Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

The Great Natural Gas Grab

admin by admin
October 2, 2014
in Uncategorized
0
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

Investing Daily Article of the Week

by Richard Stavros

Any power utility executive will tell you that the industry has been burned by unexpected natural gas price spikes a number of times over the past 10 years.

In some cases, regulators refused to allow the utility to pass on the fuel cost to ratepayers, and investors took the hit in the form of lower earnings.

While this does not happen often, when there is widespread consumer outcry over high electric bills as a result of natural gas price spikes, known in the industry as the “French Revolution effect,” the relationship with regulators can become so contentious as to materially undermine the utility’s earnings profile over a period of years.

That’s why recent moves by various utilities to develop shale gas pipelines, buy production assets, or even lock in long-term, low-priced natural gas with producers should put those firms in a more favorable light among investors. These physical risk-management strategies will keep costs low, protect profit margins, and allow for incremental increases in capital projects.

In fact, federal regulators are encouraging better coordination between electric and natural gas assets. In hearings at the Federal Energy Regulatory Commission in early July, natural gas price spikes during last winter’s polar vortex were blamed on a lack of coordination between natural gas pipelines and electric grid operators.

Though federal regulators are not advocating mergers and acquisitions by any means, many in the industry see a potential second electric-natural gas convergence wave that may lead to mergers between natural gas and power entities.

NextEra Energy Inc’s (NYSE: NEE) subsidiary, Florida Power & Light (FPL), offers one recent example of such a move. In June, the utility announced a partnership with PetroQuest Energy Inc to jointly develop up to 38 gas wells in the Woodford Shale region of Oklahoma.

In the accompanying filing, the company said the wells would provide 30 years of physical gas and save the firm $107 million over the well’s lifetime, since the firm will acquire the gas at the cost of production plus transport charges (as opposed to paying market prices).

In conjunction with its shale project, NextEra has proposed a 330-mile natural gas pipeline that would serve the Mid- and South Atlantic region.

In an interview with Energy Risk magazine, Sam Forrest, vice president of energy marketing and trading at FPL, said a similar long-term hedge with derivatives would be impossible. He explained that while FPL hedges its near- to medium-term exposure to natural gas prices, typically over a 12-month to 24-month period, hedging many years into the future would incur significant capital and credit costs.

Similarly, Dominion Resources Inc (NYSE: DOM) and Duke Energy Corp (NYSE: DUK) announced a partnership in early September to build a 550-mile pipeline that would transport natural gas from the Marcellus and Utica shale regions to fuel new power plants in the utilities’ home states of Virginia and North Carolina, respectively.

These deals as just the beginning of the beginning: As utilities add more natural gas power plants, they will need greater access to natural gas resources to hedge their commodity risk.

Natural Gas Power Generation Will Surpass Coal by 2040

2014-09-26-U&I-Chart A
Source: Energy Information Administration

The Writing on the Wall

These strategic moves couldn’t come at a better time.

At last year’s Edison Electric Institute Financial Conference, one of the most poignant questions was posed by IHS CERA consultant Dr. Lawrence J. Makovich. He asked a CEO panel whether utilities were protected from a rise in natural gas prices, given how wrong so-called experts had been in the past about natural gas abundance.

After all, no one can know for sure how natural gas prices will react to increasing resource competition between a growing number of gas-fired power plants, manufacturing plants, and eventual exporters of the commodity.

For now, we believe utilities still have a few more years to secure long-term natural gas resources for their gas-fired plant expansions.

In early September, research firm Raymond James revised its natural gas price forecasts downward. According to the analysts, “The near-term consequences of this huge gas supply growth is that the US should be able to grow supply faster than demand at gas prices of $4.25 or lower throughout the end of the decade.”

That being said, the expansion of the technologies that use natural gas will be tremendous.

According to a recent Energy Information Administration report, growth in natural gas-fired generation in the power sector will account for 78 percent of the overall increase in use of that fuel through 2040, with manufacturing accounting for the balance. Indeed, natural gas-fired generation is projected to surpass coal-fired generation by 2040.

Although this trend is still in its early stages, we believe those utilities that are able to diversify their fuel mix and manage their exposure to commodities prices will be best positioned to produce higher future earnings.

Previous Post

The Typical U.S. Commute: By Car, Alone

Next Post

Campaign Finance and Modern Monetary Theory

Related Posts

Gold Versus Bitcoin, Which Is A Better Investment In 2023?
Econ Intersect News

Gold Versus Bitcoin, Which Is A Better Investment In 2023?

by John Wanguba
March 28, 2023
World Bank Cautions Of 'Lost Decade' In Global Growth Without Drastic Policy Shifts
Business

World Bank Cautions Of ‘Lost Decade’ In Global Growth Without Drastic Policy Shifts

by John Wanguba
March 28, 2023
How Is The Banking Crisis Affecting Ripple’s XRP Crypto?
Economics

How Is The Banking Crisis Affecting Ripple’s XRP Crypto?

by John Wanguba
March 28, 2023
Virgin Orbit Extends Employee Furlough, Funding Talks Ongoing – CEO
Business

Virgin Orbit Extends Employee Furlough, Funding Talks Ongoing – CEO

by John Wanguba
March 28, 2023
Lebron James And Several Other Celebs ‘Effectively Wiped Out’ As Fitness App Tonal Loses 90% Value
Business

Lebron James And Several Other Celebs ‘Effectively Wiped Out’ As Fitness App Tonal Loses 90% Value

by John Wanguba
March 28, 2023
Next Post

Campaign Finance and Modern Monetary Theory

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe FTX inflation investment market analysis Metaverse mining NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Gold Versus Bitcoin, Which Is A Better Investment In 2023?
  • World Bank Cautions Of ‘Lost Decade’ In Global Growth Without Drastic Policy Shifts
  • How Is The Banking Crisis Affecting Ripple’s XRP Crypto?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish