Nat Gas Prices Hit Zero? // Puerto Rico's Grid Troubled By FERC // US Funds Nuclear Waste Reprocessing Projects

Nat Gas Prices Hit Zero?

Natural gas prices in the Permian Basin region dove toward zero this week.

"Gas in an area of the vast Permian known as Waha traded for as little as 20 cents to 70 cents per million British thermal units on Monday," reports Bloomberg. "That compares with the US benchmark futures contract that’s trading around $5.20 and European prices close to $28."

If prices slip below zero, investors will end up paying people to take their gas. It's been two years since this has happened in the Permian. What triggered this?

"The Texas price plunge stems from maintenance scheduled for Kinder Morgan Inc.’s Gulf Coast Express and El Paso Natural Gas pipeline systems," Bloomberg reports. Kinder Morgan expects "the volumes to be reduced to 1,325,000 on Tuesday and Wednesday, and to 1,125,000 on Thursday and Friday. KMI’s EL Paso Natural Gas Company has had a rash of maintenance performed on multiple lines since the beginning of October," Oilprice.com reports.

America lacks pipeline capacity to pick up the slack when pipelines go down for maintenance. Whenever they go down, chokepoints squeeze harder and force temporary pressure reductions or shipping stoppages.

Worse still, if the pipelines are too crowded to move more gas companies end up flaring (burning) the gas rather than moving it.

Waha has gone negative twenty times in the last three years.

Puerto Rico's Grid Troubled By FERC

Last week, the Puerto Rico Electric Power Authority asked the Federal Energy Regulatory Commission to ease its cap on LNG storage at the island's EcoEléctrica facility.

“FERC’s limitation of the fuel level of the EcoEléctrica LNG storage tank places the Island’s reserve margins and stability at risk,” Josué Colón-Ortiz, PREPA executive director, wrote in a letter to FERC.

The cap could run up PREPA's bill to $250 million if it's forced to keep burning bunker fuel at its 820-MW Costa Sur power plant instead of gas supplied by EcoEléctrica. Not only that, bunker fuel is some of the dirtiest fuel to burn. Having more access to natural gas would also improve Puerto Rico's air quality.

"EcoEléctrica’s LNG terminal supplies gas to the company’s 540-MW Penuelas power plant and to PREPA’s Costa Sur plant. The power plants produce about 40% of Puerto Rico’s electricity," reports Utility Dive. "After earthquakes with epicenters near EcoEléctrica’s LNG terminal hit Puerto Rico in late 2019 and early 2020, FERC ordered the company to not fill its storage facility above 63 feet, a level that represents about 60% of its capacity, while analysis was done on the structure to make sure it was safe."

PREPA requested that FERC allow them to increase its storage to 91 feet, but FERC denied their request because the commission did not believe the facility could handle a major earthquake. When Hurricane Fiona damaged the terminal last month, it only made things look worse.

“In the final balance of interests, the possible (not probable) risks are overwhelmingly outweighed by the fact that, considerably reducing the fuel storage limitations will allow both Costa Sur and EcoEléctrica to comply with emission regulations, maximize electricity production, provide much-needed frequency regulation for the system’s stability, and minimize costs to the people of Puerto Rico,” Colón-Ortiz wrote in the letter.

US Funds Nuclear Waste Reprocessing Projects

America, after decades of shuttering its nuclear waste recycling industry, is now looking to restart it.

"The Advanced Research Projects Agency-Energy, or ARPA-E, aims to develop a dozen projects to recycle the waste, also known as spent nuclear fuel, with $38 million in funding. A Department of Energy agency, ARPA-E supports research into high-risk but potentially transformational projects," reports Reuters.

America abandoned nuclear waste reprocessing in the 1970s under the tenure of President Jimmy Carter due to proliferation concerns. Reagan reversed course in 1981, but no plants reopened due to high costs. "The ARPA-E projects include $6.5 million for GE Research in New York to develop safeguards for aqueous reprocessing facilities, $1.5 million for Argonne National Laboratory in Illinois to develop and test equipment for reprocessing, and $4.7 million for NuVision Engineering in North Carolina," Reuters reports.

"For America to further harness the safe, reliable clean energy produced at nuclear facilities across the country, the Biden-Harris Administration and DOE recognize the importance of developing practical uses for America's used nuclear fuel," U.S. Energy Secretary Jennifer Granholm said. Recycling nuclear waste "can significantly reduce the amount of spent fuel at nuclear sites, and increase economic stability for the communities leading this important work," she added.

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Conversation Starters

1. Deloitte has released a report on oil company cash flows. They are expected to make 68% higher cash flows per barrel this year. "Nearly 40% of surveyed executives from top 100 oil and companies in the U.S. selected debt repayments and returning cash to shareholders as their top priorities, making those the most common answers," Deloitte Vice Chair for U.S. Oil and Gas Amy Chronis told Reuters.

2. China's making headway in the shale gas sector. "China Petroleum & Chemical Corporation (Sinopec) has announced that its Sinopec Southwest Oil & Gas Company has discovered new shale gas reserves in the Jinshi 103HF exploratory well deployed in the Sichuan Basin," reports Rigzone. "Sinopec, which described the find as a 'major breakthrough for China’s shale gas exploration,' revealed that the asset had daily natural gas production reaching 258,600 cubic meters and an evaluated resource capacity of 387.8 billion cubic meters."

3. S&P Global has published an exhaustive visual on Europe's gas situation. Their storage is full and now the waiting game begins: will the weather gods favor them? Or bring down their wrath?

Crom's Blessing