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Coal Use On The Decline

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With natural gas prices at a new 10-year low amid record storage levels and growing production, coal usage has been under pressure from not only the cost competition with natural gas but from the political pressure associated with the desire to curb harmful emissions.  Coal consumption by the U.S. electric sector in 2012, according to EIA, is expected to fall below 900 million short tons for the first time since 1996 (See below).  Coal demand by the power sector is expected to drop by 5% in 2012 and recover a bit in 2013.

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EIA Reports Natural Gas Stocks Climb for First Time this Year

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The Energy Information Administration reported natural gas stocks climbed by 11 Bcf in the week ending March 16, slightly higher than the market consensus. 

Thursday’s report marks the first injection since November 2011 and likely the end of winter 2011/2012 withdrawal season.  Traditionally, the winter heating/withdrawal season is from November through March.  The first injection of 2012 comes about two weeks earlier than normal and pushes total inventories to 2,380 Bcf, further expanding the year-over-year surplus. 

Following the report, natural gas futures fell as the continued supply overhang weighs on prices.  For the remaining two weeks in March…
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Two New Proposed Pipelines Designed to Move Marcellus Gas Outside of Mid-Atlantic by 2015

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The growth in shale gas has fundamentally transformed the gas and power industries over the past three years and made gas the fuel of choice for new power generation.  The Marcellus shale in PA & WV has seen explosive growth from 0.2 Bcf/day in 2009 to close to 5 Bcf/d currently. 

While supply growth has exceeded expectations, it will at some point outpace the daily demand of the northeast markets. Efforts are currently underway to assess the pipeline demand for projects that would move Marcellus gas both north and south, further transforming the North American landscape for gas supply…
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It’s Chamber of Commerce Weather for Energy Buyers…

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It appears to be a bright, sunny day for those on the buy-side of natural gas and by extension, electricity. Natural gas futures on the NYMEX for prompt month fell on Thursday, closing within pennies of the 10-year low set in January. Following the EIA’s weekly storage report indicating a smaller-than-expected 80Bcf was withdrawn from storage last week, the market continued its downward trend with prices for delivery in April falling to $2.27/MMBtu.…
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ERCOT’s Preliminary Summer Assessment

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ERCOT’s preliminary summer assessment was released on March 1 and it is predicting tight reserve margins this summer.  Reserve margins are the measure of available capacity over and above the capacity needed to meet normal peak demand levels.  They serve as insurance if there is a sudden loss of generation or an increase in energy demand.

ERCOT would like reserve margins to be at least 13.75%, but the forecast for this summer just dropped from 12.2% to 8.6% due to demand growth outpacing new generation and weather forecasts calling for above normal temperatures during July and August. This summer’s…
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The LNG Revolution

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Last month the EIA released a study focused on the long-term impact of increased domestic natural gas demand from LNG exports. This assessment is timelier than ever considering the Department of Energy now has a total of seven LNG export applications and several projects in progress.

The two main reasons for this surge in project development is cheap domestic supply of natural gas relative to global markets and increasing global demand.

The tragedy of the March 2011 Japanese earthquake and tsunami has forever altered global natural gas demand. Japan…
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