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Energy Market Update: April 3, 2018

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How is the Rover Pipeline Expansion impacting energy prices?

In this week’s Energy Market Update, Direct Energy Business Strategist, Tim Bigler, gives an update on the pipeline project and how it’s changing the market.

Watch the video below to learn more. 

 

Rover Gas Pipeline Expansion

The Rover Pipeline is currently transmitting between 1.4 and 1.7 bcf of natural gas per day.

Expansions to the pipeline are underway and will extend from southwestern Pennsylvania north into Ohio, then segment north to Michigan and south into Indiana. An additional vector across Michigan also moves gas down into Chicago.

The pipeline additions are contracted to increase to approximately 3.1 bcf per day, with a 3.25 maximum capability. The target production date for the new segments is projected to be the second or third quarter of 2018.

Energy Prices in Chicago

In Chicago, gas basis prices previously were positive, but now are negative. Chicago fixed prices also continue to move lower. Despite gas prices moving lower in PJM COMED, the power price is now stable.

The Rover Pipeline appears to be having an impact on Chicago markets, at least for gas. And it’s probably helping to anchor and keep the peak prices stable for the 19 and 20 Indexes.

Energy Prices in Michigan

MICHCON prices are very similar to Chicago, with basis prices falling into the negatives. Fixed prices are at 2.40 and 2.45. In an efficient combined cycle gas plant, these rates put us at around $17-18/megawatt hour. So, gas prices may be hitting a floor from the fixed side, and may create a strong buying reaction.

Stay tuned to the Direct Energy Business Blog for the latest energy market news and information.

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Posted: April 03, 2018

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