Stress

A progressive political advocacy group said the government of British Columbia (BC) should cap annual natural gas production and end subsidies to the industry over fears that it is expanding too rapidly at the expense of air, water and power resources.

Given the U.S. government’s stress test assessment that Bank of America (BofA) needs a multi-billion-dollar capital infusion, Standard & Poor’s Ratings Services (S&P) on Wednesday adopted a “negative” credit watch for some of the high-profile public-sector utility long-term natural gas purchases. The gas prepayment deals have been under credit rating downward pressures for the past year (see Daily GPI, Sept. 17, 2008).

If gas production shut-ins from damaged facilities due to Hurricane Katrina continue into the coming winter, significant stress could be placed on the market and prices almost certainly would be pressured even higher. However, the market might finally get some help from a source that has been in surprisingly short supply so far this summer: liquefied natural gas (LNG).

Power grid operators across the Northeast, Midwest, Mid Atlantic and Ontario sent out power shortage warnings and calls for conservation again last Wednesday, as the early summer heat continued to bake the regions with 90-100 degree temperatures and high humidity, driving up power usage and prices.

The prospect of a 67.5% increase in gas demand in the state of New York over the next five years has the New York State Energy Research and Development Authority (NYSERDA) and the New York Independent System Operator (NYISO) just a little concerned about a potential overload of the gas transportation system in the state.

The New York State Energy Research and Development Authority (NYSERDA) and the New York Independent System Operator (NYISO) are concerned about a potential overload of the gas transportation system in the state. The two organizations have commissioned a study examining the impact of increased gas demand from 22 proposed new gas or dual fuel power plants, which currently are applying for permits under the state’s siting process. The dual fuel plants also may put a strain on the delivery infrastructure for alternative fuels, the organizations noted.

President Bush is expected to stress the need for greater conservation and energy efficiency when he introduces his long-anticipated energy plan to the nation this Thursday, but this will be only half of his message. He also will propose significant upgrades to the country’s aging energy infrastructure to boost supplies of natural gas, electricity, nuclear energy and coal.

Although the Northeast power grid remained under heavy stressTuesday from an intense heat wave, hourly spot prices for electricitywere backing off from the peaks of $6,000/MWh hit Monday afternoon inthe ISO New England service area (see related story in this issue). Although gasprices continued to advance Tuesday, a large aggregator felt confidentin predicting they will be following power quotes lower today.

About 1 Bcf/d of NOVA capacity will be cut from May 31 to June9 as part of the system is inspected for stress corrosion crackingwhile tie-ins and other maintenance are performed. NOVA will take100 miles of 36-inch line between the Miekle River and Knightcompressor stations in northwest Alberta out of service during thattime. NOVA normally moves a total of about 11.8 Bcf/d, a spokesmansaid.