New England Grid: More Oil Please // Warm Weather Soothes EU's Gas Prices // Pakistani Gas Bag Ban

New England Grid: More Oil Please

New England's electricity generators are guzzling oil back into their reserves after the region's grid burned through 31.5 million gallons of oil during the holiday freeze. About 20 million gallons of fuel oil have been replaced and another eight million gallons are being shipped to the area.

“Once those deliveries are complete, we’d expect to supplies to be roughly where they were entering the winter,” ISO-New England spokesman Matt Kakley told Reuters. He added that the ISO expects normal operations over the next three weeks.

During the storm, oil made for about 30% of New England's power generation. Usually, oil is less than 1% of the generation mix.

Here's a look at ISO-NE's generation mix.

Oil was the hero of a grid that has become too dependent on just-in-time natural gas, intermittent renewables, and imports from neighbors--what Meredith Angwin calls the "fatal trifecta." A new report from ISO-NE reveals just how unreliable its wind fleet is.

Historically, this sporadic performance also occurs during winter when it's needed most.

New England experienced the most power outages in the US during the holiday storm, with more than 150,000 blackouts in Maine alone. That's not to say no one's being punished for their faults. Pay-to-perform generators that failed to deliver during the storm will face penalties of $3,500 per megawatt-hour, while over-performing generators will receive additional pay at the same rate.

Warm Weather Soothes EU's Gas Prices

Mild weather has slashed European natural gas prices for the fourth week in a row. Balmy forecasts have arrived like soothing balm on the Continent's cankered energy woes.

Benchmark Dutch front-month futures decreased by 8.9% to €69.53 ($74.06) per megawatt-hour, and the UK equivalent also declined according to Bloomberg. Low prices has made it easier for Europe to re-up on its gas stockpiles, which are 83% full--that's above the five-year seasonal norm. Some countries have even been able to send gas into storage.

However, prices are still higher than usual and the continent is vulnerable to further supply disruptions. There are limited supplies of liquefied natural gas and competition for the fuel with Asia may increase.

This situation has inspired a variety of responses from EU countries. Italy, for example, is reconsidering its nuclear ban. "Matteo Salvini, leader of the pro-industry League, on Saturday announced a petition to force a consultative referendum on reintroducing nuclear energy," reports Politico. "The League 'is ready to collect signatures for a referendum which will bring our country toward an independent, safe and clean energy future,' he said, tying the effort to the European Commission's recent draft policy that would give gas and nuclear energy a climate-friendly label for investors."

Germany, on the other hand, is quite literally doubling down on its commitment to natural gas. "Going forward, [German] regulators note that 17 to 21 GW of extra capacity will be built, as part of their bi-annual grid stability report for the period of 2025 until 2031," reports Euractiv. "The government took ownership of this suggestion, the documents confirm, confirming that Germany’s path has hardly diverged, despite the fact that its largest gas supplier, Russia, turned off the tap."

Norway has replaced Russia as Germany's largest natural gas supplier. "Norway provided 33% of the gas Germany imported last year, followed by Russia, whose share fell to 22% for last year, compared to a 52% share in 2021," reports Oilprice.com.

The lower gas prices have also relieved pressure on consumers, who were at the mercy of inflationary headwinds brought on by high energy prices. But troubling signs still arrive from everyday life in Europe. The University of Strasbourg in France has postponed its semester to conserve on energy costs, for example.

Pakistani Gas Bag Ban

Pakistan's Oil & Gas Regulatory Authority has put the kibosh on the sale of plastic bags of natural gas.

The bags are filled with natural gas at shops connected to the country's gas pipeline network and then sold to customers. They can be filled in an hour with the help of a small electric suction pump and compressor.

The plastic bags are cheap. Najeebullah Khan, a trader, explained to DW that gas cylinders made from metal alloys cost around 10,000 Pakistani rupees ($45), which make them unaffordable for many households, shops, and other businesses.

"These reusable bags sell for 500-900 rupees ($2.3-$4) each, depending on the size, while the compressor prices range from 1,500-2,000 rupees each, depending on the size. People use them in both rural and urban centers," Khan said.

But the bags are also dangerous--gas is highly combustible and the plastic bags are more delicate than cylinders. OGRA has banned their sale for health and safety reasons. If anything, these gas bags confirm the Iron Law of Energy: people will do whatever they can to get the energy they need--even if it puts them in harm's way.

Like what you're reading? Click the button below to get Grid Brief right in your inbox!

Conversation Starters

1. Freeport looks to remain offline. "The restart of Freeport LNG, a key US liquefied natural gas export terminal that has been shuttered since an explosion last summer, will likely be off line “for several more months,” a Washington consulting firm said in a note to clients that conflicts with the company’s stated goal of restarting in January," reports Bloomberg. "The estimate from Rapidian Energy Group cited 'extensive personnel training' requirements being implemented by federal regulators overseeing the facilities restart following a fire that led to its closure in June."

2. Ohio Governor Mark DeWine has made natural gas green with a stroke of his pen. "Gov. Mike DeWine signed legislation that broadly expands the ability to drill for oil and gas in state parks and also legally redefines natural gas as a source of “green energy," reports Cleveland. "A 2011 state law gave state agencies the authority, if they choose, to lease out state lands for oil and gas exploration and production. The bill signed by DeWine on Friday would change that language to say a state agency 'shall' accept a lease that meets certain conditions, instead of saying it 'may' do so. In other words, it forces an agency to grant the lease application from oil and gas drillers."

3. Phillips 66 anticipates a tight summer for gasoline and diesel. "U.S. oil refiner Phillips 66 expects supplies of gasoline and diesel to be tight this summer, a top executive said on Thursday during a presentation at the Goldman Sachs Global Energy and Clean Technology Conference," reports Reuters. "Refiners have been running at near full capacity for months as demand for gasoline and diesel roared back as pandemic travel restrictions ended and Europe sought alternatives to Russian fuel exports."

Crom's Blessing