’s Power Real-Time (RT) monitoring capabilities to gain further insight into the ERCOT power market. 

Used by power market participants for more than a decade, Genscape’s Power IQ service combines advanced, proprietary modeling technology (SEER) with fundamentals based analytics to create daily reports that allow customers to make more informed buy/sell decisions in order to manage risk, minimize cost, and enhance profitability. Power IQ serves a wide range of market participants including, physical and financial power traders, congestion and virtual traders, retailers, analysts, regulators, and government entities. Click here to learn more or request a free trial. 

Genscape’s Nodal Market Insights™ platform enables traders to use a fundamentals-based approach to model forecasted power flows across market constraints. Click here to learn more or request a call.  

*Congestion showed up on January 11, 2016 with negligible shadow prices. Before that, congestion hadn’t posted in the RT since July 23, 2014. 
**Temperatures in Brownsville, TX were used as the best indicator high/cooling load in Brownsville, TX due to the granularity of this data point.

Genscape’s HR team has attended a number of career fairs as an employer and have found it be an incredibly valuable experience when it comes to identifying new talent and building our brand.  It is so great to meet new candidates face to face and for both sides to get a better sense of each other.  However, in a lot of cases, we notice that potential candidates and students are not properly prepared for the fair and tend to go in blind when it comes to who the companies in attendance are and what information they want to learn.  This lack of preparation is something we want to help fix! As a student it is crucial to take advantage of career fairs and make a positive impression on potential employers – thus this blog post!

When it comes to preparing for a career fair, first consider: Why am I going at all?

Career Fairs (when approached in the right way) can be an excellent way to meet multiple potential employers for little to no cost and help to figure out which is best for you.  Networking is KEY and you want to SEE and BE SEEN.  Career Fairs are a great way to get information on specific industries, career options and companies – you can also get some great advice directly from the source! 

So, how do you best prepare for the fair and get the most out of your time spent there? Here are the Genscape Recruitment Team’s “6 Key Career Fair Tips”!

STEP ONE:  Always do your research!

We cannot stress how important this is.  What companies will be there?  What do they do?  What jobs do they have open and advertised?  Which companies and jobs are you interested in learning more about?  Know this information and use it!  Narrow down which companies you want to talk to and which jobs you want to learn more about.

STEP TWO: Print multiple copies of your resume.

This seems like a given, but many students show up without their resume in tow! As noted in our “Top 5 Interview Blunders” blog, proofread that resume! The resume is another first impression you want to nail!

STEP THREE: Formulate a Plan

Now that you have done your research on what companies will be there and what job openings they have available.  Ask yourself, “How does this information compare to where my interests lie?”  Based on that answer, narrow down the list of companies that you want to target (sort by location, industry, jobs that you want).  Career Fairs can get chaotic, know which company you want to speak to and focus in on them. 

STEP FOUR:Prepare the Details!

What impression do you want to make on these employers? = A good one!

• Prepare your elevator pitch!  This should be a 60-second run down stating your name, when you graduate, your major and background, 1-2 strengths and goals that align with the employer’s requirements and a question to keep the conversation moving.
• Plan your attire – always dress business professional.
• Bring with you: A folder with your resumes & a place to store collected business cards and other company swag that you may pick up along the way (Do NOT come across as unorganized.  If your hands are too full to shake someone’s hand, you will not be giving your best impression).
• Make sure to have intelligent questions prepared.  You want to show the employers that you have done your research and that you have an interest in them.  They WILL remember this. We do at Genscape!

STEP FIVE: Know what NOT to do:

• Don’t flaunt your lack of knowledge on the company
• Don’t approach a booth just for the swag!
• Don’t try to go to every single booth
• Don’t forget that this is a time to add a personality to your resume!
• DON’T ask things like “Do you have jobs for people like me” or “What do you do?” – Yikes! Those questions are the worst - We cannot stress this one enough!

STEP SIX: Follow up via email and attach a soft copy of your resume

In closing, take advantage of career fairs and treat the day like mini interviews. We (recruiters and companies) love to meet students, talk about our business and make connections with future employees. There is nothing better than a student who gives a firm handshake, a prepared elevator pitch (even if you are nervous, don’t worry! Even trying makes a great impression), does their homework, is enthusiastic and presents professionally. Those students are the ones who stand out amongst the pack! 

We’re always looking for passionate, motivated people to join the Genscape team. Interested in working in a fast-paced, collaborative environment in locations across the world? Check out our careers page for your next opportunity! 

Knowing what happened in the past is important when preparing for upcoming similar trading periods. At Genscape, our team consistently monitors the market to establish a deeper knowledge of key market drivers and their impacts to the grid. Through lookback studies our team evaluates historical transmission outages along with the historical actual demand and supply to create a correlated point of view on how these factors impacted pricing at that time. 

As you will see in the summary below, there were some considerable congestion opportunities in April of 2015. To prepare for April 2016, it is worthwhile to understand these congestion risks from last year and how they might impact trading opportunities for 2016.  Typically, April demand falls into the 38-43 GW range with a peak weekday average demand of around 40 GW. Additionally, the supply stack should remain similar to March 2016 with coal and combined cycle generation comprising most of the stack and a range of 18-28 GW of generation on outage. However, knowing these two components only gets you part of the way there. To get Genscape’s point of view on April 2016 you can request a trial of our ERCOT CRR Opportunities & Insights Service which forecasts likely congestion. Additionally, consider trialing the Nodal Market Insights Application to construct your own forecasts of congestion for April and beyond.

The report below analyzes last year’s outcomes in 2015 and provides insight on how this year might be the same or different.

DAM PEAK WEEKDAY OVERVIEW

DAM Highest Priced Constraints

The table below shows the CONSTRAINTS that posted with the Top 10 highest shadow prices.

In April 2015, four of the top 10 DAM constraints by shadow price posted in the Far West weather zone with an upside impact on the Notrees Wind farm node (NWF_NWF1). 

The NWF_NWF1 Node cleared $46.02 for PeakWD due to numerous line outages in the Far West weather zone including the ANDNR-BAKTP 138 KV line outage which was out from April 12 - April 19, 2015 (see Figure 1).  This outage drove congestion on constraint 6596__F (HLTSW-EMATP 69 kv) during this time and elevated the Notrees wind farm consistently above other nodes in the area.  The Notrees wind farm also had other dates with strong pricing including April 7 and April 9 when the 345 kv line from W_GT_345 to ODEHV was forecast to be on outage for both days.  The Odessa Ector node OECCS_1 cleared $25.62 during this time for the on peak average in the DAM.

Most Frequent DAM Constraints

The table below shows the constraints which posted most often in DAM in April 2015 along with the average shadow price for all intervals it posted.

Constraint 6090_D (HLTSW-AMMFT 138 kv) posted often at 209 hours, which was also the seventh highest priced constraint during the on peak period.  As you can see in the chart below (Figure 2.) the green line represents 6090_D constraint as compared with constraints 6596_F and 6915_A.  All of these constraints brought upside to NWF_NWF1 throughout the month, but specifically 6090__D contributed most.

While not a constraint that posted often throughout the month of April 2015, the FAYETT_6AT2 constraint, (Fayette 345 to 138 kv) which posted in the DAM on April 20-21, had a significant impact on the FPPYD_FPP_G1 node during the on peak hours.  FPPYD_FPP_G1 cleared at negative prices in the DAM over the morning and afternoon hours of both days. There was a planned outage on the FPPYD1-FPPYD2 345 kv line beginning on April 20 and scheduled through April 24, although this line outage was pulled from the scheduler and never went into outage. However, it was still responsible for driving down Fayette units 1 and 2 in the DAM with such an impact that it helped drive the average DAM price for the month considerably lower than the rest of the grid at 22.86 for PeakWD for the FPPYD_FPP_G1 node. Since the line outage was rescheduled and was never out of service, the congestion did not post in the RT.

REAL TIME PEAK WD SUMMARY

Highest Priced RT Constraints

The table below represents the constraints that posted with the top 10 highest shadow prices in RT.

Again, Notrees Wind Farm received upside in Real Time to these congestion events however it was not as significant as in DAM. Of the four constraints (6545_A, LMESA_FMR1,6090_D, ODEHV_MR1L see Figure 3.) that drove NWF_NWF1 throughout RT, only LMESA_FMR1 was in the top 10 highest priced constraints. In the RT, the price was only driven up to $30.95 for PeakWD. There were brief spikes April 7, April 17, and April 21, driving this node above the West Hub and North Hub due to these constraints but they were short lived and had a less impact on the RT than the DAM (see Figure 4).

Another node which saw the most upside in the RT was the AUSTINPL_ALL node which cleared $40 in the RT for the PeakWD.  The upside was mainly driven on two days (April 8 and April 13) and due to two constraints: CKT_979_1 constraint (MAGPLANT-NORTHLAN 138 KV) and 211T147_1 constraint (GILLCR-MCNEIL 138 kv).

The strongest RT constraint by shadow price was the CKT_979_1 constraint (MAGPLANT-NORTHLAN 138 KV) which posted on April 8 with a 3500 shadow price. This helped drive the AUSTINPL_ALL node in the center of Austin to clear $2,000 for an hour on that day.  This constraint was driven by a few line outages (MCNEIL-MARSFO 138 Kv, LAGOVI-MARSFO 138Kv, SEAHOLM-WARREN 138 Kv) along with strong Austin demand, and a lack of generation online (0 output at AUSTINPL_ALL node and Decker Creek steam units both offline). 

On April 13 (See Figure 5 and Figure 6), similar outages (MCNEIL-MARSFO 138 Kv, LAGOVI-MARSFO 138Kv, CAMERON-FISKVILL 138 KV, NORTHLAN-WARREN 138 Kv) occurred and demand and generation circumstances drove the 211T147_1 constraint (GILLCR-MCNEIL 138 kv) which had a similar impact with upside to AUSTINPL_ALL node and LZ_AEN.

Most Frequent RT Constraints

The following table shows the constraints that posted most often in RT.  The top constraint in RT was a wind driven constraint, with mainly a bearish impact to the Windthorst Wind Farm.  The third most frequent RT constraint, ZO_AJO, was actually posted incorrectly by ERCOT earlier in the month, and can be seen down further in the list as AJO_ZO before they made the correction. In reality, the frequency of this ZO_AJO interface for April 2015 is 95 instances, after we add both instances together.

CONCLUSION

Bringing forth historical analysis into future planning is a key part to being prepared to react to similar or changing conditions in the tradable operating periods.  Equally or more important is forecasting the upcoming congestion risk patterns. Using tools such as Genscape’s Nodal Market Insights Platform, users have a unique ability to efficiently assess historical patterns while also comparing that with forecasted views on congestion to get a jump start on future trading/hedging decisions.

The four DAM West constraints mentioned above have not posted recently. Most notably when preparing for the April Auction in early March, the system noted that these constraints did not post in the DAM in February, and only forecasted small flow increases for April of 2-4% as compared with the February results. While the positive flow increases indicate there is a better chance of seeing these constraints post this April vs February 2016, the small values of these increases mean targeting these constraints in the April Auction might only be worth the risk with a low bid. 

The other three constraintsthat impacted the DAM in April 2015 were FAYETT_6AT2, 211T147_1, and CKT_979_1, only posted with minimal shadow prices in February, seen below.

After running the April 2016 CRR model in Genscape’s Nodal Market Insights Platform and comparing it to February, the PeakWD flow delta’s on these constraints are as follows: 

This shows that the constraints in the Austin area are decreasing in risk, while flows on the FAYETT__6AT2 constraint are increasing 12% month over month from February.  This indicates that buying a path in the CRR market targeting this constraint will likely be a better play month over month. 

Using the Nodal Market Insights Platform, there are hundreds of constraints that can be studied in both the CRR auctions and in the Daily PTP markets.  While these represent just a small sampling of constraints, users can study any constraints to view proprietary flow data, optimal source/sink pairs based on shift factors, historical financials as well as many other bid metrics including Genscape’s proprietary scoring metric making it easier to qualify the congestion and financial risk on paths. Click here to learn more or request a call.  

The ERCOT CRR Opportunities & Insights Service is the only CRR product aimed at helping clients identify trading opportunities by focusing on the study of binding constraints, the projected flows and shift factors across those constraints, and the factors driving those flows. Leveraging this tool, clients can quickly find otherwise unknown target trading opportunities, develop new trading strategies, mitigate risk, and build new insights for the ERCOT monthly CRR Auction. Click here to learn more about the service, get more detailed performance metrics, or request a free sample report.

On Friday, March 25, 2016, Rockies Express posted a notice related to planned compressor station tie-in work in July 2016 related to the REX Zone 3 Capacity Enhancement project. The notice text notes that pipeline segments between REX’s ANR-Shelby delivery point (PIN 44416) and the Columbia Gas-Fairfield delivery point (PIN 44422) will be unavailable, as the three new compressors from the project will be tied into the line as part of construction. These new compressors – Columbus, Washington Court House and St. Paul – will not be operational at the end of the closure, but will be able to come online later in the year, along with additional horsepower at the existing Chandlersville station. The 800 MMcf/d Expansion is currently expected to come online as a lump increase in late 2016, bringing the East to West capacity of REX from 1.8 Bcf/d to 2.6 Bcf/d.

Pipeline operations in Zone 3 will have severe restrictions between Tuesday, July 19 and Monday, July 25, 2016:

• Gas received west of ANR Shelby delivery point (e.g. Rockies-sourced) will be physically unable to travel farther east than the ANR Shelby point, and
• Gas received east of the Columbia Gas-Fairfield (e.g. from Clarington and Seneca) will be unable to travel further west than Columbia Gas-Fairfield.

This will heavily, if not entirely, restrict East to West flow capacity. The Columbia Gas-Fairfield interconnect between REX and Columbia Gas has an operational capacity of 280 MMcf/d, but flows haven’t approached capacity since mid-May 2015.

Genscape expects that, as demonstrated in the early March 2016 force majeure, some production from eastern Ohio will reroute onto nearby pipelines, but most is expected to shut-in due to lack of outlet. 

Genscape's Natural Gas Infrastructure Intelligence service offers the most complete and detailed tracking of processing plant, pipeline, and gathering line projects in the United States. Data is delivered monthly based on a comprehensive review of company statements, investor presentations, earnings call transcripts, FERC filings, and more. Expert analysts collect and interpret the information to deliver a streamlined approach for understanding and quantifying the influence of planned projects on the market. Click here to learn more or request a call about the Natural Gas Infrastructure Intelligence service.

Genscape’s Natural Gas Notices & Maintenance portal consolidates hundreds of maintenance and notice events from electronic bulletin boards (EBBs) to help natural gas traders streamline their daily processes and stay informed of unavoidable events impacting the market. Genscape collects notices from over 200 pipelines that are fed into the platform within minutes of their availability on the pipeline websites. In addition Genscape provides maintenance events for over 70 major interstate pipelines. Click here to learn more or request a free trial. 

In January 2016, Genscape introduced a blog demonstrating the value the Nodal Market Insights application brings towards understanding and executing around congestion risks. Specifically given the limited volatility, low demand and lack of key market price drivers, this blog focused on capitalizing on what we believe is consistent, on-going overvaluation in the CRR Market. While this is a common trend that has existed in ERCOT for years that many are aware of, most participants still do not trade short congestion as they may not always feel confident enough in understanding the risk around these transactions. This is where Genscape’s Nodal Market Insights application brings a new transparency to the market better enabling users to assess overall risk with a more aggressive short trading strategy.

Since January 2016, the team at Genscape has been monitoring the default portfolio as generated by the Nodal Market Insights platform to discern what kind of returns can be generated when placing short positions in the Day Ahead Market. The default portfolio is a portfolio of recommended trades generated by the Nodal Market Insights platform based on a set of standard assumptions (regarding demand, the supply stack composition, outages, etc..) made by Genscape. Users of the platform have the ability to customize these assumptions and generate recommended trades based on their own assumptions.

As seen in the figure below, the Default Portfolio for all positions with a Strength of 5 (recommended trades are rated on a scale of 1 to 10 with 1 being the most compelling trades) or better has generated a steady positive return. This comes from a mix of long and short positions, however in aggregate 64 of 65 days actually netted to a short day based on the cost of the sum of all trades.

Return Breakdown 

• Average Daily % Return = 37% (Average of each individual day’s return. Not annualized)
• Average Daily $/MW = $0.19/MW
• Aggregate % Return = 40% (from January 1 – March 6 )
• Aggregate $/MW = $0.20/MW
• Max Daily Return = 517%
• Min Daily Return = -459%
• Daily Win % = 75%

Optimizing the Default

As noted in January's blog, De-risk Short Positions: Extracting Value from Over-Valued CRR Trades, the Nodal Market Insights application enables users to customize their own input assumption. One of Genscape’s market analysts has been developing his own assumptions each day which differ from the standard set of assumptions. The customized assumptions differed only in terms of the:

• Constraints being studied by the model
• Demand forecast
• Generation supply stack for a given day

All other model parameters have remained the same. Using the assumptions customized by a Genscape analyst resulted in higher returns overall than the already attractive returns generated by the default set of assumptions. Again, the returns were generated from a mix of long and short positions, however in aggregate 35 of 39 days netted to a short portfolio based on cost. As noted below, the win rate is nearly the same with a higher aggregate return and a 21% higher $/MW return on a daily basis demonstrating that with custom involvement users can further differentiate portfolios creating additional insights that drive value. 

The customized assumptions resulted in the following outcomes from February 1 to March 9:

• Average Daily % Return = 23%
• Average Daily $/MW = $0.23/MW
• Aggregate % Return = 54%
• Aggregate $/MW = $0.26/MW
• Max Daily Return = 475%
• Min Daily Return = -1536%
• Daily Win % = 74%

Find new insights.  Create new value. 

Take a look at Genscape’s Nodal Market Insights Platform today to start applying new insights to your trading processes. Click here to learn more or request a free trial. 

During Winter 2015-16, it looked like the price of power in Buffalo, NY was going to be at record-breaking lows for the year. Gas prices were cheap, wind generation was abundant, and power prices were lower than they have been in recent memory.

From December 2015 to February 2016, the Zone A power price averaged $24.20 for the on-peak average DA clear, just half of last year’s average of $53.24, and a fraction of the 2013-2014 winter price average of $92.16. Even during the bitter cold of the Valentine’s Day weekend, on-peak average prices didn’t break $35.

But these low prices were also in part a result of a sustained coal burn from the Huntley coal plant in Tonawanda, NY. Slated to retire on March 1, 2016, the NRG owned coal plant appeared intent of burning down the remainder of its coal pile on site prior to shutting down for good. With the shutdown requested by the owner in August of 2015, NRG had stated that the coal plant was no longer economical to run in current market conditions. The Huntley coal plant, in operation since 1957, is located in a very unique situation in Zone A- close to the load center of Buffalo, the plant operates inside a ring of older 230 kV transmission lines that serve the city of Buffalo.

NYISO had declared that there was little risk to reliability by retiring this plant, stating, “Based upon the expectation of the timely completion of the National Grid upgrades… reliability will be maintained through at least the year 2020 if Dunkirk is mothballed January 1, 2016 and Huntley is retired March 1, 2016.”

However, Genscape has observed Huntely as an incredibly important plant in Zone A due to its congestion relief effects. Zone A often experiences congestion on its set of older 230 kV lines that feed the Buffalo city center, due to contingency based risk from the large amount of power flowing from the Niagara hydroelectric project and imports from Ontario. This large amount of power is often at risk of flowing down the 230 kV system near Buffalo and overloading the lines, and this risk can cause substantial congestion pricing. Huntley, operating at the load end of the 230 kV system, relieves this congestion by running.

And, as soon as the Huntley plant retired, Genscape began seeing immediate and drastic effects in the DA market. Within two days of Huntley’s retirement, the Zone A price broke its winter record, averaging $39.88 on a mild day with a low of 20 degrees Fahrenheit in Buffalo.

Congestion along the Niagara – Packard and Packard – Sawyer 230 kV lines has been severe during on-peak periods, driving up the Zone A price. Prices in Buffalo NY have cleared as high as a daily average of $54.62, while prices in New York City – the area of highest demand in the state- have hardly broken $30.

NYISO has requested transmission line upgrades to be completed in Zone A before the worst of the summer heat, but those will take until the end of June to complete, and the long term outlook for Zone A is uncertain. It remains significantly doubtful that minor line improvements can reverse the effect of retiring 436 MW of generation.

Additionally, this situation represents significant risk to the rest of NY power prices throughout the summer and beyond. With such significant congestion risk in Zone A, power flows from Ontario and from the Niagara Falls Hydroelectric Project both can cause dangerous overloading in Buffalo’s 230 kV lines without Huntley running to counterbalance the heavy electricity flows moving east.

These are two of the largest sources of clean and cheap power for the entire state, and the current situation in Buffalo means that they may not be able to run during the worst of the summer heat. This makes the issue not only a reliability risk for Zone A and the Buffalo area, but for the entire New York State transmission grid as well.

In the meantime, Zone A continues to be the most expensive zone of power in NY state, with little end to the situation in sight.

Genscape's Power IQ Market Intelligence service combines proprietary modeling technology with fundamentals based analytics to create daily reports that allow customers to make more informed buy/sell decisions in order to manage risk, minimize cost, and enhance profitability. Each day, Genscape's team of analysts, meteorologists, and technologists prepare early morning reports and interact extensively with users. Click here to learn more or request a free trial.