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"Disasters Within Disaster" - Death Toll Rises To 30 As Texas Energy Crisis Hits Sixth Day

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by Tyler Durden
Thursday, Feb 18, 2021 - 11:55

Update (1123 ET): Reuters reports House Speaker Nancy Pelosi expects the House Committee on Energy and Commerce to examine Texas's energy issues that resulted in one of the worst controlled blackouts in the country's history. 

* * *

Millions of Texans woke up for the sixth day on Thursday, as one of the nation's wealthiest states can barely supply electricity to its residents. The power crisis has spread well among its borders crippling Northern Mexico. 

According to NYPost, at least 2.7 million Texas households were without heat, electricity, or water on Thursday morning as a polar vortex air mass continues to linger in the Lone Star State. 

The death toll from the historic cold snap and multiple winter storms has increased to at least 30. Besides power plants, the deep freeze has crippled critical infrastructure systems across the state, such as water treatment plants and cellular networks. 

"This is in many ways disasters within the disaster," said Judge Lina Hidalgo, the top elected official in Harris County, which encompasses Houston. "The cascading effects are not going to go away."

In a note Wednesday, we asked if "Is Texas Facing A Humanitarian Crisis?" Come to find out, the answer is yes. The cascading effects of days without power have effectively transformed some parts of Texas into a third-world country. 


The local economy is in tatters as one-fifth of the nation's refining capacity has come to a screeching halt. Readers in other states should prepare for a surge in crude product prices, such as gasoline and diesel. Also, the state's oil and natural gas production has ground to a halt. 


Gov. Greg Abbott announced Wednesday that he has forbidden gas producers from selling to power producers outside its borders through Feb. 21. 

The disruption has also spilled over into Mexico, where the US has curbed natural gas exports, resulting in power stations grinding to a halt. expands more on the chaos unfolding across Mexico's northern power grid. 

The plummeting natural gas exports from the United States to Mexico amid an Arctic cold spell in the country that has led to a gas demand surge is causing blackouts in northern Mexico, with some 4.77 million households and businesses left without power on Monday.

Argus noted that most of the natural gas Mexico receives from the United States comes from the Permian, where the production of both oil and gas has been affected by the cold weather that has caused power outages across Texas.

Oil wells are being shut down, and so are refineries along the Gulf Coast, Reuters reported earlier today, adding oil and gas pipeline operations were also disrupted by the weather.

The blackouts, Bloomberg reports, will strengthen the government's argument that Mexico needs to be less dependent on energy imports, with President Andres Manuel Lopez Obrador spearheading the drive to reduce this dependency. Obrador wants to boost Mexico's domestic oil and gas production to tackle the problem, but this has proved challenging without the participation of private energy companies as the president seeks to fortify the dominant status of state energy major Pemex.

Charles Kennedy - OILPRICE.COM

Refinitiv Eikon data shows natgas flow from the US to Mexico plunged 75% over the last week after Abbott directed a ban on gas producers exporting outside its borders. Power cuts have affected millions and led to automobile manufacturers shuttering operations this week because of the lack of natgas needed to power plants. 

There's also talk of an agriculture disaster in Texas as its citrus crop could amount to significant losses. The impact of the cold weather and storms won't be realized for another few weeks. Growers are already warning that crop losses could be substantial. Since Texas is the nation's third-largest citrus-producing state behind California and Florida, a loss in crop could result in skyrocketing prices - comes at a time when many Americans are dealing with soaring food inflation. At the same time, others can barely afford to pay rent and feed their families. 

Abbott released a statement earlier this week following the power grid collapse. He called for lawmakers to investigate the state's power grid operator "ERCOT." 

The worst is likely over as warmer temperatures could be seen by the weekend. But for weeks after, Texas will be dealing with a multitude of problems related to a power grid collapse that is still ongoing. 


To biggest takeaway from the largest controlled blackout in American history is that trust in private corporations and government to manage your well-being is set to collapse even further. Parts of Texas are effectively a third-world country this week - maybe being a prepper and storing a few cans of beans, a couple of coins of silver, a few Bitcoins, some ammunition, a generator, and clean water might not be a bad idea. 


U.S. Natural Gas Crisis Spills Into Mexico

By Charles Kennedy - Feb 16, 2021, 10:30 AM CST

The plummeting natural gas exports from the United States to Mexico amid an Arctic cold spell in the country that has led to a gas demand surge is causing blackouts in northern Mexico, with some 4.77 million households and businesses left without power on Monday.

Argus noted that most of the natural gas Mexico receives from the United States comes from the Permian, where the production of both oil and gas has been affected by the cold weather that has caused power outages across Texas.

Oil wells are being shut down, and so are refineries along the Gulf Coast, Reuters reported earlier today, adding oil and gas pipeline operations were also disrupted by the weather.

The blackouts, Bloomberg reports, will strengthen the government’s argument that Mexico needs to be less dependent on energy imports, with President Andres Manuel Lopez Obrador spearheading the drive to reduce this dependency. Obrador wants to boost Mexico’s domestic oil and gas production to tackle the problem, but this has proved challenging without the participation of private energy companies as the president seeks to fortify the dominant status of state energy major Pemex.

The president is also seeking to reinforce the dominance of the state electricity utility, CFE, by proposing a bill that will prioritize CFE’s electricity over private electricity providers, obliging the grid operator to buy from CFE first. The bill follows a policy published by the energy ministry last year to the same effect.

The policy caused an outcry from private companies, many of which have invested billions in solar and wind power capacity. The energy ministry said that prioritizing electricity from CFE ensured the reliability of the grid, but Mexico’s antitrust regulator disagreed and took the case to the Supreme Court. The court ruled the prioritization of CFE over private suppliers was unconstitutional. Now, many expect that Obrador’s bill will also end up in the Supreme Court.

By Charles Kennedy for

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Texas Was "Seconds And Minutes" From Complete Disaster

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by Tyler Durden
Thursday, Feb 18, 2021 - 20:40

One week ago, long before almost anyone else realized just how serious the situation in the plains states in general and Texas in particular would be as a result of the cascade of soaring nat gas prices, we warned that all hell was about to break loose. But not even we had any idea just how close to total collapse the system nearly was.

On Thursday, ERCOT officials said that the Texas power grid was “seconds and minutes” away from a catastrophic failure that could have left Texans in the dark for months. They should know: ERCOT is the entity that operates the power grid that covers most of the state.



The Texas Tribune reports that as millions of customers throughout the state begin to have power restored after days of massive blackouts, officials with the Electric Reliability Council of Texas, or ERCOT, said Texas was dangerously close to a worst-case scenario: uncontrolled blackouts across the state.

Maybe if they had read our warnings, none of what happened this week would have been a surprise. Alas, that was not the case. So in hopes to frontrun a wave of lawsuits, they spun their quick reaction as the only thing that prevented an even more catastrophic scenario: according to the Tribune, "the quick decision that grid operators made in the early hours of Monday morning to begin what was intended to be rolling blackouts — but lasted days for millions of Texans — occurred because operators were seeing warning signs that massive amounts of energy supply was dropping off the grid."

The #TexasPowerGrid is 90% self-contained, they can't simply get power from other states. This is why all the states are connected, so the demand of the grid can be met.

Right now, acc to @ERCOT_ISO, Texas's electricity demand is FAR exceeding current generation capacity. /8

— Liam Kent 🦞 (@l___kent) February 17, 2021

As natural gas fired plants, utility scale wind power and coal plants tripped offline due to the extreme cold brought by the winter storm, the amount of power supplied to the grid to be distributed across the state fell rapidly. At the same time, demand was increasing as consumers and businesses turned up the heat and stayed inside to avoid the weather.

“It needed to be addressed immediately," said Bill Magness, president of ERCOT. “It was seconds and minutes [from possible failure] given the amount of generation that was coming off the system.”

With energy prices exploding to record highs, and with demand soaring, grid operators had to "act quickly" to cut the amount of power distributed, Magness said, because if they had waited, “then what happens in that next minute might be that three more [power generation] units come offline, and then you’re sunk.”

Magness said on Wednesday that if operators had not acted in that moment, the state could have suffered blackouts that “could have occurred for months,” and left Texas in an “indeterminately long” crisis.

In other words, the millions of households left without power - in some cases for days - were sacrificing for the greater good.


So by manually shutting down entire parts of the grid, ERCOT avoided the worst case scenario: one where demand for power overwhelms the supply of power generation available on the grid, causing equipment to catch fire, substations to blow and power lines to go down.

If the grid had gone totally offline, the physical damage to power infrastructure from overwhelming the grid would take months to repair, said Bernadette Johnson, senior vice president of power and renewables at Enverus, an oil and gas software and information company headquartered in Austin.

“As chaotic as it was, the whole grid could’ve been in blackout,” she said. “ERCOT is getting a lot of heat, but the fact that it wasn’t worse is because of those grid operators.”  If that had occurred, even as power generators recovered from the cold, ERCOT would have been unable to quickly reconnect them back to the grid, Johnson said.

And since nobody can disprove a negative, one just has to take them at their word that dozens of people died so that millions more could live... or something.

Grid operators would have needed to slowly and carefully bring generators and customers back online, all the while taking care to not to cause more damage to the grid. It’s a delicate process, Johnson explained, because each part of the puzzle — the generators producing power, the transmission lines that move the power and the customers that use it — must be carefully managed.

“It has to balance constantly,” she said. “Once a grid goes down, it’s hard to bring it back online. If you bring on too many customers, then you have another outage.”

And while that may justify the widespread blackouts, it does not explain why the Texas grid was so underprepared for just this scenario. ERCOT officials have repeatedly said that the winter storm that swept the state caught power generators off guard. The storm far exceeded what ERCOT projected in the fall to prepare for winter. Right, but that's why they are paid the big bucks: to predict worst case scenarios (kinda like the Fed) - it is here that everyone failed so abysmally. Which means that it has to be spun into some heroic task.

“The operators who took those actions to prevent a catastrophic blackout and much worse damage to our system, that was, I would say, the most difficult decision that had to be made throughout this whole event," Magness said.

Nine grid operators are working at any given time who make these sorts of decisions, said Leslie Sopko, a spokesperson for ERCOT. “At the end of the day, our operators are highly trained and have the authority to make decisions that protect the reliability of the electric system,” she said in a statement.

The good news is that the Texas nightmare is coming to an end: ERCOT said it made "significant progress" overnight Wednesday to restore customer power to many Texans, and remaining power outages are likely due to ice storm damage to the distribution system. Some areas that were taken offline will also need to be restored manually, according to ERCOT.

ERCOT warned that emergency conditions remain, and that “some level of rotating outages” may be necessary over the coming days to keep the grid stable.


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My view is that we are simply out of gas. The "LNG exports" are nothing but a geopolitical weapon created by a D.C. elite at The People's cost, like all the tools of the military-industrial complex.

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3 hours ago, Robert Ziegler said:

My view is that we are simply out of gas. The "LNG exports" are nothing but a geopolitical weapon created by a D.C. elite at The People's cost, like all the tools of the military-industrial complex.

This point kind of confirm my concerns about Europe being overly reliant on imports.

It only takes a disaster like this for the political direction to change and suddenly the US has a temporary ban on LNG exports. LNG has made the gas storage issue in Europe even worse because its becoming more focussed on relying on that LNG tanker to turn up JIT. 


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Gas Companies “Hit the Jackpot” On Deep Freeze

By Charles Kennedy - Feb 19, 2021, 10:00 AM CST

While Texans are struggling to keep the lights and the heating on, gas producers in the Lone Star state, or at least those whose wellheads did not freeze, are having a blast.

The wave of Arctic weather that hit the United States this week led to an explosion in the price of natural gas as heating demand shot up. Supply, however, could not keep up, not least because un-winterized wells in Texas froze, tightening production.

This prompted some companies to de-idle wells in Oklahoma and others to boast they'd hit the jackpot.

"We've got four of us in the office turning on every single gas well that we've got," said the owner of a small gas production company in Oklahoma, as quoted by Bloomberg this week. "We have old wells that haven't produced in 10 years, and we're like, 'open the taps, let's go.'”

"Obviously, this week is like hitting the jackpot," said the president of Comstock Resources at a conference call this week.

Comstock, owned by billionaire Jerry Jones, is a shale oil and gas producer, and it had started ramping up production even before the polar vortex sent several states reeling from unusually low temperatures.

These temperatures pushed gas prices from single-digit territory well into the three digits: in Oklahoma, gas prices hit $600 per million British thermal units during last weekend. By Wednesday, prices on the spot market had soared above $1,000 per mmBtu in Oklahoma, to a high of $1,250.

Just a week ago, spot prices hovered around $9 per mmBtu.

According to Comstock, this week, it sold gas at prices ranging from $15 per thousand cubic feet to as much as $179 per thousand cubic feet, according to an NPR report citing the conference call. This compares with an average of $2.40 per thousand cubic feet during last quarter.

By Charles Kennedy for

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Outages Morph Into Outrage As Texans Slapped With "Mind-Blowing" Power Bills  

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by Tyler Durden
Friday, Feb 19, 2021 - 5:45

The rolling blackouts that plunged up to 15 million Texans into darkness amid a historic cold snap are diminishing by the end of the week. About 188k customers were without power in the state on Friday morning. Days after power prices jumped from $50 per Megawatt to more than $9,000, the horror stories pour in for those who had power this week during grid chaos as they are mind-boggled how their energy bills skyrocketed. 

None of these horrifying power bill stories below should be a shock as we described to readers in the piece titled "Power Bills To The Moon: Chaos, Shock As Electricity Prices Across US Explode," that this would happen. 

Texans who were on a variable or indexed plans with power companies are only now reporting their bills have jumped hundreds of dollars, if not thousands of dollars for the month. 

Royce Pierce told Newsweek he owes electric company, Griddy, $8,162.73 for his electricity usage this month. He said that's a massive increase from his usual $387 bill. 

"It's mind-blowing. I honestly didn't believe the price at first," Pierce said.

"It's not a great feeling knowing that there is a looming bill that we just can't afford."

Pierce was one of the lucky ones who maintained power through the entire grid crisis, but it came at a steep cost. 

"There is nothing we can do now. This is already an insane thing and I don't care about the money when it comes to people's health," Pierce said, adding that if the virus pandemic hadn't affected his work, "we could have taken care of this."

Other horror stories of soaring power bills flood local television stations across the Lone Star State. When food and housing insecurities are incredibly high due to pandemic job loss, many folks in Texas who were on variable power plans could be financially devastated. 

WFAA Dallas spoke with one person who said:

"Mine is over $1,000…not sure how…700 square foot apt I have been keeping at 60 degrees."

One couple said:

"When your electric company tells you to switch but there has been a hold on switching for over a week now. Using as little as possible 1300 sq ft house and this is my bill. . How is this fair. I only paid $1200 for the whole 2020 year. "

A tweet was accompanied by a screenshot of their bill that now stands at $3,800 for the month. 


Ty Williams told WFAA that his average electric bill is around $660 per month. He said it now stands at $17,000.

Williams wondered: "How in the world can anyone pay that? I mean you go from a couple of hundred dollars a month... there's absolutely no makes no sense." 

... and in case you were wondering, ran the numbers of how much it would cost to charge a Tesla in Texas earlier this week. While a regular charge costs around $18 using a Level 1 or Level 2 charger at home, estimates showed that the surge in power prices would have cost $900

So the Texas power outage has morphed into outrage for customers who had variable power rates. We don't want to speculate, but if small and medium-sized enterprises were on these plans (unhedged) - their bills could be absolutely devastating. Hopefully, larger companies hedged against the spike in power rates; if not, their energy for this month could be astronomical.  


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Texas May Lack Authority To Enforce Ban On Natural Gas Exports

By Charles Kennedy - Feb 19, 2021, 3:30 PM CST

The Texas Railroad Commission may not have the authority to enforce the Texas Governor’s mandate to ban natural gas exports out of the state as it would interfere with corporate contracts of exporters, one of the three elected Commissioners told Reuters in an interview.

Earlier this week, Texas Governor Greg Abbott banned the exports of natural gas until normal power supply in the state is restored. The export ban is in effect until Sunday, February 21, with Abbott noting, “That will also increase the power that’s going to be produced and sent to homes here in Texas.”

The Texas Railroad Commission issued on Wednesday a notice to operators, saying that “Operators should take notice that under this mandate, all “sourced natural gas” be made available for sale to local power generation opportunities before leaving the state of Texas, effective through February 21, 2021.” 

However, one of the Commissioners, Jim Wright, told Reuters that the Commission might lack the authority to prevent companies from exporting natural gas because they have contracts to honor.

Natural gas producers in Texas “are certainly focused on selling everything they can into Texas, but they’re obligated under contract,” Wright told Reuters.

“I’m not sure we have authority to mess with that, nor do I really want to,” Wright added.

Texas exports a lot of its natural gas output to other states and to Mexico via pipelines, while Freeport and Corpus Christi ship liquefied natural gas (LNG) out of Texas.

Pipeline operators, including Enterprise Product Partners, that have extra supply of natural gas are selling those supplies in Texas whenever possible, said Wright, who had spoken to operators. 

According to data and analytics firm Enverus, less natural gas is being exported out of Texas this week, but this was mostly because output had fallen with producers shutting-in wells due to power outages and frozen equipment.

“You can’t just stop a pipe at the border and turn it around,” Bernadette Johnson, vice president at Enverus, told Reuters. “The systems are not designed with these crazy orders in mind.”

By Charles Kennedy for

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I am going to clone a post from another Thread here...

Cascend: Data Shows Wind-Power Was Chief Culprit Of Texas Grid Collapse

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by Tyler Durden
Saturday, Feb 20, 2021 - 10:45

With the worst of the Texas power crisis now behind us, the blame and fingerpointing begins, and while the jury is still out whose actions (or lack thereof) may have led to the deadly and widespread blackouts that shocked Texas this week, Cascend Strategy writes that "in case there was any doubt why the Texas grid collapsed, the data is clear"

  • Wind failed as “Ice storms knocked out nearly half the wind-power generating capacity of Texas on Sunday as a massive deep freeze across the state locked up wind turbine generators, creating an electricity generation crisis."

  • Natural gas made up the difference for a while

  • But then everything else followed down failed texas.png?itok=eC0HzIcg


Some more detail from Cascend which lays out the events of this week in sequence:

  • A massive cold snap drove demand for electricity well beyond normal levels

  • Wind power failed to deliver it’s expected power – almost 40% of expected power – in part due to lack of winterized wind turbines power overnight.png?itok=AT84ZDwy


Natural gas (as always) made up the difference... gas wind texas.png?itok=0S0330v7


but then suffered from lack of supply from non-winterized delivery gas saved day.png?itok=6sS2knzV


  • Coal and nuclear both underperformed, but not by much, due to non-winterized equipment

  • Solar underperformed for a few days but is back, although is far too intermittent to help without storage except during heat waves

  • And Texas’ grid couldn’t buy enough power from neighbors to make up the difference

  • Nor are power producers required to keep a reserve of power

The simple 5-step solution according to Cascend:

  • Winterize equipment

  • Require power reserve

  • Connect the Texas grid better

  • Add solar with storage (storage is key)

  • And add more natural gas

As some others have summarized the Texas disaster best...

It is sad and ironic that in a state known for its huge petroleum and natural gas resources, the lack of reliability of wind power has brought the state to its knees in a time of crisis, not unlike that which California experienced in 2020 during record heat where wind and solar power could not keep up with demand and was near collapse.

The folly of chasing renewable energy as a means of mitigating “climate change” is making itself abundantly clear today in Texas. When will politicians wake up and realize that renewable energy almost always equates to unreliable energy?

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Gas Traders Pleaded for Cash as Texas Cold Upended Their Market

Naureen Malik, Gerson Freitas Jr, Michael Tobin and Rachel Morison

Sun, February 21, 2021, 8:00 AM·8 min read

(Bloomberg) -- The urgent phone calls came over the holiday weekend: traders of natural gas needed more money, and fast.

Temperatures were starting to plummet across the central U.S. Prices for the heating fuel had skyrocketed 300-fold to levels nobody had thought possible. This would later prove to be the precursor of one of the worst energy crises the nation had seen, plunging millions into darkness for days amid a deadly deep freeze.

But on Saturday, traders in the relatively small and obscure world that is the physical gas market were singularly focused on one very big problem: exchanges were demanding more collateral because of the volatility. The traders had until Tuesday to come up with the cash or else they’d be forced to exit their positions and, in some cases, face potentially catastrophic losses.

The dire situation triggered a frenzy of round-the-clock meetings. One group of traders convened their first Saturday morning conference call since the collapse of Lehman Brothers in 2008. The public holiday on Monday meant U.S. banks were closed, so -- desperate for money -- some market players turned to European parent companies that could deliver so-called margin payments on their behalf to the exchanges sooner. The cash showed up in different currencies, but it did the trick.

“I’ve been through a lot: The ‘98 and ‘99 power spikes in the Midwest, the California crisis” of 2000-2001, said Cody Moore, head of gas and power trading at Mercuria Energy America. “Nothing was as broadly shocking as this week.” One gas trader said in a message over the weekend his head was “still spinning.” Brian Lavertu, a trader in Texas’ power market, predicted prices were about to go “wild.”

That turned out to be an understatement. In what will go down as one of the most remarkable weeks in power and gas market history, gas soared as high as $1,250 per mmBtu in some locations, electricity in Texas surged to its $9,000-per-megawatt-hour price cap and the state’s grid operator ordered the country’s biggest-ever forced blackout as the cold pushed its system to the brink of total collapse. Winners will emerge -- like Jerry Jones, the billionaire owner of the Dallas Cowboys, whose gas company sold some fuel for high premiums. There will most undoubtedly be losers. And the markets may never be the same.

The world of physical gas is dominated by industrial buyers and sellers, trading firms and the odd hedge fund. The action revolves around matching demand in one corner of the vast U.S. energy network with supply in another. Players obsess over the weather that drives demand -- air-conditioning in the summer, heating in the winter.

Gas trader Paul Phillips and his team at Denver-based Uplift Energy spent the week before last focused on the big freeze that had yet to reach Texas. Uplift advises gas producers, for a fee, on how to get the best price. It told clients to get ready.

Despite the mounting concern, benchmark Nymex futures -- the deepest, most liquid market for gas -- were relatively stable at just under $3 per million British thermal units.

Futures, as their name implies, reflect expectations for future supply and demand -- in this particular case, out to March and beyond, but not the looming weekend. Instead it was in the spot market, where gas is bought and sold for immediate delivery, that the alarm started ringing.

Spot prices at the Oneok delivery hub in Oklahoma, for example, which had mostly been trading at a small but steady discount to Nymex, moved sharply higher on Wednesday, Feb. 10, to settle at $9. On Thursday they hit $60. By Friday, they briefly surpassed $500, a level previously undreamed of.

Physical gas sales contracts can require the buyer or seller to pledge collateral, such as a letter of credit, a kind of insurance in case bets go awry or if a company has a liquidity issue. Price gains typically mean more collateral, or margin, is needed.

But the spot gas price spikes now being seen were triggering truly outsized demands: According to one trader, a small market participant with a margin requirement of $100,000 saw that balloon to $1 million. Larger companies had to find tens of millions of dollars. Many spot gas trades are conducted via next-day contracts on Intercontinental Exchange Inc., which boosted its margin requirements.

After the market closed Friday, stunned traders scrambled to work out how much additional funds they would need to set aside for the following week. Some trading houses were extremely nervous. An executive at one said he was worried that some counterparties could go bust and leave his firm with positions to fill on the spot market.

There were also more practical considerations as the weather closed in. Mercuria made the decision to book hotel rooms for some of its Houston employees so they could avoid driving in icy conditions. “This is an exceptional time and our first priority was to do whatever we can to keep the grid moving, the gas flowing properly,” Mercuria’s Moore said.

Meanwhile key pieces of Texas’ energy infrastructure began to fail. Oil and gas wells stopped producing as liquids froze in pipes. By the night of Sunday, Feb. 14, it was apparent that Ercot, which oversees Texas’ power grid, might have to implement rolling blackouts.

Some traders looking to raise more collateral urgently tapped credit lines, while lenders sprang into action. One bank was able to extend credit facilities by $500 million and have them in place when the markets reopened, according to a person working there. Other lenders also took similar action, according to other people with knowledge of the situation. “Nobody wanted to trade a liquidity event, so they stepped up,” one banker said.

By the morning of Tuesday last week, Texas was plunged into an unprecedented energy crisis, with Ercot unable to restore most of the grid. As markets reopened, some traders liquidated their positions, unable to post the additional margin.

“If you want to play, you’ve got to pay,” said John Kilduff, trader and founding partner at Again Capital. “It’s a mechanism to wring out excessive speculation.”

For those still in the game, the wild ride continued. By Wednesday, spot prices had surged at Henry Hub in Louisiana, the delivery benchmark for Nymex futures, while rates at Oneok touched $1,250.

Working from home, Phillips and his co-workers at Uplift saw orders filled in the Western Rockies at prices as high as $350. “I thought maybe the highest we could get was $20 this week, to be honest,” he said.

Some of Uplift’s clients were doing everything they could to keep the gas flowing at this point amid the frigid temperatures, using space blankets and portable heaters to stop pipes from freezing. “Some of our producer clients felt morally obligated that the gas was flowing,” Phillips said.

In Oklahoma, Chris Bird’s company Exponent Energy, was using similarly improvised measures, including a propane gas torch, to keep its gas wells from freezing. In just five days, Exponent’s wells in Osage County raked in about $3 million of revenue, compared with around $800,000 for the whole of last year.

As awareness grew of the sky-high cost of gas, outrage grew, even within the gas market. Some observers questioned why fuel was still flowing to liquefied natural gas export terminals when power was still down for millions of Texans.

“What is happening is a disgusting price-gouging that we have not seen since the California energy crisis,” said John Woods, an independent trader, referring to the spot prices. “Texas should ban the export of fuel.”

By late afternoon Wednesday, Texas Governor Greg Abbott announced during a televised address that he had stopped the shipment of gas from the state.

That created a fresh wave of panic in the market. Traders frantically sought clarification on how the order would be enforced. One trader on the West Coast who had been working around the clock lost $1 million within minutes, having earlier bought a gas swap priced at $20 -- essentially betting on continued supply constraints in Texas -- only to see the price fall to $12 immediately after news of Abbott’s order broke.

At the peak of the power outages, close to 4 million Texans were cut off, but by Thursday Ercot was having more success in reconnecting homes and businesses, and temperatures were beginning to recover. Gas supplies rebounded, too, and spot prices plunged. Oneok rates fell back to settle on Friday at $3.56 and Ercot ended emergency conditions.

While gas prices are almost back to where they started, the full repercussions of the wild ride will likely take a while to emerge. The hasty curbs on Texan exports may jeopardize the perception of how reliable U.S. LNG supplies could be in the future, said Katie Bays, managing director at FiscalNote Markets. Some financial losses in the U.S. market may only emerge toward the end of March, when billing comes due for February. Serious financial damage may end up raising the barriers for entry to the market, which in turn could reduce the amount of competition, said Kilduff at Again Capital.

“We’ll have to see what kind of defaults come to the surface,” he said. “That will dictate who can stay in.”

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Chesapeake Energy Has a Fresh Start — Now It Looks Like a Bargain

Mark R. Hake
Fri, February 19, 2021, 1:52 PM·4 min read

On Feb. 9, Chesapeake Energy (NASDAQ:CHK) came out of Chapter 11 bankruptcy. Now, CHK stock looks like a bargain. The company has no debt except for recently raised five-year notes for $1 billion.


However, after receipts from warrants that are now in-the-money, the remaining net debt is only $71 million, according to an analyst writing in Seeking Alpha.

More importantly, though, management now seems to have become quite serious about generating free cash flow (FCF). Chesapeake even says its FCF will be “sustainable.”

For example, in its initial press release upon exiting bankruptcy, Chesapeake said it expects to generate large amounts of FCF — $2 billion on a cumulative basis over the next five years.

Why CHK Stock Is a Bargain

CHK stock now has 100 million shares. Using its Feb. 16 price of $43.60, Chesapeake’s market capitalization (before any of the warrants are exercised) is $4.36 billion. The $2 billion in FCF averages out to $400 million per year over five years.

Therefore, an investor who intends to hold CHK stock for five years will make a very high FCF yield. For example, $400 million divided by $4.36 billion in market value works out to 9.17% per year on average.

That, in essence, is why the stock is a bargain. Again, this assumes that the investor holds Chesapeake for the full five years and that the company is able to produce that $2 billion in FCF over the same period. If it is able to do that, you will likely see management initiate either a dividend, a share buyback program or both.

This also assumes — as you might have guessed — that oil and gas prices stay relatively high over the next several years. They need to stay high enough for the company to produce these FCF levels. In that vein, Chesapeake Energy also released a very detailed operations presentation on Feb. 9.

The company has become a low-cost operator focused mainly on natural gas in Pennsylvania’s Marcellus shale and the Haynesville region of Louisiana (Slide 12). That shows that Chesapeake now has a cost per barrel of oil equivalent (BOE) of between $13.60 to $15.05.

The difference between those costs (plus admin and capex) and the market price of oil equivalent (currently over $59 per barrel) accrues to free cash flow. In other words, it is making a very good margin that will underline the “sustainable” nature of its FCF yield projections.

What Will Happen

At first glance, it appears that the company really does want to be a much more conservative and “sustainable” FCF generator, whatever that means. I’m keeping that word — “sustainable” — in quotes, since there are no guarantees with a commodity producer.

For example, in the appendix to the presentation, Chesapeake points out that it has hedged or “locked in 75% of forecasted volumes for 2021” (Slide 21). The problem is that those locked-in prices are way below the market prices today. That makes the FCF it may be generating sustainable or guaranteed in one sense, but also missing out on the upside of a bull oil and gas market right now.

So, maybe that conservative strategy might have to loosen up a little bit. That way, the company can participate in the bull market in energy prices expected for the rest of 2021 and 2022.

Nevertheless, if Chesapeake can really produce $2 billion in FCF over the next several years, the market will reward CHK stock very handsomely. This will occur once the market realizes that the company has the wherewithal to begin dividend payments or buybacks.

What to Do with Chesapeake Energy

The enterprising investor who is willing to take management at their word might see CHK stock as a bargain. This assumes that the projected average 9.1% FCF yield comes to pass.

Consider also an FCF yield around 5% or so. That implies that CHK is worth over 80% more. This is because, if you divide the average $400 million in FCF (see above) by 5%, the market value works out to $8 billion.

Basically, CHK stock should be worth 83.48% higher ($8 billion divided by the Feb. 16 market value of $4.36 billion), implying that its target price for sometime over the next five years is $80 per share (before warrants). This works out to an average annual gain of 12.9% per year over five years. That is a reasonably good return, especially if dividends are paid along the way.

On the date of publication, Mark R. Hake did not have (either directly or indirectly) any positions in the securities mentioned in this article

Mark Hake writes about personal finance on and runs the Total Yield Value Guide which you can review here.


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I was just looking at the figures - feed gas into LNG plants is about 9 bn cf/d or about 89bn m3 a year. I don't know what that equates to in what is shipped out the other end. 

Anyway you have to acknowledge the power of wind in that equation. Texan wind resources alone are displacing about 18bn m3 of gas (assume its all burned in CCGT plant). 

Just think Texas wind is responsible for 20% of the USA's LNG export boom. 

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Is Another LNG Glut Looming?

By Tsvetana Paraskova - Feb 21, 2021, 4:00 PM CST


Global natural gas demand is set to return to pre-crisis levels as early as this year and will continue to rise in the coming years, thanks to the coal-to-gas switch in Asia, particularly China.  The growing gas demand will drive more liquefied natural gas (LNG) consumption and trade, and producers are gearing up for a new cycle of final investment decisions (FIDs) on projects.    

The recent record-high LNG spot prices in Asia highlighted the more stable prices of the gas for LNG buyers in long-term supply contracts compared to the much higher volatility in spot prices. However, long-term supply is indexed to the inherently volatile oil prices. 

The term supply contracts are set to underpin the additional LNG capacity the world will need this decade and could prompt a new wave of an investment super-cycle in LNG projects. 

However, a possible new wave of strong investment in LNG could create a massive glut later this decade if most of the planned or proposed projects move forward, Rochelle Toplensky of The Wall Street Journal argues.  

Qatar already moved to claim LNG supremacy, approving last week what it says would be the world’s largest LNG project in terms of capacity, and likely the largest oil and gas project in terms of value to get the green light this year. 

More projects apart from Qatar’s mega plan will be needed to meet the growing LNG demand, analysts say. But they also warn that a renewed rush to sanctioning LNG projects would leave the market with a supply overhang by the end of this decade. 

Around 104 million tons per annum (tpa) of new LNG supply will need to move forward over the next five years in order to meet the 580-million-ton global oil demand by 2030, Rystad Energy says

However, the current proposed LNG capacity is ten times higher—at around 1 billion tpa. This proposed supply will be competing to secure buyers and attract investors, according to Rystad Energy. 

“After a poor sanctioning year in 2020, we believe that the optimism is back in the market and that more final investment decisions for LNG projects will follow after Qatar’s NFE,” the consultancy said last week. 

Related: Gas Companies “Hit the Jackpot” On Deep Freeze

However, new projects will need more careful planning than in the previous boom in the mid-2010s. First, they will have to compete for profitability with low-cost Qatari and Russian LNG projects. And secondly, buyers and investors will be increasingly looking at the environmental credentials of the LNG projects as many major developed economies, most of which are importers of LNG, have raised the bar for environmental standards as they pledge net-zero emission economies within three decades. 

It’s not surprising, then, that when announcing the major North Field project expansion, Qatar Petroleum also boasted plans for a CO2 capture and sequestration (CCS) system as part of the project and said the project would recover 75 percent of the plant’s tertiary water, conserving 10.7 million cubic meters of water per year. 

“Qatar’s decision to construct a carbon capture and storage facility, as well as additional environmental investments, shows that LNG suppliers are increasingly putting focus on ways that they can mitigate their carbon emissions,” said Wood Mackenzie research director Giles Farrer. 

“Policy makers will need to provide clarity on decarbonisation plans, including how they see the role of natural gas, following pledges to achieve climate neutrality,” Wood Mackenzie vice president Massimo Di Odoardo says, noting that “Decarbonising natural gas will become a strategic priority for the gas industry.”

According to Katan Hirachand, managing director at Societe Generale Corporate & Investment Banking, lenders will look at the emissions profile of projects before committing to financing new LNG supply. 

“It is not black and white. Certain projects will go ahead and some will not,” Hirachand said at the online European Gas Conference last month, as carried by Reuters

New LNG projects will be sanctioned this decade after the shock in 2020 put many investments on hold. But those new facilities will have to not only compete with the low-cost high-volume Qatari gas, but also to show emission mitigation efforts in order to win the backing of investors and buyers.  

By Tsvetana Paraskova for

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The Texas Cold Blast Was A Warning To Hydrogen Investors

By Alex Kimani - Feb 21, 2021, 6:00 PM CST

The Texas storm has exposed an energy grid ill-prepared for climate change, with electric grid regulators now saying that the United States needs to rapidly develop vast supplies of power storage--including giant batteries and hydrogen storage. So, it might be wise for investors to avoid any fear associated with the wild valuations of hydrogen stocks. 

Leading hydrogen companies like Plug Power Inc. (NASDAQ:PLUG), Bloom Energy Corporation (NASDAQ:BE) and Ballard Power Systems (NASDAQ:BLDP) could still be prime long-term investment candidates despite currently trading at stratospheric valuations.

PLUG, which manufactures fuel cells, gained over 1,300% in the past 12 months, and it's growing revenue at a fairly fast clip. Until recently, its key market has been forklifts with high-profile customers such as Amazon and Home Depot. But a series of big deals, most recently with Renault, look good for expansion. The only question is whether its revenue growth goals are actually realistic. If they are, then the wild valuation is a good speculative bet. 

PLUG is aiming for revenue of $1.7 billion in 2024, which would be up from 2020's anticipated $327 million. 


Ballard has also been cutting eye-catching deals, particularly in China, that spell expansion, though its revenue has grown slower than PLUG's, but its valuation isn't as wild. 


Bloom Energy just reported its Q4 2020 results and upped its target to reach profitability a year ahead of expectations. Now, profitability is set for this year. 


But on Thursday, these stocks all took a beating, precisely at the time of the Texas deep freeze, when investors should have started to see the potential reality creeping through their crazy valuations … 

Related: Bitcoin’s Market Cap Hits $1 Trillion As America’s Largest Mining Facility Goes

Investors in the energy tech of our future are fickle, and Thursday showed them having second thoughts about further upside potential.  The deep freeze should have been a wake-up call … and it was, to an extent. But with overvalued stocks such as the hydrogen crew, when share prices soar too far and too fast, investors balk at the upside potential and start to pull back. It does not necessarily mean anyone should change their investment outlook on hydrogen. Not at all. 

What the Deep Freeze Could Mean for Hydrogen 

Over the past few weeks, dozens of states in the U.S. have been facing the wrath of the fearsome Arctic Blast. More than 100 million people are currently grappling with devastating winter storms extending from Texas all the way to New England. As previously feared, the extreme weather events have been disrupting energy grids everywhere; however, Texas has, by far, been the hardest hit.

The Lone Star State is going through one of its coldest winters in decades, with temperatures dropping to as low as 11F (-12C) in Houston and 9F (-13C) in San Antonio.

Of the 2.5 million homes and businesses in the country that have suffered power outages, about 1.9 million are in Texas. In fact, about a quarter of the state has experienced serious power disruptions resulting in failing water systems and gasoline shortages as well as hundreds of thousands of homes and cars without heat.

With millions of Texans demanding accountability for the massive disaster, Texas' politicians have, unsurprisingly, been quick to deflect blame with Texas Gov. Greg Abbott (Rep.) making absurd claims that renewable energy is to blame for the power disruptions while other top state lawmakers have been calling for investigations into the Electric Reliability Council of Texas.

Nevermind the fact that nearly two-thirds (30GW) of lost power capacity has been from thermal energy sources such as coal and gas, with only a third (16GW) from renewable energy, mostly wind power. In fact, the Electric Reliability Council of Texas (ERCOT) had warned in November that wind energy would make up less than 10% of the overall winter capacity this year.

Hydrogen as an Energy Storage System

The outages have been concentrated in Texas as the grid was forced to shed load, unable to keep pace with a massive spike in heating demand.

The Federal Energy Regulatory Commission and the North American Electric Reliability Corp. plan to launch a joint inquiry into what triggered the widespread outages across the South and the Midwest while decrying the sorry state of many power grids in the country.

"For batteries to play the ultimate backup system, we're so far away from that it's not funny," Jim Robb, CEO of the North American Electric Reliability Corp., a regulatory body, has lamented in an interview. "To really make the vision that we like to get to, a highly decarbonized electric system, you're going to have to have batteries deployed in many orders of magnitude beyond what we have now."

But maybe the situation could not have been quite as dire if Texas regulators had taken the pains to develop the state's massive hydrogen potential.

Related: Oil Is Hot Again, But For How Long?

Last year, Frontier Energy, in collaboration with 10 partners including GTI and The University of Texas at Austin, launched three-year projects meant to demonstrate that renewable hydrogen can be a cost-effective fuel for multiple end-use applications. The companies chose to conduct the pilot projects in Texas in order to leverage the state's considerable wind power and solar energy resources; hydrogen pipelines, underground salt-dome storage formations, natural gas infrastructure, international port operations, and a large, concentrated industrial infrastructure.


Source: FuelCellStore

With the International Energy Agency (IEA) predicting that renewable energy will account for 18% of the world's primary energy by 2035, there's little doubt that the age of renewables has finally arrived. Yet, renewable energy is faced with one major hurdle: It can be highly variable, intermittent, and unpredictable depending on the season, location, and weather conditions.

To solve these grid-reliability and quality issues, renewable energy facilities need to be paired with an energy storage system to provide continuous and uninterrupted energy. An effective energy storage system (ESS) is able to respond to electricity demand fluctuations that occur with daily, weekly, or seasonal cycles; react to intermittency issues from renewable energy grid-connected systems and also recover energy that may otherwise be wasted. ESS is especially critical for large-scale applications in order to improve energy security and also aid in balancing energy prices.

Green hydrogen can be a viable solution for a state like Texas.

Hydrogen is a flexible energy carrier that can be compressed, liquefied, or stored in a solid or liquid form for use in fuel cells, turbines, or internal combustion engines. Unlike natural gas, power produced by burning hydrogen produced from renewable sources is 100% clean energy and is an effective way of storing massive amounts of renewable energy--far more than any of today's batteries can hold. 

And the best part for pipeline companies: Hydrogen can use the same basic infrastructure that now carries natural gas.

To get around the problem of boil-off inherent to the storage or a cryogenic hydrogen pipeline due to the heat input from ambient, pipelines can use new generation cryogenic Pipe-in-Pipe (PiP) that tolerates hydrogen permeation with no effect on the long term thermal performance of the PiP insulation properties.

With the world's green hydrogen leaders recently joining hands with an ambitious goal to drive a 50-fold scale-up in green hydrogen production over the next six years and drive down hydrogen costs to below $2/kg, thus making the fuel source competitive with fossil fuels in power generation, more states are likely to start exploring hydrogen storage as a means to enhance their power grids.

By Alex Kimani for

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Monday morning Feb 22nd - Natural Gas is down about 5% hovering around 2.90 (down about 16 cents)


Natural Gas Price Fundamental Weekly Forecast – Market on Uncertain Path Towards Sufficient Storage Builds

The futures market could continue to be underpinned because the cold weather could actually return with a vengeance the first week of March.

5 hours ago (Feb 22, 2021 8:26 AM GMT)

Natural gas futures settled higher last week but off their highs after an attempt to breakout to the upside failed to draw enough buyers to continue the move. The buying stopped when the weather models started to show warming trends and the government report fell short of expectations.

Last week, April natural gas futures settled at $2.991, up $0.115 or +4.00%. This was down from a high of $3.060.

Spot Gas Prices Balloon

“Spot gas prices ballooned last week to the thousands and one of the biggest states in the country left more than four million of its residents in the dark and cold during a prolonged, unprecedented Arctic freeze,” according to Natural Gas Intelligence (NGI). NGI’s Weekly Spot Gas National Average rocketed $16.855 higher week/week to $33.680.

Energy Information Administration Weekly Storage Report

Last Thursday the Energy Information Administration (EIA) reported a 237 withdrawal from U.S. gas stocks for the week-ended February 12, a print that disappointed versus consensus expectations but came in much larger than the year-ago 141 Bcf draw and the 142 Bcf five-year average.

Total working gas in storage stood at 2,281 Bcf as of February 12, down 105 Bcf from year-ago levels and 57 Bcf above the five-year average, EIA said.

Short-Term Weather Outlook

According to NatGasWeather for February 22-29, “A weather system with rain and snow will track across the Ohio Valley and Northeast Monday, with showers extending all the way to the South and Southeast. But overall, conditions will be much milder Monday through Wednesday compared to last week with highs of 50s to 70s over the southern U.S. and 30s to 50s over the northern U.S. A cold front will dive down the Plains late in the week, while a second system sweeps across the Midwest, Great Lakes, and Northeast Thursday through Saturday with lows of 0s to 30s for a swing back to strong national demand.”

Weekly Forecast

Although the futures market failed to follow the cash market sharply higher last week, it could continue to be underpinned this week because the cold weather is expected to linger in key demand areas and could actually return with a vengeance the first week of March.

Mobius Risk Group analysts said, “If colder-than-normal temperatures linger longer than expected (Friday’s 6- to 10-day weather forecasts hinted at this) or another cold shot or two arrive in March, the NYMEX curve may finally begin to reflect the very uncertain path towards sufficient storage builds during the summer 2021 injection season.”

Furthermore, Morgan Stanley Research analysts said it was lowering its end-of-March inventory estimate to 1.413 Tcf, down from 1.466 Tcf. Reaching this level would bring stocks 30% below last year and 20% lower than the five-year average.

For a look at all of today’s economic events, check out our economic calendar.

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Qatar's LNG Megaprojects Are Making Markets Increasingly Competitive

By Vanand Meliksetian - Feb 22, 2021, 1:00 PM CST

Qatar Petroleum’s recently set a new record for the largest LNG export project ever. By 2026, the country will once again become the world's largest supplier of liquefied natural gas by overtaking Australia. The signing of the contract was delayed for a year due to economic uncertainty as a direct consequence of the Covid-19 pandemic. With the mega-expansion, the market could be oversupplied for years and the feasibility of other projects that are awaiting their investment decision could be in jeopardy.

For years Qatar Petroleum was the de-facto leader of the global LNG industry. The self-imposed moratorium was intended to ensure competitiveness in the long-term by preventing oversupply. Currently, Qatar produces 77 million tons per annum (mtpa). With the first phase expansion, the country will increase its capacity to 110 mtpa by 2026. By 2026 this should rise to 126 mtpa after completion of the second phase.


Qatar’s decision to lift the moratorium is a direct consequence of increased competition by primarily Australia and the U.S. Also, Russia has entered the fray with major plans of its own. The added supply went at the expense of Qatar Petroleum which was losing market share. According to Giles Farrer, research director at Wood Mackenzie, “Qatar is pursuing market share. This FID (final investment decision) is likely to increase pressure on other pre-FID LNG suppliers, who may find Qatar secured a foothold in new markets.”

Global demand is expected to increase to between 560 mtpa and 600 mtpa by 2035 up from 315 mtpa in 2018. The expectation is that an additional 100 mtpa to 140 mtpa of new capacity will be required until 2035. Currently, an unprecedented amount of 100 projects with a production capacity of 1,100 mtpa are awaiting FID. According to McKinsey, these projects require a break-even price of $7 per million British thermal units (MMBTU) to maintain competitiveness.  Related: Even Bill Gates Is Struggling To Go Completely Green



In this regard, Qatar's LNG industry has a strong advantage due to low production costs compared to the competition. The cheap feed gas from the world's single largest natural gas field, South Pars/North Dome, significantly improves Qatar Petroleum's competitiveness despite the excruciating heat of the Middle East. Russia's arctic climate, however, makes it possible to keep liquefactions costs low. Coupled with cheap feed gas, Novatek's facilities are also highly competitive.

This means that many of the envisioned projects won’t make it to the finish line under the current expected demand growth. However, there are reasons to believe that demand could increase more than currently expected. First, the growth of renewables in all regions of the world increases the need for flexibility to balance the grid. Currently, natural gas is a good contender due to its wide availability and relatively low CO2 emissions.

Second, carbon ceilings decrease the long-term competitiveness of coal in favor of gas that emits approximately 50 percent less CO2. China, the world's largest emitter of greenhouse gasses, saw the launch of its carbon trading market just a few weeks ago. This could boost demand for LNG in favor of coal in the Asian country.

Lastly, with rapid industrialization developing countries are facing an environmental crisis comparable to China not so long ago. Therefore, it is reasonable to expect that demand for cleaner gas could offset more pollutant fuels such as coal which is dominant in the energy mix of many countries.

However, it remains unclear how fast demand will grow. The absence of an organization dedicated to natural gas comparable to OPEC and a swing-producer comparable to Saudi Arabia makes the LNG market highly volatile. Also, the high upfront costs and long-development time make investments risky. By the time a project is completed, the market could have transformed.

Therefore, expect many of those 100 pre-FID projects to fail in reaching the finish line in the next decade.

By Vanand Meliksetian for

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Texas Deep Freeze Delivers Macquarie $210 Million Windfall

Nabila Ahmed

Mon, February 22, 2021, 5:05 AM·3 min read

(Bloomberg) --

The Texas deep freeze that upended the U.S. energy market has delivered Macquarie Group Ltd. a windfall of as much as A$270 million ($210 million) amid wild swings in gas and electricity prices.

The Sydney-based investment bank on Monday raised its profit forecast, citing increased demand for its gas and power supply services in the U.S. At the same time, Griddy Energy, a household supplier in Texas that’s backed by Macquarie Energy is handing out massive electricity bills to residents who used power when wholesale prices were spiking.

Macquarie is the second-biggest physical gas supplier in the U.S. behind BP Plc, and typically moves gas between different parts of the country based on last-minute customer needs.

Last week the bank profited as its major clients -- including energy companies -- sought to buy and move higher-than-expected volumes of gas and electricity to their customers amid the crisis in Texas, according to a person with knowledge of the matter. The price of physical gas, which is normally less than $3 per million British thermal units, skyrocketed to as much as $1,250 in some locations last week.

As the cold blast froze oil and gas wells, sent electricity prices to record highs and caused blackouts for 5 million homes and businesses, more of Macquarie’s customers ordered gas for Texas that had to be shipped from other parts of the country, the person said.

Consumers are now feeling the impact of the huge price swings. Griddy customers in Texas are being handed massive utility bills some as high as $8,000. The supplier charges electricity based on real-time prices in wholesale markets, therefore passing the costs straight on to consumers. Griddy saw the problem developing and even urged its retail customers last weekend to switch to another provider. By Sunday last week, 20% managed to do so.

Macquarie’s commodities business is unusual among banks in the U.S., where counterparts such as Goldman Sachs Group Inc. and Morgan Stanley have had to curb commodities trading activities to satisfy regulators. But Macquarie, which expanded its commodities operations by purchasing Cargill Inc.’s power and gas trading business in the U.S. in 2017, doesn’t trade commodities with its own balance sheet, the person said.

In its profit upgrade, Macquarie said the “extreme winter weather conditions in North America have significantly increased short-term client demand for Macquarie’s capabilities in maintaining critical physical supply across the commodity complex and particularly in relation to gas and power.”

After two weeks ago saying earnings in the year ending March 31 will be “slightly” down on last year’s result, Macquarie on Monday forecast profit would now be up 5%-10%. That implies net income of about A$2.87 billion ($2.3 billion) to A$3 billion, compared to A$2.73 billion a year earlier.

The improved outlook sent Macquarie shares to a one-year high in Sydney trading. The stock was up 3.7% to A$147.56 at 3:50 p.m. in Sydney, the highest since Feb. 21, 2020.

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The First Texas-Freeze Casualty: Just Energy Implodes, Issues Going Concern Warning

Tyler Durden's Photo
by Tyler Durden
Monday, Feb 22, 2021 - 8:59

Just Energy's shares crashed more than 21% in the premarket after the company released a statement about steep losses incurred during the winter storms that swept across Texas last week warning of doubts about remaining a 'going concern' (translation: it may not survive).

“The financial impact could change as additional information becomes available,” it said in the statement.

“Accordingly, the financial impact of the Weather Event on the Company once known, could be materially adverse to the Company’s liquidity and its ability to continue as a going concern.”

Just Energy hit a record low ($4.05) in premarket trading since it went public in 2002... and peaked above $600 in 2007.


The retail energy provider specializing in electricity and natural gas commodities, renewable energy options, and carbon offsets revealed that it lost $250 million due to Texas's latest "weather event".

"The sustained high prices from February 13, 2021 through February 19, 2021, during which real-time market prices were artificially set at USD $9,000/MWh for much of the week, it is likely that the Weather Event has resulted in a substantial negative financial impact to the Company."

Based on current information available to the company as of the time of this press release, the company estimates that the financial impact of the Weather Event on the company could be a loss of approximately USD $250 million (approximately CAD $315 million), but the financial impact could change as additional information becomes available to the company," Just Energy stated. 

The company warned the material impact could cause "liquidity" issues and raises doubts it can continue operating. It's currently talking with top stakeholders regarding the impact of the weather event last week. 

As we first discussed more than a week ago, and long before the full extent of the Texas freeze was revealed (see "Energy Trader: We've Officially Hit "Holy S*it Levels"), the extreme moves in natgas caught many energy and power companies offside, and Just Energy may well be the first causality of last week's weather event. In the coming days, more energy firms could release statements about steep losses. 

"We'll have to see what kind of defaults come to the surface," Again Capital's John Kilduff said, and as of this moment we are waiting to see who else drowned in the "rogue wave."



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CBS News

Skyrocketing electric bills are "top priority," Texas governor says


Texas Governor Greg Abbott said Sunday that dealing with residents' skyrocketing electric bills is the "top priority" for the state Legislature, and he said there will be a moratorium on customer disconnects for nonpayment. As the power went out amid deadly frigid temperatures, Texans who did not have a fixed electric plan had their bills spike due to market costs, with some reporting their bills totaling in the tens of thousands. 

Abbott and the Legislature held an emergency meeting Saturday to find ways to "shield" residents from the skyrocketing bills. "Texans who suffered through days of freezing cold without power should not be subjected to skyrocketing energy bills due to a spike in the energy market," Abbott said Sunday.

There are about 30,000 Texans who did not have power as of Sunday afternoon. Abbott said he expected power to be restored throughout the state by Sunday evening.

In addition to the crisis of skyrocketing electric bills, Texas is also facing two other immediate crises: food shortages and lack of access to clean water. Abbott said Sunday that he is suspending regulations on trucking to get drivers on the road to deliver food to grocery stores quickly. He also suspended regulations on kitchens to prepare food as long as they comply with state health guidelines.

Abbott also said the state will be distributing "Meals Ready to Eat," or MREs, and he requested a USDA disaster declaration to help distribute food.

The Texas Department of Environmental Quality said boil water notices have been lifted for about 5 million Texans on Sunday, including in Houston and most of San Antonio, two of the state's largest cities. Two days ago, 14.9 million Texans were under boil water notices.

Abbott is also bringing in plumbers as residents try to deal with broken pipes.

He urged anyone with issues to call for a plumber as soon as possible, as well as call the insurance companies.

In addition to the triple immediate crises, Abbott said that from now on, Texas will winterize all sources of energy. 

"We should never run short of power again," Abbott said. "Texas is the energy state, we need to make sure that we translate that into power generation to make sure the power stays on."

On Saturday, President Biden issued a major disaster declaration, making 77 of Texas' 254 counties eligible for federal funding to help with recovery efforts.

Temperatures plunged throughout the state last week, leading to a spike in energy usage that caused the power grid to shut down. At least 30 deaths have been attributed to the storm in Texas, including a grandmother and three elementary school-aged children who died in a house fire in suburban Houston.

Warmer temperatures over the weekend caused snow to melt.


Reuters Videos

Texas' Abbott to temporarily ban electric bills

Texas Governor Greg Abbott announced a temporary ban on electric bills Sunday, as the state reels from a deadly winter storm which left millions without power.

The ban comes after many Texans were charged thousands of dollars for electricity during the deadly deep freeze.

According to invoices posted on social media, some Texans who managed to get their power back racked up $5,000 electricity bills over just five days.

Abbott told reporters in San Antonio Sunday that some 30,000 Texans were still without power.

"The Texas Public Utilities Commission called an emergency meeting today to issue a moratorium on customer disconnections for non-payments. They are also going to restrict electric providers from sending customer invoices at this time. And this pause will give them time to address the electric and power billing challenges that Texans are seeing."

Texas has a highly unusual deregulated energy market that lets residents choose between scores of competing electricity providers.

Some providers sell electricity at prices that rise in sync with demand, which skyrocketed as the record-breaking freeze gripped a state unprepared for extremely cold temperatures.

The news has prompted criticism from politicians on both sides of the aisle, including U.S. Senator Ted Cruz, who called the rate increases "ridiculous" and distanced himself from the free-market system he had previously praised.

Separately, Texas Attorney General Ken Paxton has ordered an investigation into power companies regarding their outages, emergency plans and pricing, saying that the companies "grossly mishandled" the weather emergency.

Video Transcript....

Edited by Tom Nolan

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Although only indirectly related to LNG,  the recent  announcement out of the University of Illinois about a breakthrough in the making of methanol at room temperature could possibly have far reaching consequences.

While the conversion of methane into LNG form requires enormous expense and technological sophistication, this announced method uses a titanium/copper catalyst and small amounts of electricity to convert gaseous methane  into stable methanol form.


Like many other potential 'breakthroughs', this may not lead anywhere substantive, but if a practical/affordable process of liquefying methane is doable without going the cryogenic route, the ramifications could be pretty profound.

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FX Empire

Natural Gas Price Fundamental Daily Forecast – Pressured by Forecasts Calling for Improving Weather Conditions

James Hyerczyk

Tue, February 23, 2021, 7:52 AM·2 min read

Natural gas futures are edging lower on Tuesday as warmer weather in Texas is helping production to recover faster than previously expected from last week’s Arctic freeze that rattled the energy markets last week. Falling spot gas prices are also weighing on the futures markets as well as forecasts calling for improving weather conditions. Nonetheless, traders shouldn’t become complacent with volatility expected to return with the March contract roll-off on Wednesday.

At 13:25 GMT, April natural gas is trading $2.875, down $0.061 or -2.08%.

Short-Term Weather Outlook

NatGasWeather said the more moderate conditions are expected to shift colder late this week, but the latest weather data paints a less cold picture than in earlier outlooks. The data is colder with a second system forecast to follow March 2-4. Overall, though, the set-up for the 12- to 15-day forecast period is bearish, according to the forecaster.

Despite the warmer weather on tap for this week, NatGasWeather said “the damage from the recent Arctic blast has been done.”

The firm expects the 54 Bcf gas storage surplus over the five-year average reflected in last week’s storage report to soon be a deficit of 300 Bcf, “making the background state bullish.”

“It would just be more impressively so if the 12- to 15-day forecast wasn’t so mild,” NatGasWeather said.

LNG Demand Still Sluggish

Natural Gas Intelligence (NGI) reported that liquefied natural gas (LNG) feed gas demand is currently 8.6 Bcf/d, up from a low point of about 1.5 Bcf/d but still 2.5 Bcf/d shy of nameplate, TPH said. NGI data confirmed this level of feed gas volumes. The bulk of the gap is attributable to reduced flows to the Freeport LNG terminal, where all three production units remain offline.

In addition Mexican exports are still roughly 1 Bcf/d below prior levels, according to TPH. This is resulting in a total net demand impact of 3.5 Bcf/d.

Short-Term Outlook

EBW Analytics Group analysts expect “monster draws” to be reported this week and next, eliminating a quarter of the gas in storage to the tune of around 550 Bcf.

Tudor, Pickering, Holt & Co (TPH) struck a similarly bullish tone regarding storage, with analysts indicating “extra tightness” in the market is already reflected in supply/demand data.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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The Most Important Pipeline You’ve Never Heard Of

By Global Risk Insights - Feb 23, 2021, 9:30 PM CST


“[With] the Balkan Stream project, Bulgaria will become a regional strategic gas distribution centre and will guarantee the diversification of gas supply”

— Boyko Borisov, Bulgarian PM

The competition of the ‘Balkan Stream’ (BS) extension to the Turk Stream pipeline has received little attention. This holds true strangely even in the countries through which it runs: Bulgaria and Serbia. Nevertheless, the pipeline has the potentiality to change the geopolitics of natural gas supply. How will South-Eastern Europe exploit this opportunity — if at all?

The Pipeline that Wasn’t…

On December 29, Serbian president Aleksandar Vucic announced that Russian natural gas would start flowing via the Balkan Stream pipeline. The new pipeline will allow Russia to supply gas to central Europe by extending the more controversial Turkish Stream. Meanwhile, the EU and the Western Balkans (WB) will be able to diversify gas routes bypassing still-unstable Ukraine (Figure 1). By circumventing turbulent areas of the Former Soviet Union (FSU), the BS hands Moscow more leverage on Kiev and Minsk. In fact, both countries are heavily dependent on the transit fees Russia pays to use Ukrainian and Belarussian pipelines. Being able to shift a sizeable portion of these supplies further south would deal a devastating blow to those economies. Meanwhile, it grants the EU a few aces in the hole to in its relations with Turkey and the Eastern Neighbourhood.

However, because of the BS Brussels is set to confront a much more complex issue. As South-Eastern Europe (SEE) regains centrality in the geopolitics of energy, new risks emerge. The WB, and namely Serbia, as well as EU member Bulgaria, have acquired a big stake in the game. How will their government leverage this new position?

Enter Bulgaria....


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Natural Gas Is Driving Decarbonization In India

By Tatiana Serova - Feb 23, 2021, 4:00 PM CST

Tatiana Serova is a freelance journalist and a Masters' student in International Energy and Journalism. She has experience working in newsrooms and for international organisations (OECD).

“Come and invest into India’s energy sector”. Indian Prime Minister Narendra Modi’s words, pronounced at the inauguration of a new gas pipeline on February 17th, sent a clear message: the country’s energy landscape is undergoing fundamental transformations and will seek to attract foreign investors. 

After the Covid-19 crisis ravaged the country and caused massive disruptions in local industries, India is slowly getting back on its feet. With the promise of double-digit economic growth in 2021, India is set to become the world’s largest energy consumer - particularly for fossil fuels - along with China - in the coming years. Indian energy demand is expected to grow by some 3% per annum until 2030, the Minister of Oil and Gas Dharmendra Pradhan said at the 11th IEF-IEA-OPEC Symposium on energy outlooks. 

To power this dynamic growth, Modi outlined the objective of a “gas-fired economy”, under which the share of gas in the energy mix would jump from 6% today to 25% by 2030. This ambitious target was revised from the 15% goal announced earlier in 2020. Modi thus hopes to embark on the sustainability road by betting big on natural gas as a base-load fuel, while developing renewable energy at the same time.  As announced in 2019, a total budget of $60 billion will be dedicated to modernizing the gas infrastructure of India, which currently occupies the world’s third spot in terms of GHG emissions.

But beyond industries and transport, the sector of fertilizers is also a key driver for this natural gas demand in India. In fact, methane is used as a feedstock for the fabrication of fertilizers and other chemicals, and new plants will be installed for that purpose in the coming years. 

LNG on the rise 

India’s steady decline in domestic gas production created the need to import LNG. In 2019, India was ranked fourth in the world in terms of volumes of LNG imported, with 20 million metric tons. Until now, the country has been taking advantage of low spot prices on the Asian LNG hub, concluding deals at levels below $10 per MbBtu before this winter surge in prices. Although Qatar is India’s historic supplier, the United States and the United Arab Emirates are also becoming increasingly important partners.  Related: How Hard Did The Texas Freeze Hit U.S. Shale Production?

Amounting to around half of the gas basket in India, LNG constitutes a major part of this “gas-revolution”. The Ministry of Oil and Gas recently released a new plan aiming at enhancing the country’s regasification capacity, and notably promoting LNG for the transport sector (specifically for long-haul trucks). This regasification capacity is expected to increase from 41 million cbm per annum to 57 million cbm, according to Minister Pradhan’s statement during the 11th IEF-IEA-OPEC symposium. 

The challenge of grid extension 

Today, however, India lacks pipelines that could transport gas from LNG terminals to the final consumption points, and access to natural gas is unequal in the Eastern and Western parts of the country. Most of the existing LNG terminals are located in the West, accounting for around 75% of India’s import capacity, and leaving the Eastern region marginalized from gas. This is why the Urja Ganga pipeline project aims at solving that issue and connecting the Eastern region to the national gas grid. 

The major challenge is now making energy accessible throughout all the Indian territory, and particularly in rural areas. This is precisely the aim of the “One Nation, one grid” program, launched in 2019, and planning to extend the gas network from 17 000 km to 35 000 km. Furthermore, PM Modi announced on February 17th his intent to include natural gas into the Goods and Services Tax regime, which will make gas prices harmonized across the country and facilitate investment. 

As 53% of natural gas consumed in the country is currently imported, several pipeline projects are already planned, slowly paving the way for India’s energy independence. On February 18th, Prime Minister Narendra Modi dedicated the Ennore-Ramanathapuram pipeline. He earlier inaugurated the Kochi-Mangaluru gas pipeline, on January 5th, by video-conference. 


A shy investment in clean gases

In parallel, a nation-wide program dedicated to biofuels has also been announced earlier in 2020. The option of hydrogen is not actively explored, although a report by the Energy and Resources Institute (TERI) predicted a drop in costs of 50% for hydrogen production by 2030, which will be likely to boost demand. However, subsequent investment will be required in CCS infrastructure, which is far from being developed in India. 

All this being said, scenarios for future natural gas demand are far from being certain. While the International Renewables Energy Agency believes that natural gas will peak around 2025, the Gas Exporting Countries Forum expects the gas share to increase to 28% in the world energy mix by 2050, mainly driven by the Asia-Pacific market. One thing appears clear: for India, natural gas is the most pragmatic solution to balance the grid amid ambitious targets in renewable generation, and at the same time seizing momentum in the growth of the blue fuel. 

By Tatiana Serova for

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Trillion Energy International Inc. (TCFF) might be worth looking at.

Fundamentals are fantastic.  It is a gas and oil producer.

Trillion Energy is Deeply Undervalued and Poised for Rerating with CEO Art Halleran




Trillion Energy is deeply undervalued and poised for a significant rerating explains CEO Art Halleran in this interview.  The current cashflow of about US$2M from its oil production easily justifies the company’s US$10M market cap. But Trillion is currently getting no value for its SASB project’s US$608M of fully built-out infrastructure which is about to be producing natural gas in 2021. The company owns 49% of the SASB project in the Black Sea just off the cost of Turkey and has an offtake partner ready to purchase its gas.


Art has said that if he were to sell the project’s production platforms and processing facility for scrap metal it would be worth more than Trillion’s current US$10M market cap.  Not only is Trillion’s liquidation value higher than its current market cap but the company also calculates the intrinsic value of its gas reserves at US$1.25/share while shares have only been trading between 6 and 8 cents US per share recently.  And to further demonstrate how undervalued Trillion is, Art pointed out that a Columbian natural gas producer NG Energy has less than half of the reserves as does Trillion yet it has a current market cap of US$125M.


In addition to the clear fundamental value of the company, Trillion has tremendous blue sky potential on both its natural gas and oil license areas.  The company’s SASB gas field is located just 100km south of the largest gas discovery in 30 years in Europe and is the only nearology play in the region.  Trillion also owns a 100% interest in 42,833 hectares oil exploration block covering the northern extension of the prolific Iraq/Zagros Basin as well as in the Vranino 1-11 block in Bulgaria, a prospective unconventional natural gas property.


Art has already built several successful energy companies.  Once such company is Canacol Energy which he co-founded and now has a US$500M market cap as the largest natural gas producer in Columbia.  He has a Ph.D in geology and over four decades of experience in the gas and oil business.  Art became involved with Trillion four years ago because of the quality of the SASB asset and has never sold even one share. He explained, “I'm going to hang onto my shares until I get the shares up to the value it should be.”


0:00 Introduction

1:35 Art has already built a US$500M energy company

3:04 SASB flagship gas asset severely undervalued

5:10 TCF has all infrastructure & gas buyer in place

5:51 TCF has cash-flowing oil asset on shore

6:17 US$20M needed to recommence gas production

8:54 Expecting cashflow approx. Aug 2021

9:44 TCF intrinsic value about $1.25 per share

10:41 TCF undervalued relative to peers

12:51 Expected FCF in 2022 is $1.2-$1.8M per month

15:15 Turkey as a jurisdiction

16:03 Turkey NatGas price $6-7 mcf which is higher than North America market

17:32 Plans to list on the London Stock Exchange

18:20 Share structure


Art's email:


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