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  • AEP on coal/gas competition

    Our capacity factors have been pretty high for the gas units, running in the70%, 78% to 80% capacity factor during the July time we've had thus far. And generally, around that 70% to 80% capacity factor, which is sort of amazing, given what we're dealing with. from a coal-fired generation perspective, it's dropped off considerably. As long as we're not having sub-$3 per MBTU price, the capacity on the gas units are going to be -- continuing to be high. There's no capacity constraints that we have on the gas units at this point in time. And I think our numbers were slightly down last month because that's when we took some outages on some of the gas units. But we are pleased with our gas capacity factors and our ability to respond, actually. What we're -- and just as an additional add-on to that, we are continuing to be concerned about the reliability implications or what the EPA is doing because one thing we haven't talked about is the capacity factors of those small, older coal-fired units that are depending -- dependent upon during the peak. As we had last year, these units are being called on and connected to the system 54% of the time and are running in the order of 30% capacity factor during these peak months. So they're still needed. And we're going to have to work through that process. And even with those committed to provide the peak, and obviously they have minimum run-time obligations and minimum load obligations, we still achieved almost 80% capacity factor on the gas units. So that pretty well tells you we're really switching back and forth based upon what the peak requirements are but utilizing the energy component through the natural gas as much as we can.

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    • The Bearish Element is baked into the Price

      Originally posted by carnegie1 View Post
      Presumably the longer-term contracts for coal will gradually roll-off, enabling the utilities to re-negotiate to get to lower coal prices. That, in turn, will be bearish for NG, at the margin, as the coal-to-gas switching equation will revert somewhat back to coal (i.e., lower coal prices will make coal more competitive with NG). But that impact might take a few months, at minimum, to occur--as who knows how long it will take for the current long-term coal contracts to start rolling off to any substantial degree.
      In the immediate term, the most bearish factor affecting natural gas consumption is the price itself. At $3.50 per MMBtu on the forward calendar strip, there is little incentive to substitute natural gas for coal. Through the storage zenith in mid-November, this could impact injections by as much as 0.5 Tcf as we head into what should be one of the mildest winters on record. Compare this year's scenario to 2009 when the Northeast experienced a particularily cold winter. Even half of this contribution to the total stored quantities would set a bearish tone for gas prices that should return to sub-$2, this winter, if, indeed, not earlier. I, therefore, maintain my storage peak forecast of 4.05 Tcf. In conclusion, both coal and gas prices will continue to languish.

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      • Southern comments

        So for the first half, we're kind of 45% gas and 38% coal. Recall, we kind of projected for the year kind of a 47-35 relationship. So for the year-to-date '12, we're pretty well there. Now what's interesting is, during the third quarter, you should expect the ratio to kind of flip back a little bit more centric on coal. That's because we still have a lot of kilowatt hours. And I was just looking at kind of late-breaking data, we may set a new peak today. We're going to come very close for a yearly peak today. So these are things that we're keeping our eye on. And as total demand increases as a percentage just because the capacity is there, we'll burn a little more coal. But we'll keep our eye on it. We still feel confident with the 47-35 relationship with gas to coal for the year.

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        • Departure from normal gas burn volumes for power generation averaged +2.85 Bcf/d last week, said analysts at SocGen in a report this morning.
          The July average was 4.01 Bcf/d, following 4.11 Bcf/d, 5.51 Bcf/d and 5.93 Bcf/d for June, May and April respectively, they said.
          The main reason for this drop is the narrowing of the cost equivalent price spread between coal and NG prices. The cost equivalent spread calculation is a way to price in the difference in heat rates, pollution costs, and transportation and delivery costs between Central Appalachian coal and natural gas for power generation."

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          • Some of this years 'switch' is gone forever...

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            • Obama loves to create [destroy] jobs. Hopefully China can continue to grow at a good clip on our cheap coal.

              Is that chart net, I couldn't find how much power was coming online as the current plants (and under construction) are exempt from the new EPA regs.

              http://www.eia.gov/coal/

              http://online.wsj.com/article/SB1000...051798192.html

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              • by the time the US coal arrives China, and after 17% vat, it's no longer cheap

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                • http://www.reuters.com/article/2012/...83I0AK20120419

                  Cheaper to float it over than ship it internally in china. I wonder if the US will get accused of dumping.

                  One more industry that wil lhave to get on the government hand out, yay Obama!

                  Comment


                  • silence is killer in here

                    Power burn down 2 % over last week, up only 2 % over last year.

                    Comment


                    • Power burn is on track pretty much with last year. Since virtually everything was on last year, just like everything is on this year.
                      The telling tale is going to be when power requirements ramp down, what is going to come off? Coal or Gas?
                      I saw that Marcellus pricing point averaged $1.34 for August bidweek. Ouch. Tells me gas is going to keep on a burning.

                      Comment


                      • Originally posted by Sh0gun View Post
                        http://www.reuters.com/article/2012/...83I0AK20120419

                        Cheaper to float it over than ship it internally in china. I wonder if the US will get accused of dumping.

                        One more industry that wil lhave to get on the government hand out, yay Obama!
                        i liked the action today .
                        demand is definitely waning.
                        the wild card is the switch to coal.

                        not oppressive enough for my liking.
                        not sure if we will see 3 dollar handle again but i think it might have a shot at it.

                        Comment


                        • Tropical Depression 5

                          Tropical Depression 5...wouldn't be crazy to see a hurricane scare move the prompt month back up to about $3.20 from $2.919 here. Ya 28 bcf was all of 5 huge bcf higher than expected...but storage surpluses are all still declining and hurricane scares have no problem moving prices 20 cents...doesn't matter if it hits or not.

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                          • It matters if it brings rain to the midwest.

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                            • Please Keep this and this side of the forum to information and facts. Since none of you work in this industry, nor are imparting anything other than your opinion or inuendo, meaning nothing.

                              Please get back to your ETF side and gab away.

                              That means you Novice.... amazed you are still here....

                              Yes I was an advocate of separating the forum, just remember why that happened.

                              Chatter clutters in an information based industry and those that try to make something of it.

                              Back to your side you ETFers or give us something to mull over.

                              Comment


                              • Originally posted by cosmo View Post
                                i liked the action today .
                                demand is definitely waning.
                                the wild card is the switch to coal.

                                not oppressive enough for my liking.
                                not sure if we will see 3 dollar handle again but i think it might have a shot at it.


                                I wouldn't be that optimistic, preliminary scrapes are telling a more dismal story. for upcomming injections.

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