The U.S. Energy Information Administration is a government agency who’s charter is to act as an organization that “collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment”. Unlike the FERC they really are fairly neutral parties and they seem to the “independent and impartial” aspects of their functions seriously.

A lot of my research has centered around eia.gov because they give so much raw data – and then they couple it with hundreds of different ways to correlate it, visualize it, and analyze it. Since day one they’ve been a thorn in the side of PennEast because eia.gov data regularly repudiates a number of PennEast’s key justification claims.

One of their handy tools to help make sense of all the information out there is their “Natural Gas Weekly Update“. It’s kind of like a newsletter that snapshots what happened in the week prior in the natural gas markets. They give pricing, capacity, supply, and demand numbers for the week but also provide some light analysis to explain larger forces driving the market and what might be coming up in future weeks or months.

Their most recent on is here:

http://www.eia.gov/naturalgas/weekly/archive/2015/04_23/index.cfm

There are a number of useful nuggets of information in here that taken together land a heavy blow against PennEast’s so-called justification for their pipeline, including:

• The levels of natural gas going to electrical power generation is more dependent on pricing and the weather than any other factor.  The record for consumption by electrical plants was hit in 2012 when we had fewer natural gas fired plants than we do today.
• Retirement of coal-fired plants is a red-herring.  EIA notes “It’s important to note that retiring coal-fired capacity does not necessarily result in a significant change in generation; many of the retiring plants are old and not used much.”.

The two above points taken together mean that you shouldn’t put too much credence on people pointing to the retirement of coal-fired plants as a big driver of natural gas consumption.  Yes there will be some uptake but it is fairly moderate in size.  When PennEast talks about natural gas replacing coal or speaks of supplying the Gilbert electrical plant in Holland Township they are not talking about substantial amounts.  Mostly they’re talking about backup generation facilities (e.g. what Gilbert is) that go mostly unused.  Which reinforces the question again – when all of these assets are sitting around not using the gas, where’s it going to go?

There is further data on the overall system’s capacity and the production numbers:

• There’s already an enormous amount of elasticity in the system.  The generation numbers show that we can already accomodate up to 5 billion cubic feet of day of changes in consumption without significantly impacting the system as a whole.
• Gross production is up 8% year over year, while LNG imports into the country are down 64%.

In other words we are drowning in natural gas and seem to have adequate pipes to move it around.  This is further underlined by the next piece of data:

• Price volatility compared to a year prior is down 1100%.  Last year during the polar vortex prices spiked on a couple of days to around $110.  This year prices spiked to….$8.00.

And there you have the gun pointing at PennEast’s head.  Their whole house of cards is really based on that $110 number from a year ago.  It’s what they use to scare the crap out of people and indicate that they are our saviors.

In reality the problems that lead to that $110 have been fixed.  As I’ve mentioned in previous posts, we’ve had new pipelines come on line in 2014 which helped with capacity issues.  And FERC has mandated coordination between major consumers and producers to make the existing infrastructure far more efficient.  The net result: $8 vs. $110.

While most of us hate Mondays, I imagine PennEast dreads Thursdays.  Thursday, the day of the eia.gov Natural Gas Weekly Update that puts yet another nail in PennEast’s coffin.