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Northeast needs nukes for reliability; CONSOL looks to divest coal business


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Northeast needs nukes for reliability; CONSOL looks to divest coal business

Top News

ISO New England: Northeast needs nukes, oil-fired plants for reliability

The head of New England's power grid operator is worried about the lights going out in coming winters, following the slated May 2019 shutdown of the Pilgrim Nuclear Power Station if natural gas pipelines are not expanded.

ETP faces tight schedule for construction of 3.25-Bcf/d Rover pipeline

FERC Commissioner Norman Bay's coming resignation could challenge the schedule for Energy Transfer Partners LP's proposed 3.25 Bcf/d Rover natural gas pipeline, which could delay the transport of additional Appalachian supplies to Midwest, Gulf Coast and Canadian markets until 2018, according to the developer and analysts.

'New Peabody' designed to weather coal market cycles

In a series of disclosures Jan. 30, Peabody Energy Corp. outlined its financial, corporate and production positions that are designed to better navigate the coal industry's market cycles, ahead of an expected emergence from bankruptcy protection.


* President Donald Trump could withdraw the U.S.' participation in the Paris climate agreement by issuing an executive order today, "or he could do it as part of a larger package," Myron Ebell, who led the president's U.S. EPA transition team, told Reuters.

* A former lobbyist for Southern Co. has been hired to run the U.S. Department of Justice's division dedicated to fighting pollution. Jeffrey Wood was appointed acting Assistant Attorney General of the Environment and Natural Resources Division of the U.S. Justice Department on Jan. 20, according to a brief notice on the division's website.

* Dayton Power and Light Co. will retire two coal plants and develop wind and solar projects under a proposal submitted to Ohio regulators Jan. 30. The AES Corp. subsidiary will retire the coal-fired 2,308-MW J.M. Stuart and the 600-MW Killen Station plants in June 2018, according to a Jan. 30 release.

* San Diego Gas & Electric Co. is planning to equip its substations with hydrogen fuel cells to provide backup power during an outage, Bloomberg News reports. Under an agreement, GenCell will install backup fuel cells at 30 substations within three years.

* Toshiba Corp. will not book any new orders to build nuclear power plants, in accordance with its exit from the business, Kyodo News reports, citing unnamed sources. The company will remain involved in the construction of four nuclear power plants in the U.S. until their expected completion in 2020.

* Cypress Creek Renewables, LLC lodged a complaint against Duke Energy Corp. with the North Carolina Utilities Commission over the company's alleged refusal to enter "long-term" power purchase agreements with utility-scale solar projects, the Charlotte Business Journal reports. Duke contends that it opted to enter five-year contracts to "protect its customers."

* A subsidiary of NextEra Energy Resources LLC recently completed a 10-MW lithium nickel-manganese-cobalt energy storage system for Tucson Electric Power Co. Meanwhile, E.ON Climate & Renewables is building a 10-MW lithium titanate oxide storage facility and an accompanying 2-MW solar array for the Fortis Inc. subsidiary. The projects will help Tucson Electric to maintain reliable service for customers during periods of high energy demand.

* A proposal to expand California ISO's oversight to an 11-state regional electric grid is on hold after several states voiced concerns over how to balance California's authority over their grid operations, The Salt Lake Tribune reports.

* Tesla Motors Inc. commissioned an energy storage facility at Southern California Edison Co.'s Mira Loma substation in Ontario, Calif, the Los Angeles Times reports. The state Public Utilities Commission directed SoCalEd to procure energy storage to respond to the closure of the Aliso Canyon natural gas storage facility and ensure the reliability of the grid.

Natural gas/midstream

* Azure Midstream Partners LP and its units filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas to help manage debt obligations. The company expects to file a motion to approve procedures for a sale of all or substantially all of its assets, as well as a Chapter 11 plan and accompanying disclosure statement in the near future, it said in a statement. The filings do not involve Azure's parent company, Azure Midstream Energy LLC.

* House lawmakers are gearing up to kill an SEC rule that will require energy companies by 2018 to reveal the payments they made to governments for oil and gas fields, according to The Wall Street Journal. A companion legislation has been introduced by Sen. Jim Inhofe, R-Okla.

* CONSOL Energy Inc.'s E&P division produced 101.3 Bcfe in the fourth quarter of 2016, an increase of 6% from the 95.5 Bcfe produced in the same quarter of 2015. For the most recent quarter, CONSOL's average sales price for natural gas, NGLs, oil and condensate was $2.77/Mcfe. The company's average price for natural gas was $2.22/Mcf for the quarter and, including cash settlements from hedging, was $2.68/Mcf.

* After enduring two difficult years, the U.S. oil and gas industry should experience a rebound in 2017, the CEO of Enterprise Products Holdings said Jan. 30. Speaking during Enterprise Products Partners LP fourth-quarter 2016 earnings call, Jim Teague said Enterprise's customers had gone from being hesitant to put out a capital budget last year to expanding budgets in 2017.

* Summit Midstream Partners Holdings is selling 4 million common units of Summit Midstream Partners LP at $24 apiece. The company is also granting the underwriters a 30-day option to purchase up to an additional 600,000 units at the same price.


* CONSOL Energy Inc. is pursuing "several different approaches" to achieve its goal of separating its coal and E&P businesses as early as 2017. Those approaches include the possible sale of the company's coal business to a third party or the spinoff of the business to its shareholders. "We think there may be a market opportunity to achieve a sale of the coal business on favorable terms or, alternatively, to effect a spin-off as our leverage ratio comes down to a level that allows each business to stand on its own. At the same time, we will continue to evaluate dropdowns of additional undivided interests in the Pennsylvania Mining Complex," CFO David Khani said.

* CONSOL Energy's Pennsylvania mining operations division sold 7.1 million tons in the 2016 fourth quarter, compared to 5.0 million tons during the corresponding quarter of 2015. Total cost of coal sold was $33.90/ton, compared to $39.70/ton in the year-earlier quarter.

* A coalition of Republican members of Congress touted companion resolutions aiming to overturn the Obama administration's Stream Protection Rule. Reps. David McKinley and Evan Jenkins of West Virginia and Ohio's Bill Johnson joined Sens. Mitch McConnell of Kentucky and Shelley Moore Capito of West Virginia in introducing resolutions of disapproval under the Congressional Review Act.

* Clean Coal Technologies Inc. is eyeing a new project in Wyoming that will clean coal before its transportation and burning, according to The Oklahoman. "We have two or three more tests we have to do for investors coming in from Australia, Indonesia and India," CEO Robin Eves told the publication.

* Alliance Resource Partners LP finished 2016 in a self-described "impressive fashion," boosted by a recent upward trend in U.S. coal markets. President and CEO Joseph Craft III said President Donald Trump could usher in even more good times in coal markets going forward.


* So-called smart money traders in natural gas have played both sides of a roller coaster trend in natural gas prices in recent weeks, while traders in crude oil pushed their net long position to a record high for a second consecutive week.

* After ending its first day in the lead role down 12.6 cents at $3.232/MMBtu on Monday, March natural gas futures extended lower overnight ahead of the Tuesday, Jan. 31, open, amid ongoing fundamental pressure, as moderating weather implied by forecasts and the calendar looks to sap demand and further slow the pace of storage erosion.

* Day-ahead power values could slump Tuesday, Jan. 31, as the anticipation of reduced demand in much of the country at midweek conspires with ongoing losses at the natural gas futures complex. Losing 12.6 cents in the week's opening session, March natural gas futures were extending lower ahead of the opening bell early Tuesday.

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New from RRA

* Based on the 2017 S&P Global Market Intelligence consensus EPS estimate of $2.21, Avangrid Inc. shares are trading at a roughly 17.1x P/E multiple, in line with the RRA group average.

* On Jan. 26, Aqua Ohio and the Public Utilities Commission of Ohio staff filed a settlement that would resolve all issues in the company's pending water distribution rate proceeding.


"[B]ecause OMB's annual reports show that virtually all rules issued in the past 10-15 years have greater benefits than costs ..., eliminating an existing rule will likely reduce net benefits," Harvard Law School professor Jody Freeman, a former Obama administration official, said about President Donald Trump's executive order directing that for every new regulation approved, two existing regulations be removed.

The day ahead

* The U.S. Senate Committee on Energy and Natural Resources will hold a business meeting at 9:30 a.m. ET in room 366 of the Dirksen Senate Office Building to consider the nominations of Ryan Zinke as interior secretary and Rick Perry as energy secretary.

* The Tennessee Valley Authority will hold its first-quarter fiscal 2017 earnings conference call at 9:30 a.m. ET; NuStar GP Holdings LLC, NuStar Energy LP and CONSOL Energy Inc. will hold their fourth-quarter 2016 earnings conference calls at 10 a.m. ET.

* Early morning futures indicators pointed to a lower 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.

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