PIRA Energy Group's Weekly Natural Gas, Power and Coal Market Recap for the Week Ending September 15th, 2013

Planned Liquefaction Maintenance Adds Up, While Recent Operational Data Bullish for German Off-Peak Power Prices

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PIRA Energy Group

PIRA Energy Group

Will the revolution on the supply side of the North American gas market be followed by a revolution on the demand side? PIRA’s newly released study, “Gas Demand Implications of the Shale Revolution,” answers these questions.

New York, NY (PRWEB) September 18, 2013

NYC-based PIRA Energy Group believes that planned liquefaction maintenance adds up. In the U.S., there is very slow progress for Alaskan gas pipeline. In Europe, there is planned rough storage closure pushing more Norwegian gas to France and Belgium. Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:

Planned Liquefaction Maintenance Adds Up

Angola LNG 53-day maintenance period has been pushed out to mid-Sept. on leaks in onshore gas pipelines. PIRA estimates the plant could restart in early November. Trinidad train 3 is down for maintenance this month, while Qatar maintenance this month through November will take off some 23-mmcm/d on average for the period.

Very Slow Progress for Alaskan Gas Pipeline

Progress has moved glacially since January 2012 when Alaskan Governor Sean Parnell called on TransCanada and three North Slope producers “to move forward on a large-diameter LNG pipeline to tidewater in Alaska.” This past June, Governor Parnell acknowledged the four companies did not meet his latest benchmark for progress, which was an agreement to conduct preliminary engineering and design work (pre-FEED). In our view, ExxonMobil is the key player to watch, as the Alaskan gas pipeline cannot be completed without its participation.

Planned Rough Storage Closure Pushes More Norwegian Gas to France and Belgium

Lack of access to Rough storage will create trading anomalies over the next week in the U.K. The Rough storage closure has not led to higher U.K. flows to the Continent, as Norway has diverted more volumes to France and Belgium. These countries experienced significant decreases back in August during heavier maintenance in Norway.

Gas Demand Implications of the Shale Revolution

How much longer will gas prices be range bound between $3.00 and $4.50/MMBtu? Will the revolution on the supply side of the North American gas market be followed by a revolution on the demand side? PIRA’s newly released study, “Gas Demand Implications of the Shale Revolution,” answers these questions. Subscribers will have the opportunity to discuss the report’s findings with the authors during and after the September 17 online briefing.

NYC-based PIRA Energy Group believes that recent operational data bullish for German off-peak power prices. In Asia, demand surge prompts uptick in 4Q13 coal prices. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:

Recent Operational Data Bullish for German Off-Peak Power Prices

PIRA sees as bullish the recent operational data from the EEX transparency platform, which appears to be suggesting more aggressive dispatching patterns in the German power market, especially for coal units. These more aggressive patterns have emerged in the form of increased short-term unavailability, as a result of more frequent warm and cold starts, which could be interpreted as an attempt by power generators to cut costs and limit the downside at off-peak hours or days with relatively lower fossil fuel retirements.

Asian Demand Surge Prompts Uptick in 4Q13 Coal Prices

Seaborne coal prices strengthened again this week, with 4Q13 API#2 (Northwest Europe) and FOB Newcastle (Australia) gaining marginally more than API#4 (South Africa). The continued strike at Drummond’s Colombian coal mines may have made some European coal buyers slightly nervous about the rate of resupply in the run up to winter, particularly as gas-fired generating costs are significantly higher. In the Pacific Basin, heightened coal demand in China and Japan, and lower throughput from Newcastle likely caused the strength in FOB Newcastle prices.

Sharply Higher Gas Prices in France's Southern Gas Hub are Threatening the Future of Gas-Intense Fertilizer Makers

Gas prices in the southern gas hub of PEG Sud have typically been 10-15% higher than the northern hub for the past 18 months, as the zone relies on around 50% of its supplies in the form of LNG. During the middle of August the differential narrowed to near zero, but the gap expanded again to a differential of 8% in the second week of September.

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Click here for additional information on PIRA’s global energy commodity market research services.

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