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In This List

9 Bcf/d of LNG capacity to hit US market; PRB volume growth could turn negative

Essential Energy Insights - September, 2020

Bull market leaves US utilities behind in August

Rate case activity slips, COVID-19 proceedings remain at the forefront in August

Utilities, midstream reckon with energy transformation on the horizon


9 Bcf/d of LNG capacity to hit US market; PRB volume growth could turn negative

Top News

Pa. nuke operation costs running at or above market prices

Operation and maintenance expenses at Pennsylvania's five nuclear plants have all run close to or above monthly average nodal wholesale power prices for at least the past year-and-a-half, as modeled by S&P Global Market Intelligence's Generation Supply Curve. This reality prompted Exelon Corp. to announce on May 30 the retirement of its Three Mile Island plant by September 2019, nearly 15 years before its operating license expires, and has increased interest in a legislative solution for subsidies known as the zero-emission credit, such as what Exelon-owned nuclear units in Illinois and New York have already been granted.

Here comes the boom: 9 Bcf/d of LNG capacity to hit US market by end of 2019

When it comes to U.S. exports of super-cooled natural gas, all eyes have been on Cheniere Energy Inc.'s Sabine Pass LNG terminal in Louisiana. But American LNG exports are just getting started. Six projects under construction are poised to bring online the equivalent of more than 9 Bcf/d of LNG production capacity by the end of 2019 — nearly five times what the U.S. is capable of exporting now. That wave of capacity is coming as the global market is working through a supply glut spurred in part from massive volumes coming out of export giants Qatar and Australia.

Seaport says Powder River Basin coal volume growth could turn negative this year

Seaport Global Securities LLC wrote in a new research note it is "looking more and more likely" the Powder River Basin will see volume growth numbers turn negative at some point in 2017. The note states about 330 million tons of coal were shipped from the basin in 2016. Based on data from the U.S. Energy Information Administration, annualized production for 2017 would result in about the same. Analysts Mark Levin and Nathan Martin questioned the projections of Union Pacific Corp., which the analysts said have implied 8% growth for the full year.

Power

* A group of 15 U.S. congressmen from Oregon and Washington urged the Trump administration not to pursue the sale of three federal power marketing administrations' transmission assets, saying the move would raise rates for consumers and threaten grid reliability for rural communities.

* The U.S. Environmental Protection Agency is extending the deadline for promulgating initial area designations for the 2015 ozone National Ambient Air Quality Standards by one year, according to a news release.

* Previously confidential change orders disclosed by South Carolina regulators show about $325 million in revisions to the contract to build two new reactors at the V.C. Summer nuclear plant since 2009.

* California Gov. Edmund Brown Jr. signed an agreement to expand cooperation on the advancement of low-carbon, renewable energy and energy efficiency technologies. The agreement also aims to deepen coordination on greenhouse gas emission and air pollution reduction programs.

* Hawaii Gov. David Ige signed into law S.B. 559 that expands strategies and mechanisms to reduce greenhouse gas emission statewide in alignment with the principles and goals adopted in the Paris Agreement on climate change. "The measure adopted relevant sections of the Paris agreement as state law, which gives us legal basis to continue adaptation and mitigation strategies for Hawai'i, despite the Federal government's withdrawal from the treaty," said Sen. J. Kalani English, senate majority leader who introduced the bill.

* A Transition Pathway Initiative assessment on the world's 20 largest electric utilities by market capitalization found that European utilities are significantly less carbon-intensive than their North American counterparts. "The results clearly show if we are to understand the risks and opportunities presented by the transition to a low carbon economy then investors need to focus on the future carbon performance of companies," said TPI co-chair Adam Matthews. TPI is backed by funds with more than £3 trillion in assets under management.

* The Los Angeles Department of Water and Power is putting on hold a $2.2 billion plan to rebuild old natural gas-fired power plants as it studies "cheaper and cleaner energy alternatives," according to the Los Angeles Times. Moreover, the Times reports that the California Energy Commission may announce a decision as soon as June 8 to stop a natural gas project in Ventura County.

* The Navajo Nation Council's Health, Education and Human Services Committee issued a "do pass" recommendation in support of legislation that would allow for the operation of the Navajo Generating Station until the end of 2019 and provide additional time beyond 2019 for decommissioning.

* Despite pressure from environmental advocates, Maryland Gov. Larry Hogan is not joining the U.S. Climate Alliance, a coalition of states that are committed to taking "aggressive action on climate change," The Baltimore Sun reports. The Hogan administration, however, is not ruling out participation and is "still learning about the initiative," the report adds.

Natural gas/midstream

* The Senate's energy committee voted to approve President Donald Trump's two picks for the Federal Energy Regulatory Commission, sending to the full Senate the nominations that would give FERC a quorum to make major moves on energy projects.

* The Court of Appeals for the District of Columbia Circuit is asking the U.S. Environmental Protection Agency to justify its authority to halt the methane pollution rule, which was introduced by the Obama administration, The Hill in Washington, D.C., reports. The EPA has until June 15 to respond to a lawsuit filed by environmental advocates.

* LINN Energy Inc. agreed to sell its interest in properties comprising approximately 2,000 net acres in the Brea-Olinda Field in Orange and Los Angeles counties, Calif., to an undisclosed buyer for $100 million. The sale price is subject to closing adjustments, with an additional $7 million contingent payment if certain operational requirements are satisfied within one year.

* Dominion Energy Inc. expects to weather the federal and state permitting processes and start construction on the $5 billion-plus Atlantic Coast natural gas pipeline project later in the year.

* Spectra Energy Partners LP expects to close a $400 million public offering of its floating rate senior notes due 2020 on June 7. The partnership plans to use net proceeds to repay a portion of outstanding borrowings under its term loan credit facility and for general partnership purposes or any combination of such purposes, according to a Form 8-K filing.

* USD Partners LP acquired a crude oil terminal in Stroud, Okla., for $25 million to facilitate rail-to-pipeline shipments of crude oil from its Hardisty terminal in Western Canada to the Cushing, Okla., crude oil hub, according to a news release. The terminal includes 104 railcar spots that can unload one unit train per day, two 70,000 barrel onsite storage tanks and one truck bay, according to a news release.

* The unconventional windows of the Permian Basin have made it the world's hottest formation, consistently outproducing other U.S. shale plays, but return on investment in the Permian still lags behind other plays globally, according to a research report.

* SaskEnergy Inc. is permanently removing natural gas service for about 250 property owners, or about 16% of its customer base in Last Mountain Lake due to continued high levels of ground movements in key zones within six communities. "Significant ground shifting is continuing in isolated zones within these communities and, despite extensive infrastructure upgrades, SaskEnergy can no longer safely serve customers in those zones," said President and CEO Ken From in a statement.

Coal

* Federal prosecutors have recommended at least three years in prison for the president of a company behind a carbon capture project who pleaded guilty to fraud charges. "The defendant's conduct here was orchestrated. It was coordinated and planned. The defendant was methodical. Most importantly, the defendant's conduct was driven by greed," the prosecutors said in a sentencing recommendation filed June 1 in the U.S. District Court for the Western District of Pennsylvania.

* The Kentucky Public Service Commission approved Duke Energy Kentucky Inc.'s ash disposal plan, which is the final step in eliminating coal waste pond at the company's East Bend power plant in Boone County, according to a news release. The PSC order allows the Duke Energy Corp. to spend about $94 million to close and repurpose the existing waste pond, relocate the ash from the pond to a landfill and construct new facilities for handling and treating wastewater from the plant.

* East Kentucky Power Cooperative Inc. has applied for a permit to construct a coal combustion residual landfill for its Spurlock power plant in Maysville, Ky.

* Anglo American Plc has named Stuart Chambers as its next board chairman effective Nov. 1, according to a news release. Chambers will succeed John Parker who announced in February his intention to step down during the course of the year.

Commodities

* Natural gas exports and new domestic demand sources drive the outlook for spot natural gas price gains in the latest U.S. Energy Information Administration "Short-Term Energy Outlook." The Henry Hub natural gas spot price is forecast to average $3.16/MMBtu in 2017 and rise to $3.41/MMBtu in 2018, the EIA said in the June 6 report.

* While rising demand and slowing production growth have started to balance the U.S. natural gas market, a rush of natural gas supply associated with oil production threatens to keep prices from recovering much higher, according to Macquarie global oil and gas strategist Vikas Dwivedi.

* Next-day power prices could be bolstered Wednesday, June 7, by the combined support of mostly rising demand forecasts for the latter part of the workweek and ongoing gains at the natural gas futures arena. Rising 6.0 cents in the prior session on technical buying, NYMEX July natural gas futures were extending those gains early Wednesday ahead of the opening bell.

* After ending a five-day losing streak with a 6.0-cent gain in the prior session at a settle at $3.042/MMBtu, NYMEX July natural gas futures extended higher overnight ahead of the Wednesday, June 7, open amid ongoing technical buying supported by warmer weather outlooks that spelled stronger demand and smaller storage builds in the coming weeks. At 6:38 a.m. ET (1038 GMT), the contract was 4.6 cents higher at $3.088/MMBtu.

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New from RRA

* A settlement adopted on June 6, by the Kansas Corporation Commission requires Kansas City Power & Light Co. to implement a $3.6 million (0.6%) electric base rate reduction in the company's "abbreviated" rate case, Docket No. 17-KCPE-201-RTS. The new rates are to take effect June 28.

* Overall, there was a fair amount of electric and gas regulatory activity in May. Developments concerning merger activity were not as predominant as they had previously been in the non-rate-case portion of the regulatory sphere. With several state legislative sessions coming to a close, legislative activity saw a slight uptick. However, rate case activity saw a sharp decline in May 2017 versus April.

Quoted

"It is imperative that the world know that in the U.S., the actors that will provide the leadership necessary to meet our Paris commitment are found in city halls, state capitals, colleges and universities, investors and businesses," a letter signed by hundreds of governors, mayors, businesses, and college and university leaders declared.

The day ahead

* The Nebraska Public Service Commission will hold a public meeting at the O'Neill Community Center from 1 p.m. to 8 p.m. to hear comments on TransCanada Corp.'s Keystone XL pipeline application.

* The U.S. Senate Committee on Appropriations will hold an energy and water development subcommittee hearing at 2:30 p.m. ET in Room 138 of the Dirksen Senate Office Building to review the FY 2018 budget request for the U.S. Nuclear Regulatory Commission.

* Early morning futures indicators pointed to a higher opening for the U.S. equity markets. To view more SNL equity market indexes, click here. To view more SNL Energy commodities prices, click here.

The Daily Dose is updated as of 7:30 a.m. ET. Some links may require registration or a subscription.