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PJM Maintenance Cuts About 1.3 Bcf/d In Power Burn Since March 22, Genscape Says

Natural gas deliveries to power plants in the PJM Interconnection have dropped by around 1.3 Bcf/d over the last two weeks due to spring maintenance outages, according to natural gas analytics firm Genscape.

The drop in power burn offers a potential counterpoint to some of the recent bullishness over spring nuclear plant outages bolstering gas demand, Genscape told NGI.

PJM, the grid operator for all or parts of 13 states, mostly in the Mid-Atlantic, has seen total nominations for power plants drop from 3.58 Bcf/d on March 22 to as low as 2.16 Bcf/d on April 2. Gas deliveries to PJM power plants are down about 1 Bcf/d year/year and by about 0.3 Bcf/d compared with 2015. However, recent deliveries are running just slightly under the five-year average, Genscape said.

These volumes are based on pipeline deliveries to power plants and have not been adjusted for weather.

"A lot of the market is so focused right now on how much nuke capacity is offline" for scheduled maintenance "and what sort of bullish sentiment that does create for gas in a lot of ISO [independent system operator] regions," Genscape's Rick Margolin, senior natural gas analyst, told NGI. "But not all ISOs are created equal. While there are nuke outages occurring in PJM as well, it's really the gas outages that are kind of counteracting some of that otherwise bullish momentum that these nuke outages would be creating.

"You've got to look really specifically within the ISO to get a good grasp of what's going on there."

While PJM took a big chunk of electric capacity offline for maintenance this time last year, a large portion of this spring's maintenance outages are gas-fired plants, according to Genscape.

PJM has seen a lot of growth in gas-fired capacity due to coal retirements and coal-to-gas switching, and that could be a factor in the recent dip in power burn during spring maintenance, the firm said.

According to Genscape, the cuts have come mostly from six plants, which dropped from 992 MMcf/d in nominations March 21 to 95 MMcf/d April 4:

  • Brunswick; 205 MMcf/d (Transco Zone 5)   
  • Hanging Rock II; 141 MMcf/d (Texas Eastern M-2/Tennessee Zone 4)
  • Fairless Energy; 195 MMcf/d (Transco Zone 6 non-NY)
  • Ontelaunee; 84 MMcf/d (Texas Eastern M-3)
  • Post Road; 138 MMcf/d (Transco Zone 6 non-NY)
  • Beirne Hill; 134 MMcf/d (Tennessee Zone 4)

"Out of the various ISOs for the last two weeks, only PJM has been behaving like this," Genscape’s Josh Garcia, a natural gas analyst, told NGI. "Most of them have been nominating right around the average. PJM is the only one that has this huge downtrend in nominations over the last two weeks."

Garcia said there's not a clear way to assess how long the spring maintenance will continue to impact gas deliveries based on the information available from the pipelines. Some plants have only partially reduced volumes and most haven't specified dates to resume full operation, he said.

The exception is Dominion's Brunswick plant in Virginia, where the Transcontinental Gas Pipe Line (Transco) has said the plant is expected to be back online by April 24, according to Garcia.

Capacity Release Trends Point to More Gas-Electric Synchronization

Meanwhile, Skipping Stone's CapacityCenter.com released numbers this week showing a 46% month/month increase in capacity releases for March on the top 10 traded pipelines. March capacity releases for the top 10 pipelines totaled 3,455, according to the firm.

An increase in capacity trades like this is normal during the shoulder season, Skipping Stone analyst Brendan Tierney told NGI. "However, the numbers have been steadily increasing" the past few years, he said.

For March 2016, CapacityCenter.com reported 3,229 capacity releases, while the firm tracked 3,096 releases in March 2015.

Tierney said the increases the last few years "could tie in with the increase in need for capacity and synchronization with the electric market."

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