The Kobiona Monitor

Volume 1 / Number 7
June 24, 2019

Kobiona’s leadership has enlisted the help of our Market Intelligence Desk to craft this monthly
publication to share major market dynamics impacting future power and gas prices. As every
client’s situation is unique, we encourage you to review market movements with us to decide
whether any action on your part could serve to lower your future costs or avoid known,
coming increases.

 

Natural Gas
Natural gas is now the primary fuel source for power plants across the country and throughout New England. As gas prices often closely correlate to power futures, we monitor natural gas supply and demand fundamentals closely.

Prompt Month Prices
In recent days NYMEX prompt month (June) trading has hit $2.28/MMBTU, a three year low. This week one year ago the prompt month was trading at $2.70/MMBTU. This puts natural gas and power futures at “significantly discounted” levels and only slightly off all-time lows.

NYMEX Prompt Month 36 Month Lookback 

 


Dry Natural Gas Storage

After several robust early-season injections, the storage picture is much more positive than a few months ago. On June 13th, the EIA reported inventories of 2,088 BCF through June 7th, 10% above the same week last year and only 10% below the five-year average of 2,318. At one point in the past six months, the storage deficit to the five-year average was as high as 33%. 


 

Natural Gas Production 
After 10 weeks of average daily dry gas production above 89 BCF/day, the past two weeks production has been below 89 BCF. Additionally, gas rig counts are down 8% since historic highs (200) in January 2019. Flattening of production and declining rig counts are likely signals the market has hit a bottom.

 

 

 

Weather
Over the next two weeks the country is likely to separate with very cool temps in the West and a warm front (with significant humidity) spreading from New England to Texas with hottest temps in the Deep South. Cooling demand could cut into the next few weeks of storage injections.

Bye, Bye Pilgrim 

After 47 years of operating, Plymouth Massachusetts-based Pilgrim Nuclear Power Plant closed on May 31st. The closure was announced in 2015 when the plant’s owner, Entegy, said it could no longer profitably operate against competition from cheaper (natural gas) generation sources.

The decommissioning process has sparked controversy in the state. The Nuclear Regulatory Commission (NRC) is reviewing Entergy’s proposal to sell Pilgrim to Holtec International for decommissioning. Holtec has proposed an aggressive decommissioning schedule of eight years for a cost of $1.1 billion. However, Holtec has never owned a commercial nuclear plant and has no experience at decommissioning one. We’ll keep you posted as this story develops.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Questions?
For those tasked with procuring power and gas for the first time — or the tenth time — the industry can seem overwhelming with densely-technical and sometimes conflicting information.We welcome your questions on how to apply our observations, as well as your feedback on The Kobiona Monitor. Please share how we can make this publication more useful by calling us on 844-209-7972, or contacting us via email, info@kobiona.com.