Morningstar® Commodities Research

In-Depth Reports

NYISO Term 2017-20 Outlook

Outlook Excerpt:

Three transmission owner transmission solution, or TOTS, projects were completed in June 2016 to reduce the impact of the Indian Point retirement in April 2020 (Unit 2) and April 2021 (Unit 3) by adding 575 megawatts of transfer capability to the upstate New York to ConEd interface. The added transfer capability combined with the addition of CPV Valley 775 MW in Zone G (Millennium gas) set to come on line in 2018 and Cricket Valley Energy Center 1,000 MW in Zone F (Iroquois gas), will help fill the supply gap and solve the bulk NYISO power system. But we still believe that upside risk from congestion, especially from zones F to G, is likely to show up in a post-Indian Point world and that the market is probably underestimating the impact in 2020 and 2021. This would force more-expensive downstate Zone J generators to be on margin more often. From 2019 to 2020, the current forward market is only pricing in a $1.40/MW increase in Zone G on-peak spark spreads versus Iroquois gas and less than $0.60/MW of contango in fixed-price Zone G. Zone J should see similar upside from the retirement of Indian Point but could separate further from Zone G in winter if oil prices continue to rally.

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NYISO Zone A On-Peak Day-Ahead Clearing Prices and Timeline of Impactful Events

Pacific Northwest Refineries: Cheap Crude and a Captive Market

Outlook Excerpt:

The five refineries in the U.S. Pacific Northwest performed better in 2016 than rivals on the East or Gulf coasts for two main reasons. First, the changing pattern of North American crude supply has worked to their advantage. Faced with the threat of dwindling mainstay crude supplies from Alaska, refiners in Washington state replaced 22% of their slate with North Dakota Bakken crude shipped in by rail. They have also enjoyed advantaged access to discounted crude supplies from western Canada. Second, Northwest refiners face less competition for refined product customers than rivals on the East and Gulf coasts, meaning they have a captive market that often translates to higher margins.

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Crude Supply to Washington State Refineries

PJM Zonal Term Outlook

Outlook Excerpt:

The rally in Central Appalachia coal prices from $34/ton in June 2016 to more than $56/ton in November 2016 has significant implications for power prices in PJM at both the RTO and zonal levels. Coal still sets the marginal price during 42% of on-peak hours in PJM and, as we discuss below, we do not see that changing much at the RTO level (absent congestion) through 2020 even as another 16 gigawatts of gasfired combined cycles come on line

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PJM TRO Generation Stack

Marcellus Takeaway Expansions and Impact on Gas Basis

Outlook Excerpt:

We are in the midst of one of the largest regional expansions of gas pipeline infrastructure in the last 50 years because of the need to find markets for rapidly growing production out of the Marcellus and Utica.

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Marcellus and Utica Production and Takeaway Capacity Step-Up

East Coast Refining After the Shale Boom

Outlook Excerpt:

The shale boom breathed new life into East Coast refineries that were under threat of closure by their owners between 2009 and 2012. Now some of those same refineries are under threat again, suffering poor margins as well as expensive compliance with environmental regulations.

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Petroleum Administration for Defense District









Research Notes

Power & Gas Research

Oil Research