The New Normal

April 29, 2013

Since May of 2012

When the natural gas

Nymex (gas out of the ground)

Hit the floor at just under $2.04 a dth

We have seen the nymex

More than double!!!!!

Today the nymex is at $4.16 a dth

All this talk about……

Overflowing gas supplies

Storage levels being at a

5 year high

Has not dampened the market

I have had many conversations

With people in the energy industry

There is an….

Across the board agreement

That there is little substantiation

For this increase in pricing

Will prices go back down?

Hard to say…..

I do not see it dropping

To where prices were last May

Is having over a $4.00 nymex

The new normal

Stay tuned

For more insight contact george@hbsadvantage.com or call 856-857-1230

Visit us on the web http://www.hutchinsonbusinesssolutions.com

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Back in September

Right after Labor Day

Future forecast show

We are in for……

A cold winter

Thus began the long trudge….

Natural gas prices

Started inching up

In October

The drumbeats started

Beating louder

Forecasts are calling

For a cold winter

Natural gas prices

Inched up

A bit higher

All this was happening

As Natural gas storage levels

Remain at….

An all-time high

Future supplies are poised

To make the US

The world’s largest

Natural gas supplier

New finds and

Refined extraction methods show

We have over 100 years

Of natural gas reserves

November starts….

The drums keep beating

Forecast show that it is

Going to be

A cold winter

Prices inch up a bit higher

All the while

We have been experiencing

Higher than normal temperatures

Here it is January 2013

We have had some cold weather

But no long term stretches

Of cold weather

They are already forecasting

That beginning next week…..

A warm front will be coming in

And hanging for a couple of weeks

All this has created a

Natural gas market

Phenomena

The index

(The base cost of natural gas

To all providers)

Started to drop

So much for the higher prices

HBS has been working with our clients

Keeping them apprised of the opportunity

For the savings this presents

The basis (transportation cost)

Is inverted

That means the longer you go out

The less expensive it is

We have never seen this

In the 12 years we have been

Servicing the deregulated market

By locking in a

3 to 4 year

Basis position

Clients have been able

To add more certainty

To their future

Natural gas cost

This will allow the client to

Concentrate on managing the cost

Of the Nymex

ie: (gas out of the ground)

During the highest usage months

November thru March

For most clients

That is when 75% of their

Annual natural gas usage

Is consumed

Feel free to contact us…..

To learn more about

How you are able

To save in the deregulated

Natural Gas and Electric markets

Start the New Year off with Savings

That will always bring a

Smile to your face….

Hutchinson Business Solutions

Smart Solutions for Smart Business

For more insight contact george@hbsadvantage.com

Visit us on the web http://www.hutchinsonbusinesssolutions.com

By SANDY SHORE, AP Business Writer–8 hours ago

Battered natural gas prices are getting a bit of a break as cooler spring weather raises expectations that demand may improve.

Natural gas rose 6 cents to finish at $2.186 per 1,000 cubic feet in Friday trading. That’s up nearly 15 percent from April 19 when the price hit the lowest level in more than a decade at $1.907 per 1,000 cubic feet.

The price has plunged this year as a natural gas production boom created a glut of supply and demand dropped during a mild winter.

Now, some in the market are suggesting demand will strengthen, which help boost prices.

Cooler weather moving across the Northeast, parts of the Midwest and the Rockies this weekend could prompt homeowners to turn up the heat, creating more need for natural gas.

In addition, utilities have been substituting cheaper natural gas for coal to generate electricity. As much as six billion cubic feet a day of natural gas has replaced coal-fired power generation this year, said Ron Denhardt, an analyst with Strategic Energy & Economic Research. Consumption on an annual basis is about 66 billion to 67 billion cubic feet a day.

In addition, some energy companies have cut production because low prices can make it unprofitable to drill for some types of natural gas.

Yet, several analysts believe any rally will be short-lived.

With May upon us, any pick-up in demand for heating will be brief. About 70 percent of the nation’s demand for natural gas comes during the winter to heat homes and businesses.

Natural gas inventories continue to build. Analysts say that underground storage could be filled to the brim by fall without additional production cuts or an extremely hot summer that boosts electricity demand for cooling.

“It’s fundamentally a disastrous market,” Denhardt said. “I can’t see any turnaround of any significance before November, December of this year.”

PFGBest analyst Phil Flynn said there has to be an even bigger drop in price to force companies to cut more production. He speculated that the price will test an all-time low of $1.35 per 1,000 cubic feet.

In other energy trading, oil prices rose slightly, as traders shrugged off a report that the economy grew more slowly in the first three months of the year as governments spent less and businesses cut back on investment. But consumers spent at the fastest pace in more than a year. The Commerce Department said Friday that the economy grew at an annual rate of 2.2 percent in the January-March quarter, compared with 3 percent in the final quarter of 2011.

Benchmark oil rose 38 cents to end at $104.93 per barrel in New York. Brent crude fell 9 cents to finish at $119.83 per barrel in London. Heating oil lost 1.37 cents to end at $3.1807 per gallon and gasoline futures rose 2.29 cents to finish at $3.2062 per gallon.

At the pump, gasoline prices were little changed at a national average of $3.826 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That’s 8.5 cents less than a month ago and 5.3 cents lower than a year ago.

By DARREN  SAMUELSOHN | 3/30/12 5:57 PM EDT

President Barack Obama isn’t the only candidate who has to worry about  gasoline price spikes.

Take a look at members of Congress and their challengers, who are going all  out to express concern about the plight of American motorists — often with  personal stories of their own sticker shock.

Illinois GOP Rep. Bobby Schilling took a page from that  playbook this month when he invited reporters to watch him fork over a C-note to fill up his Chevy Suburban  at a Phillips 66 U-Save Mart in Moline. So did Rep. Judy Biggert (R-Ill.), who  opened a recent weekly e-newsletter by bemoaning her last $58 pit stop.

Others are content just to empathize.

Hence, Republican Jason Plummer — running to replace retiring Rep. Jerry  Costello (D-Ill.) — visited ConocoPhillips’s Wood River refinery outside St.  Louis to slam EPA policies that he blamed for driving up fuel prices. New York  GOP Rep. Ann Marie Buerkle’s YouTube moment came when she gave explicit instructions on  what she wanted Energy Secretary Steven Chu to tell his administration  colleagues: “The American people are hurting. They need you to do something  now.”

Expect to hear a lot of the same until November.

“This train stretches from New York City to Los Angeles with how many people  have jumped on it,” said Patrick DeHaan, a senior petroleum analyst at  Gasbuddy.com., a fuel price tracking website. “Either you are for low gas prices  or you are going to get voted out of office. Everyone running is forced to talk  about it because the other party is.”

There’s good reason for all the gas pump bickering. A Gallup poll in March found that 65 percent of Americans  think Congress and the president can take actions to control gas prices, and  that 85 percent want “immediate actions to try to control the rising price of  gas.”

Blame is also easy to spread around. Senate Democrats tried to put  Republicans on the spot in March with a floor vote to repeal oil subsidies,  while House Republicans see rewards from a legislative agenda heavy on domestic  drilling and embarrassing the Obama administration on the Keystone XL  pipeline.

“I’m certain that with $4 gas, the American people will remember who listened  to them and who didn’t,” House Speaker John Boehner said in May before passing  one in a series of energy bills.

During last year’s price spikes, freshmen fanned out to meet with voters and  hear their complaints about fuel costs. Wisconsin GOP Rep. Reid Ribble’s visit to  an Appleton gas station made local TV newscasts, as did Republican Rep. Robert  Hurt’s stop with Virginia farmers, where he talked up offshore development and alternative energy.

The House websites for Ribble, Scott Rigell (R-Va.) and Indiana GOP Rep. Larry Bucshon all feature gas price surveys asking people to  vote on policy solutions.

Indicative of this year’s political stakes, Senate Republican candidates hoping  to help their party reclaim the majority are being much more aggressive than  their House counterparts with their attacks on Democrats.

Virginia Republicans, for example, have posted a video picking at the opening line of a response from  Democrat Tim Kaine at a town hall event when asked about gas price spikes. “I’ve  got to admit there’s some aspects about the gas price thing that makes me  scratch my head,” Kaine says in the clip — a comment his campaign says was taken  out of context.

Kaine’s likely opponent, former Republican Sen. George Allen,  is also up with a  website that allows visitors to type in the make and model of their car to  see how much more it costs to fill up their tank compared with when Obama came  into office.

California Sen. Dianne Feinstein’s long-shot Republican opponent Elizabeth  Emken features a “#FeinsteinOnEmpty” hashtag on her website. She  also questions Feinstein’s past praise for Chu, who said in 2008 — before  joining the Obama administration — that he supported Europe-style gas prices in  the United States.

Democrats are in on the action too.

Indiana Democrats are squeezing Sen. Richard Lugar with a Web ad slamming the Republican over his support for a gas tax hike of $1 or more.

Sen. Bill Nelson (D-Fla.) sent an email to voters in February talking up legislation he has  co-sponsored that would curb oil market speculators.

He also solicited voters’ ideas on “what else you think we could do to bring  down gas prices.”

Sen. Claire McCaskill’s website tries to bust what she lists as six myths about gas prices (No. 5: “Nothing can be done to  bring down the price of fuel”). The Missouri Democrat also promotes her call for  Obama to tap the Strategic Petroleum Reserve for the second time during his  term.

Democratic candidates for House seats are also going after Republican  incumbents’ campaign contributions from the oil and gas industry, pairing them  with votes against repealing the industry’s subsidies.

Nearly identical press releases came out in late February from New Hampshire  Democratic candidate Annie Kuster, who is challenging Republican Rep. Charlie  Bass; Nevada state Assembly Speaker John Oceguera in his race against Rep. Joe Heck; former New  York Rep. Dan Maffei in his rematch against Buerkle; and Manan Trivedi  in his second attempt to unseat Rep. Jim Gerlach (R-Pa.).

“High gas prices? You can thank Washington insiders influencing Washington  insiders,” Trivedi posted on Twitter, where he linked to a statement criticizing Gerlach for supporting oil and gas  subsidies while taking more than $132,000 in campaign contributions from the  industry.

Outside groups are also weighing in on the gas price debate.

Public Campaign, a group with ties to MoveOn.org and labor unions, sponsored  two weeks of cable  TV ads against Republican Rep. Scott Tipton in his Western Colorado  district, knocking him for taking more than $100,000 in campaign contributions  from the oil and gas industry and questioning his vote against repealing the  industry’s subsidies.

The American Petroleum Institute has already spent generously this cycle,  mostly to help Republicans, including House Energy and Commerce Chairman Fred  Upton (R-Mich.), Natural Resources Chairman Doc Hastings (R-Wash.), Science  Chairman Ralph Hall (R-Texas), Majority Whip Kevin McCarthy (R-Calif.) and  Boehner. The trade group also ran radio and print ads ahead of the Senate  subsidy debate in the Senate and presidential battleground states of Maine,  Massachusetts, Missouri, Nevada, North Carolina, Virginia and West Virginia.

Karl Rove’s American Crossroads is also going after vulnerable House and  Senate Democrats, including $1.5 million spent so far challenging McCaskill. The  attacks include a  website called “The Truth About Claire” that questions her commitment to  lowering gas prices.

The group’s spokesman Nate Hodson said the group “won’t be shy” when spending  tens of millions more this cycle to raise the gas price issue in congressional  races. “It’s what voters are paying attention to right now,” he said.

This article first appeared on POLITICO Pro at 5:41 p.m. on March 30,  2012.

Read more: http://www.politico.com/news/stories/0312/74690_Page2.html#ixzz1r6jsxV7S

As reported by Bipartisan Policy Center

March 22, 2011

Media Contact:

Paul Bledsoe
Bipartisan Policy Center
(202) 637‐0400
pbledsoe@bipartisanpolicy.org

Washington, DC – A national producer—consumer Task Force convened by the Bipartisan Policy Center (BPC) and the American Clean Skies Foundation (ACSF) issued a report today finding that the growth of shale gas production “reduce[s] the susceptibility of [natural] gas markets to price instability and provide[s] an opportunity to expand the efficient use of natural gas in the United States.”

The Task Force’s 70-page report, the result of a yearlong review, calls on governments to “encourage the development of domestic natural gas resources, subject to appropriate environmental safeguards” given that the efficient use of gas has the potential to reduce harmful air emissions, enhance energy security and improve the prospects of U.S.-based energy-intensive manufacturers.

With a more stable price horizon for natural gas, the report also urges state public utility regulators and industry to consider making greater use of longer term supply contracts. “Rules that unnecessarily restrict the use of or raise the cost of long-term contract and hedging tools for managing supply risk should be avoided,” the Task Force said.

“We have a good problem,” said Task Force co-Chair, Norm Szydlowski, Bipartisan Policy Center and President and CEO of SemGroup Corporation. “Finding more natural gas provides an opportunity that is as much unparalleled as it was unexpected. Fundamental changes that have taken shape in the domestic supply and demand balance for natural gas, including an unprecedented level of available storage and import capacity, should allow markets to function more efficiently and fluidly in the future,” said Szydlowski.

“The extensive work of this diverse, expert panel identifies a small number of practical regulatory and policy measures that can provide the necessary confidence to support new investment in efficient applications of natural gas,” said Ralph Cavanagh, Senior Attorney and Co-Director of the Energy Program at Natural Resources Defense Council. “If the industry can meet high standards of environmental performance for extracting and delivering the fuel, we are looking here at very good news for America’s economy and industrial competitiveness, the environment, and our nation’s energy security.”

“The Task Force findings and recommendations reflect optimism that the robust supply horizon for natural gas presents fresh opportunities—not only to move beyond prior price volatility concerns shared by both consumers and producers, but to develop new tools for managing price uncertainty,” said Marianne Kah, Chief Economist, Planning and Strategy of ConocoPhillips. “With sound policies, the nation can capitalize on this abundant natural gas supply and convert it into intelligent energy progress.”

“With U.S. natural gas now one-fourth the price of oil on an energy equivalent basis, it is further welcome news to consumers that, with the right policies, U.S. natural gas appears poised to enter into an era of greater price stability,” said Paula Gant, Senior Vice President for Policy and Planning of the American Gas Association.

“The fact that a diverse Task Force like this could reach a consensus on these particular findings and recommendations was unexpected,” said Task Force co-Chair Gregory C. Staple, CEO of ACSF. “This consensus suggests that, although we may have a stalemate on many other energy issues, there is at least one important area – natural gas – where progress is within reach,” Staple added.

Background

Interest has grown recently in natural gas as a cleaner, low-carbon, low-cost alternative to other fossil fuels in the electric power and industrial sectors. For example, in his State of the Union address, President Obama called for a federal clean energy standard for generating electricity that could be partly satisfied by using more domestic natural gas.

The Task Force was jointly convened by the BPC and ACSF in March 2010 to examine historic causes of instability in natural gas markets and to explore potential remedies. Task Force members, listed below, represent natural gas producers and distributors, consumer groups and large industrial users, as well as independent experts, state regulatory commissions and environmental groups.

Key Task Force Findings and Recommendations:

1. Recent developments allowing for the economic extraction of natural gas from shale formations reduce the susceptibility of gas markets to price instability and provide an opportunity to expand the efficient use of natural gas in the United States.

2. Government policy at the federal, state and municipal level should encourage and facilitate the development of domestic natural gas resources, subject to appropriate environmental safeguards. Balanced fiscal and regulatory policies will enable an increased supply of natural gas to be brought to market at more stable prices. Conversely, policies that discourage the development of domestic natural gas resources, that discourage demand, or that drive or mandate inelastic demand will disrupt the supply-demand balance, with adverse effects on the stability of natural gas prices and investment decisions by energy-intensive manufacturers.

3. The efficient use of natural gas has the potential to reduce harmful air emissions, improve energy security, and increase operating rates and levels of capital investment in energy intensive industries.

4. Public and private policy makers should remove barriers to using a diverse portfolio of natural gas contracting structures and hedging options. Long-term contracts and hedging programs are valuable tools to manage natural gas price risk. Policies, including tax measures and accounting rules, that unnecessarily restrict the use or raise the costs of these risk management tools should be avoided.

5. The National Association of Regulatory Utility Commissioners (NARUC) should consider the merits of diversified natural gas portfolios, including hedging and longer-term natural gas contracts, building on its 2005 resolution. Specifically, NARUC should examine:

  • Whether the current focus on shorter-term contracts, first-of-the-month pricing provisions and spot market prices supports the goal of enhancing price stability for end users,
  • The pros and cons of long-term contracts for regulators, regulated utilities and their customers,
  • The regulatory risk issues associated with long-term contracts and the issues of utility commission pre-approval of long-term contracts and the look-back risk for regulated entities, and
  • State practices that limit or encourage long-term contracting.

6. As the Commodity Futures Trading Commission (CFTC) implements financial reform legislation, including specifically Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Pub. L. 111-203), the CFTC should preserve the ability of natural gas end users to cost effectively utilize the derivatives markets to manage their commercial risk exposure. In addition, the CFTC should consider the potential impact of any new rulemaking on liquidity in the natural gas derivatives market, as reduced liquidity could have an adverse affect on natural gas price stability.

7. Policy makers should recognize the important role of natural gas pipeline and storage infrastructure and existing import infrastructure in promoting stable gas prices. Policies to support the development of a fully functional and safe gas transmission and storage infrastructure both now and in the future, including streamlined regulatory approval and options for market-based rates for new storage in the United States, should be continued.

Complete copies of the Task Force report along with a library of original commissioned research can be found here and here.

Sponsoring Task Force Members:

Gregory C. Staple
Task Force Co-Chair
Chief Executive Officer
American Clean Skies Foundation

Norm Szydlowski
Task Force Co-Chair
Bipartisan Policy Center;
President & CEO
SemGroup Corporation

Ken Bromfield
U.S. Commercial Director, Energy Business
The Dow Chemical Company

Carlton Buford
Lead Economist
The Williams Companies

Peter Sheffield
Vice President, Energy Policy and Government Affairs
Spectra Energy Corporation

Ralph Cavanagh
Senior Attorney and Co-Director, Energy Program
Natural Resources Defense Council

Paula Gant
Senior Vice President for Policy and Planning
American Gas Association and on behalf of the American Gas Foundation

Carl Haga
Director, Gas Services
Southern Company

Byron Harris
Director
West Virginia Consumer Advocate Division

Marianne Kah
Chief Economist, Planning and Strategy
ConocoPhillips

Todd Strauss
Senior Director, Energy Policy, Planning and Analysis
Pacific Gas & Electric Company

Additional Task Force Members:

Colette Honorable
Chairman
Arkansas Public Service Commission

Sharon Nelson
Former Chair, Board of Directors
Consumers Union

Sue Tierney
Managing Principal
Analysis Group, Inc.;
Former Assistant Secretary of Energy

Bill Wince
Vice President, Transportation and Business Development
Chesapeake Energy Marketing

Marty Zimmerman
Professor
Ross School of Business, University of Michigan;
Former Group Vice President, Corporate Affairs,
Ford Motor Company

About the American Clean Skies Foundation

The American Clean Skies Foundation, a Washington-based nonprofit, supports energy independence and a clean, low-carbon environment through expanded use of natural gas, renewables and efficiency. For more information, visit www.cleanskies.org.

About the Bipartisan Policy Center

The Bipartisan Policy Center (BPC) is a non-profit organization that was established in 2007 by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob Dole and George Mitchell to develop and promote solutions that can attract public support and political momentum in order to achieve real progress. The BPC acts as an incubator for policy efforts that engage top political figures, advocates, academics and business leaders in the art of principled compromise. For more information, please visit our website.

Trade group looks to revise “price-to-compare” system that helps customers make informed choices about independent power suppliers
 
By Tom Johnson, January 28 in Energy & Environment |
With residential customers finally switching electricity suppliers, a trade group representing independent power companies is hoping the state revamps billing and other procedures to make it easier for consumers to shop for a cheaper energy.
For the first time since the state broke up its electric monopolies more than a decade ago, residential customers and small commercial operations have some choices about who supplies the power to light their homes and businesses.

Because of a steep drop in natural gas prices and the way the state buys electricity, independent power suppliers have an opportunity to undercut the price that public utilities offer customers.

“The big story on the retail electricity side has been the emergence of residential and small commercial markets,” agreed Jay Kooper, New Jersey state chair of the Retail Energy Suppliers Association, a trade group representing so-called Third-Party Suppliers (TPS).

Falling Prices

Until natural gas prices fell, more than 99 percent of residential customers elected to stay with their incumbent electric utility to buy their power, a fact that generated criticism of the state’s deregulation law. Other power suppliers found it hard to beat the price of the incumbents, in part because fuel costs had been rising and the state mitigated those spikes by buying power in chunks over three years, which tended to moderate those increases.

But when natural gas prices began falling more than a year ago, suppliers could undercut the price offered by the state, with some offering price discounts of up to 15 percent on the supply portion of customers’ bills. Nearly 100,000 customers have switched as of November, according to the most recent data compiled by the state Board of Public Utilities (BPU).

With customers looking around for options, the big question for third-party suppliers is how do they sustain the business, especially if natural gas prices begin rising.

To Kooper, the answer is to revamp the state’s policies in two key areas: how to deal with customers who fall behind in their bills and owe the third-party suppliers money and the so-called price-to-compare, a mechanism set up by the state to help customers shop for new suppliers.

“We need to dive into the nuts and bolts of the retail market to keep it sustainable for the long term,” Kooper said, noting the changes his group is seeking have already been adopted in other states with deregulated energy markets.

Gaining Momentum

Board of Public Utilities President Lee Solomon, who ordered the stakeholder hearings on the issue, said he is trying to take advantage of the momentum created by new suppliers coming into the market and make it easier for them to compete with the incumbents.

Without changes, Kooper said the suppliers will be subject to a “boom and bust” cycle when natural gas prices rise as they most inevitably will. What the suppliers are seeking is a level playing field to compete with the utilities, he said.

Along those lines, the group is advocating requiring the utilities to purchase the suppliers’ account receivables, or unpaid customer bills. Kooper argued such a change would be fair because utilities are already are protected from uncollected bills by a surcharge, which allows them to pay off those bills.

The group is also seeking to establish a uniform price-to-compare system because each of the four utilities uses a different scheme to help customers compare prices, according to Murray Bevan, counsel to the group.

“As retail markets evolve, it’s very important that price-to-compare is as close to an apples-to-apples comparison as possible,” Kooper said. “Without these mechanisms, it makes access to the smaller customers trickier and riskier.”

By Andrew Maykuth

Inquirer Staff Writer

Posted Jan. 13, 2011

A coalition of electrical-power interests is encouraging New Jersey Gov. Christie to veto a controversial bill that would subsidize development of a Gloucester County power plant that they say would unsettle the region’s energy markets.

The bill’s sponsors said the legislation approved Tuesday by the New Jersey Legislature would lower energy rates. But opponents, including power generators such as Exelon Corp. and large industrial consumers, call it an anticompetitive sweetheart deal that will cost consumers in the long run.

“We cannot afford an energy surcharge to guarantee billions of dollars of revenue to a few select developers,” said George M. Waidelich, vice president of energy operations for Safeway Inc., which says it now spends about $2 million a year on electricity for its five Genuardi’s stores in South Jersey.

The measure would provide a guaranteed long-term income for developers of several large power plants. The legislation was known as the “LS Power Bill” because its initial aim was to provide guarantees for LS Power Development L.L.C. to build a giant natural-gas power plant in West Deptford, the hometown of state Senate President Stephen Sweeney (D., Gloucester).

Tom Hoatson, director of regulatory affairs for LS Power, said the guarantees were necessary to obtain financing to construct the 640-megawatt plant along the Delaware River, which would cost from $800 million to $1 billion.

Hoatson said the bill would provide the New Brunswick company “an opportunity to compete with other generators.” The plant would employ up to 500 people to build and about 25 people to operate.

Christie spokesman Michael Drewniak said the bill was under review. Legislative sources said the governor was expected to sign it because his office was consulted in drafting amendments that addressed some of the administration’s concerns.

In the arcane world of wholesale electrical markets, the New Jersey bill has attracted intense attention because its opponents say it would turn back the clock on years of efforts to open electrical-power markets to more competition.

But supporters of the legislation say those markets, which are managed by regional power-grid operator PJM Interconnection Inc., have failed to lower prices for N.J. residents.

And they say that many of the interests opposed to the N.J. legislation are incumbent power generators like Exelon Corp. and Public Service Enterprise Group of Newark, which stand to gain by keeping new power generators out of the market.

“I don’t think it’s a system that encourages building new generation to keep prices down,” said Stefanie Brand, the New Jersey Rate Counsel, the state’s consumer advocate.

“The market is not a true free market,” she said. “It’s a constructed market that was created by PJM, and as far as we’re concerned, it doesn’t work.”

N.J. officials complain that the Garden State has suffered more than its western neighbors because it has paid up to $1.9 billion a year in extra capacity and congestion charges that PJM imposes on power transmitted into the state.

Lee A. Solomon, a Christie appointee who is president of the N.J. Board of Public Utilities, told PJM in December that “it is incumbent upon New Jersey to promote new generation in locations where it is needed the most to ensure reliability and to control costs.”

Sweeney, whose West Deptford hometown would host the LS plant, introduced the legislation that would allow the board to sign long-term contracts with several power generators to provide up to 2,000 megawatts of electricity at guaranteed rates. If market rates fall below the threshold, N.J. ratepayers would pick up the tab.

“Consumers have been paying inflated capacity charges,” said Derek Roseman, Sweeney’s spokesman. “This is a chance to reverse that. How can that not be a good thing for consumers?”

The Compete Coalition, a Washington lobbying group that promotes open electrical markets, has appealed to Christie’s antitax sentiments by branding the bill the “Energy Tax of 2011.”

John E. Shelk, president of the Electric Power Supply Association, testified in December that the bill would “artificially depress” rates in the short term, but would discourage other generators from investing in the future.

Shelk said the bill likely would be challenged because it would interfere with federally sanctioned wholesale power markets.

Public Service Enterprise Group, the politically powerful Newark energy company that operates the PSE&G utility, announced its opposition to the measure last week.

Anne Hoskins, the company’s senior vice president for public affairs, said the state’s intervention in the past requiring utilities to enter into long-term supply contracts had “disastrous results.”

In the next six years, PSE&G will pay $1 billion for the remaining costs of the long-term contracts, she said. And Atlantic City Electric recently received approval to raise its customers’ bills 5 percent to recover the costs of its out-of-market contracts.

“Subsidies are a slippery slope,” she said, “and will drive away other nonsubsidized private investment in New Jersey.”


As reported by Energy Information Administration (EIA) Logo - Need Help? 202-586-8800

Shale gas refers to natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich sources of petroleum and natural gas. Over the past decade, the combination of horizontal drilling and hydraulic fracturing has allowed access to large volumes of shale gas that were previously uneconomical to produce. The production of natural gas from shale formations has rejuvenated the natural gas industry in the United States.

Did You Know?

Sedimentary rocks are rocks formed by the accumulation of sediments at the Earth’s surface and within bodies of water. Common sedimentary rocks include sandstone, limestone, and shale.

U.S. Natural Gas Supply, 1990-2035
Chart showing U.S. natural gas supply, 1990-2035. Source, EIA Annual Energy Outlook 2010

Did You Know?

Shale gas in 2009 made up 14% of total U.S. natural gas supply. Production of shale gas is expected to continue to increase, and constitute 45% of U.S. total natural gas supply in 2035, as projected in the EIA Annual Energy Outlook 2011.

Does the U.S. Have Abundant Shale Gas Resources?

Of the natural gas consumed in the United States in 2009, 87% was produced domestically; thus, the supply of natural gas is not as dependent on foreign producers as is the supply of crude oil, and the delivery system is less subject to interruption. The availability of large quantities of shale gas will further allow the United States to consume a predominantly domestic supply of gas.

According to the EIA Annual Energy Outlook 2011, the United States possesses 2,552 trillion cubic feet (Tcf) of potential natural gas resources. Natural gas from shale resources, considered uneconomical just a few years ago, accounts for 827 Tcf of this resource estimate, more than double the estimate published last year. At the 2009 rate of U.S. consumption (about 22.8 Tcf per year), 2,552 Tcf of natural gas is enough to supply approximately 110 years of use. Shale gas resource and production estimates increased significantly between the 2010 and 2011 Outlook reports and are likely to increase further in the future.

Where is Shale Gas Found?

Shale gas is found in shale “plays,” which are shale formations containing significant accumulations of natural gas and which share similar geologic and geographic properties. A decade of production has come from the Barnett Shale play in Texas. Experience and information gained from developing the Barnett Shale have improved the efficiency of shale gas development around the country. Another important play is the Marcellus Shale in the eastern United States. Surveyors and geologists identify suitable well locations in areas with potential for economical gas production by using both surface-level observation techniques and computer-generated maps of the subsurface.

Map of Shale Gas Plays for the Lower 48 States
Source: U.S. Shale Plays Map, http://www.eia.doe.gov/oil_gas/rpd/shale_gas.pdf

How is Shale Gas Produced?

Two major drilling techniques are used to produce shale gas. Horizontal drilling is used to provide greater access to the gas trapped deep in the producing formation. First, a vertical well is drilled to the targeted rock formation. At the desired depth, the drill bit is turned to bore a well that stretches through the reservoir horizontally, exposing the well to more of the producing shale.

Hydraulic fracturing (commonly called “fracking” or “hydrofracking”) is a technique in which water, chemicals, and sand are pumped into the well to unlock the hydrocarbons trapped in shale formations by opening cracks (fractures) in the rock and allowing natural gas to flow from the shale into the well. When used in conjunction with horizontal drilling, hydraulic fracturing enables gas producers to extract shale gas at reasonable cost. Without these techniques, natural gas does not flow to the well rapidly, and commercial quantities cannot be produced from shale.

Schematic Geology of Natural Gas Resources

Graphic showing the schematic geology of natural gas resources
Source: modified from U.S. Geological Survey Fact Sheet 0113-01.

How is Shale Gas Production Different from Conventional Gas Production?

Conventional gas reservoirs are created when natural gas migrates toward the Earth’s surface from an organic-rich source formation into highly permeable reservoir rock, where it is trapped by an overlying layer of impermeable rock. In contrast, shale gas resources form within the organic-rich shale source rock. The low permeability of the shale greatly inhibits the gas from migrating to more permeable reservoir rocks. Without horizontal drilling and hydraulic fracturing, shale gas production would not be economically feasible because the natural gas would not flow from the formation at high enough rates to justify the cost of drilling.

Diagram of a Typical Hydraulic Fracturing Operation

Diagram of a Typical Hydraulic Fracturing Operation
Source: ProPublica, http://www.propublica.org/special/hydraulic-fracturing-national

What Are the Environmental Issues Associated with Shale Gas?

Natural gas is cleaner-burning than coal or oil. The combustion of natural gas emits significantly lower levels of key pollutants, including carbon dioxide (CO2), nitrogen oxides, and sulfur dioxide, than does the combustion of coal or oil. When used in efficient combined-cycle power plants, natural gas combustion can emit less than half as much CO2 as coal combustion, per unit of energy released.

However, there are some potential environmental issues that are also associated with the production of shale gas. Shale gas drilling has significant water supply issues. The drilling and fracturing of wells requires large amounts of water. In some areas of the country, significant use of water for shale gas production may affect the availability of water for other uses, and can affect aquatic habitats.

Drilling and fracturing also produce large amounts of wastewater, which may contain dissolved chemicals and other contaminants that require treatment before disposal or reuse. Because of the quantities of water used, and the complexities inherent in treating some of the chemicals used, wastewater treatment and disposal is an important and challenging issue. If mismanaged, the hydraulic fracturing fluid can be released by spills, leaks, or various other exposure pathways. The use of potentially hazardous chemicals in the fracturing fluid means that any release of this fluid can result in the contamination of surrounding areas, including sources of drinking water, and can negatively impact natural habitats.

Would you intentionally overpay for your phone service… monthly rent… or maybe a new car?

Of course not…

Then why would you overpay for your natural gas or electric bills?

Lower Rates… For the first time in the last 4 years deregulated natural gas and electric prices are lower than the local provider charges.

You now have a choice and can choose lower energy rates without any risk or local service change. No-Hassle!

Your local providers buy natural gas and electric on the open market at wholesale prices and then bill their customers at retail prices.

We put our clints in a wholesale position.

If you are a business spending a minimum of $3000 a month a piece on your electric or natural gas, you may qualify for deregulated savings.

We conduct a no-hassle evaluation. There is no-risk and there is no-cost. We simply find you the best rates available.

All we need is a copy of your latest provider invoice.

Start Saving and join thousands of happy customers who have already lowered their energy bills!

Makes Sense!

Why Overpay?

To learn more email george@hbsadvantage.com or call 856-857-1230

Natural Gas Deregulation

June 24, 2010

Large market swings offer you big savings.

If you have been following market prices for natural gas, over the past couple of years, you have probably noticed the large market swings. 

In 2008, PSEG prices ranged from $1.07 per therm in February to $1.64 per therm in July.

In 2009, prices dropped and we saw $.889 cents per therm in January with a low of $.496 cents a therm in September. 

This is good news for those interested in saving money in the deregulated natural gas market. PSEG and SJ Gas buy natural gas on the open market wholesale and sell it to their clients retail.

Should you be spending a minimum of $5,000 a month on natural gas for yor business, there is a big opportnity for savings.

With so much market fluctuation, we have been advising our clients to float their accounts, based on the market index.  If you are a PSEG client and chose to float the index over the past 12 months, you would have saved 12%-15% on your supply bill. SJ gas customers would have saved 8%, while NJ Natural gas clients would have saved 13%

Choosing to float the market index does not preclude you “locking in” on a fixed price at any time during the term of the contract. Conversely, if you choose a fixed price, you are unable to change to a float when market prices go down.

Note: Since the prices of natural gas have been so low, we have also seen this play a large effect on the reduction of electric prices in the deregulated market. Did you know that 30% of the electric generated is made from natural gas?

Want to learn more about opportunities to save in the deregulated natural gas market or deregulated electric market email george@hbsadvantage.com or call 856-857-1230.

Visit us on the web www.hutchinsonbusinesssolutions.com