What will happen to NY, they keep banning gas power gens and pipelines?!! Hotter temps, lower prices to lift summer gas burns in Northeast, Southeast

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Hotter temps, lower prices to lift summer gas burns in Northeast, Southeast

Weather Service predicts up to 40% risk for above-average temps

Cash prices in June down 40 cents to 60 cents/MMBtu on year

Above-average summer temperatures along the US Eastern Seaboard and Southeast, combined with historically low gas prices there could drive upside risk for the regions' power burn levels over the coming months.

 

In a forecast published Thursday, the US National Weather Service predicted a 33% to 40% chance for abnormally warm temperatures from July to September in states stretching from Maine to Florida.

Warmer temperatures are also likely to prevail across much of the US Southeast including all or most of Georgia, Alabama, Mississippi and Louisiana, the Weather Service said.

With gas prices across the Northeast and Southeastern US currently hovering near multiyear lows, power burn levels in the two regions could be expected to hit new record highs later this summer.

At Boston's Algonquin city-gates hub, cash prices averaging just $2.14/MMBtu this month are down about 42 cents compared to the 2018 month-to-date average. At New York's Transco Zone 6, prices are down more than 60 cents over the same period, averaging about $2.12/MMBtu so far in June.

At key hubs across the Southeast, prices are about 55 cents to 60 cents lower this month compared to June 2018, averaging $2.33/MMBtu at Transco Zone 4 and $2.37/MMBtu at the Henry Hub, S&P Global Platts data shows.

SUMMER-TO-DATE

Already this month, power burns in the Northeast and the Southeast are at record levels.

Currently averaging over 7.4 Bcf/d, Northest power burn in June is at a record high this month to date, despite cooler-than-average temperatures, which are off about 0.6 degrees Fahrenheit since June 1.

In 2018, Northeast power burn from June 1 to date averaged 7 Bcf/d, despite above-average temperatures across the region.

While lower gas prices have supported the economics of coal-to-gas switching this year, recent changes to the Northeast generation stack have also favored gas as a percentage of total thermal load.

Over the past 12 months, generators across the Northeast have added over 11,500 MW of gas-fired power and simultaneously retired nearly 5,000 MW coal-fired generation, S&P Global Platts Analytics data shows.

In the Southeast, power burn this month is also outpacing historical averages -- though by a smaller margin compared with the Northeast. At just over 10.8 Bcf/d, power burn in the Southeast is up about 180 MMcf/d compared to last year's June-to-date average.

While temperatures in the Southeast are nearly flat to historical averages, changes to the region's generation stack have also supported higher burns. Generators in the region have added about 4,900 MW of new gas-fired capacity over the last year and retired about 1,500 MW of coal-fired power.

According to Platts Analytics, average temperatures in the Southeast would see burns levels average about 11.6 Bcf/d from July to August, or about 270 MMcf/d below levels seen over the same two-month period last summer.

In the Northeast, though, even weather-normal burns are expected to outperform this summer. From July to August, power burn is forecast to average nearly 9.6 Bcf/d, compared to last summer's 9.1 Bcf/d average over the same two months.