Energy Market Fundamentals Update

Transcription

1 Energy Market Fundamentals Update 16 January

2 Quick Introduction Exelon s family of companies represents every stage of the energy value chain. Generation Energy Sales & Services Transmission & Delivery Exelon Generation Generation Capacity: Constellation * Competitive C&I Load Served: Atlantic City Electric, BGE, ComEd, More than 32,000 MW 139 Annualized TWH (power) Delmarva Power, 734 Annualized BCF (natural gas) PECO and Pepco *Q data Competitive Energy Sales: Nearly 2 million business & public sector customers 1.4 million residential customers Wholesale sales, dispatch, and delivery from Exelon s ~33 GW power generation portfolio Service: 10 million electric and natural gas customers 2

3 Today s Agenda Introduction Where We Are Now Weather Outlook Natural Gas Supply & Demand Key Demand Driver Update: LNG Price Review Wrap-up

4 A Quick Look Back Heating Season 2018 Cooling Season November March 2018 GWHDD: Year Normal: Year Normal: 3798 May September PWCDD: Year Normal: Year Normal: 1162 Key Points: The heating season (Nov Mar) came in about equal to the 10 year normal and warmer than the 30 year normal. It was followed by an abnormally cold spring. The summer that followed was a record-breaker. Many major population centers saw a Top 10 season for cooling demand, despite seven named storms and three hurricanes spraying things down late in the season and disrupting demand. Data Sources: Radiant, NOAA 4

5 Winter Outlook Change is Coming EURO WEEKLY FORECAST (1/28 2/03) Key Points: We re at the halfway point for Winter ! The season thus far has been marked by persistent warmth across much of the US, including a 32 day stretch (Dec 12 Jan 12) that posted heating demand below the 5 year average Season to date we re experiencing the sixth warmest winter period, but change is coming Data Sources: Radiant, WSI, NOAA 5

6 Descent into Winter 924 CDDs 938 CDDs Key Points: Winter forecasts were generally aligned that December would be cold, January would moderate, and February was likely to be a deep freeze. After a mild stretch since mid-december, the forecasts indicate much colder temps begin now. Data Sources: CWG, Radiant, NOAA, Constellation 6

7 Natural Gas Storage How Deep were the Holes? End of Season Range: Tcf Report for Thursday, January 10 th was -87 Bcf (week ending January 4 th ) Storage is currently Tcf and is tracking -204 Bcf (-7%) BELOW 2018 and -464 Bcf (-25%) BELOW the five year average. The heating season ended with Tcf remaining in storage. After a robust start to this season in November to early December, above normal temperatures have slowed withdrawals. Expected cold through February may draw stocks and support prices. Data Sources: S&P Global Platts, EIA, Constellation 7

8 Natural Gas Production Higher oil prices are driving increased production in Texas increasing associated gas output, especially in the Permian Basin Gas rig counts ticked up 4 rigs in the most recent report, this a big move for a figure that was stuck at 197/198 for 5 straight weeks previously. L48 production is averaging 85.6 Bcf/d in January, about 9.4 Bcf/d higher than the same month last year Production for the Northeast in January is averaging 30.9 Bcf/d which is 0.4 Bcf/d less than the same month last year Key Points: Natural gas production continues to post impressive year over year gains driven by increased pipeline capacity in the Northeast and gains in associated gas on the back of oil production in Texas. Continued strong production will be key to meeting growth in demand and refilling storage in advance of the next heating season. Data Sources: Spring Rock, Constellation 8

9 Bcf/d LNG Export Recap Trains 1 4 (~3.25 Bcf/d) online by end 2017 Train 5 (0.6 Bcf/d) is commissioning, slated for commercial operation in Q2 2019, with Train 6 possibly in 2021 Cove Point, MD (0.7 Bcf/d) entered service in March 2018 Corpus Christi, TX (0.6 Bcf/d) began commissioning in November, slated for commercial operation in Q ,300 Bcf 608 cargoes Data Sources: Cheniere, Thomson Reuters, IHS Markit 9

10 Where s It Going? Data Sources: S&P Global Platts, DOE, Thomson Reuters, EIA 10

11 Upcoming LNG Demand Key Point: Present day there are two operating LNG export terminals, a year from now there should be six. The line of sight to ~10 Bcf/d of export demand by mid-2021 remains clear. Data Source: EIA 11

12 Nymex Natural Gas Forward Strips BarOHLC, NAT GAS FEB19, Trade Price 1/16/2019, 3.456, 3.492, 3.377, Line, NGCal20, Default(Last) 1/16/2019, Line, NGCal21, Default(Last) 1/15/2019, Line, NGCal22, Default(Last) 1/15/2019, Line, NGCal23, Default(Last) 1/15/2019, Line, NGCal24, Default(Last) 1/15/2019, Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Q Q Q Q Q Q Q Q Q Q Price USD MMBTU Auto Data Source: Thomson Reuters 12

13 Unpredictable Technical Trade Spikes Prices Natural Gas Monthly Strip Change on Nov 14 emotional-video-to-options-firms-clients ?mod=article_inline Lessons Learned: One buyer can move the market. Don t leave your energy purchases to the last minute. Don t short winter. Don t apologize on YouTube. Data Sources: OptionSellers.com, WSJ 13

14 MA Hub Forwards 2y Lookback Bal 2019 Cal 2020 Cal 2021 Cal 2022 Cal /11/ vs. Avg -5% 7% 6% 5% 5% vs. Max (11/19/18) -16% -5% -3% -3% -2% vs. Min (01/12/17) 10% 15% 13% 12% 12% Data Source: Constellation 14

15 MA Hub Forwards 5y Lookback Bal 2019 Cal 2020 Cal 2021 Cal 2022 Cal /11/ vs. Avg -5% -3% -5% -8% -10% vs. Max (09/16/14) -30% -31% -34% -36% -38% vs. Min (01/05/17) 13% 18% 17% 16% 16% Data Source: Constellation 15

16 New England Pipeline Expansion Projects Kinder Morgan Connecticut Expansion Project Tennessee Gas Pipeline Placed Bcf/day of gas pipeline capacity in service Nov 2017 Enbridge (formerly Spectra) Algonquin Incremental Market (AIM) Project Status: Bcf/day in-service Nov/Dec 2016 Atlantic Bridge Project (Algonquin) Status: NY water permit secured in early May; construction underway.135 Bcf/day (CT portion) in service 2017, (remainder) in service Late 2018 Portland Natural Gas Transmission Systems (PNGTS) Continent to Coast No build expansion; build on upstream TransCanada Pipelines to provide additional pressure ~92 MMcf/day in service Nov 2017 Portland Xpress LDC-based, added compression to increase throughput ~200 MMcf/day in service by Nov 2020? Key Points: Pipeline expansion projects in New England are limited due to high population density restricting location choices and local resistance. Floating pipelines (in the form of LNG deliveries) often save the day but come at a cost. Data Sources: Enbridge, Kinder Morgan, FERC, PNGTS 16

17 Send an to Receive Registration Link Register for Constellation's Webinar: Wednesday, 23 January :00 PM ET Winter Weather: Where do we stand from a demand perspective in terms of the key winter heating load? Short-Term Market Fundamentals: We will review production growth and where storage is projected to finish in March. Key Demand Drivers in 2019: We will analyze pipeline and liquefied natural gas export demand, which is expected to grow in 2019, as well as power generation demand. Gregory.Kosier@constellation.com 17

18 Disclaimer The information contained herein has been obtained from sources which Constellation NewEnergy, Inc. and Constellation NewEnergy-Gas Division, LLC (collectively, Constellation ) believes to be reliable. Constellation does not represent or warrant as to its accuracy or completeness. All representations and estimates included herein constitute Constellation s judgment as of the date of the presentation and may be subject to change without notice. This material has been prepared solely for informational purposes relating to our business as a physical energy provider. We are not providing advice regarding the value or advisability of trading in commodity interests as defined in the Commodity Exchange Act, 7 U.S.C. 1-25, et seq., as amended (the CEA ), including futures contracts, swaps or any other activity which would cause us or any of our affiliates to be considered a commodity trading advisor under the CEA. Constellation does not make and expressly disclaims, any express or implied guaranty, representation or warranty regarding any opinions or statements set forth herein. Constellation shall not be responsible for any reliance upon any information, opinions, or statements contained herein or for any omission or error of fact. All prices referenced herein are indicative and informational and do not connote the prices at which Constellation may be willing to transact, and the possible performance results of any product discussed herein are not necessarily indicative of future results. This material shall not be reproduced (in whole or in part) to any other person without the prior written approval of Constellation Constellation Energy Resources, LLC. The offerings described herein are those of Constellation NewEnergy-Gas Division, LLC or Constellation NewEnergy, Inc., affiliates of each other and ultimate subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.