US news brief July 24: House passes bill to speed up natural gas pipeline permits

wholesale

Source: U.S. Energy Information Administration, based on ABB Energy Velocity Note: Prices are simple averages of CAISO trading hubs ZP26, NP15, and SP15 from January 1 through June 30 of each year.

 Also in news brief: American Midstream sells propane business for $170 million, US House moves to streamline permitting process of natural gas pipelines

As the California power grid adapts to increased solar electricity production, wholesale power prices are rising in the morning and evening hours, according to the US Energy Information Administration.

The higher hourly prices in the morning and evening reflect a premium for a particular characteristic that not all generators can deliver: the ability to increase output on command.

In the electric system, demand must always be met with sufficient generation to maintain grid reliability and to avoid blackouts.

Historically, electricity generation was adjusted as customers turned appliances and equipment on and off around the same time each day.

The morning and evening hours, when load is either ramping up or ramping down, are often the most challenging hours for grid operators, as they must ensure that the electricity supply changes to match the relatively rapid changes in demand.

Recently, the addition of both utility-scale and small-scale solar generators has contributed to steeper morning ramp-down and evening ramp-up periods. Other types of generating units decrease in the morning as solar generation increases with the sunrise and increase in the evening as the sun sets.

Flexible generators ramp up and down to follow net load, which reflects demand minus electricity generation from variable resources, such as solar and wind.

CAISO anticipated this evolution of the net load profile, often referred to as the “duck curve,” back in 2013. Load profiles from March were used as the reference for a typical spring day because seasonally low electricity demand makes the impact of solar and wind on net load more evident at that time of year.

Wholesale prices in CAISO’s day-ahead and real-time electricity markets, which do not directly determine retail rates, reflect dispatch decisions and are typically driven by the variable cost of the most expensive generation used to satisfy system load in a given hour.

As the need for flexible generation that can operate during ramp periods has increased, wholesale prices in those hours have also increased.

US House approves bill to streamline FERC permitting process for natural gas pipelines

“This is an important step in strengthening our nation’s energy infrastructure and creating U.S. jobs across the country,” said API Midstream and Industry Operations Group Director Robin Rorick.

“Creating certainty and improving efficiency in the permitting process for natural gas pipelines will ensure that consumers continue benefitting from affordable, reliable, clean-burning natural gas.”

Private investment in American energy infrastructure is a $1 trillion proposition that could support one million jobs annually through 2035, according to a recent ICF study commissioned by API.

“We urge the Senate to approve this legislation so that American workers, consumers, and the environment can continue to benefit from our nation’s abundant supply of natural gas,” said Rorick.

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American Midstream sells propane business for $170 million, redeploying capital

American Midstream Partners, LP has sold its Propane Marketing and Services business to SHV Energy N.V. for $170 million in cash.

The transaction is expected to close in the third quarter of 2017.

Highlights:

  • Sale provides significant capital to be redeployed in core operating areas of the deep-water Gulf of Mexico, Permian Basin and East Texas
  • Partnership expects to redeploy substantially all proceeds in Q3 of 2017
  • Announces acquisition of Viosca Knoll, further integrating Gulf of Mexico system
  • Maintains 2017 Adjusted EBITDA guidance; expects material increase in 2018

Viosca Knoll serves producing fields located in Main Pass, Mississippi Canyon and Viosca Knoll areas in deep-water Gulf of Mexico that connect to several major delivery pipelines, including AMID’s High Point and Destin pipelines.

The acquisition of Viosca Knoll continues the Partnership’s development of a premier Gulf of Mexico system offering strong interconnectivity across the Gulf Coast and providing customers with more efficient delivery options.

The acquisition was initially funded with borrowings from the Partnership’s senior secured credit facility and will be repaid commensurate with closing of the Propane transaction.

 

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