energy metro desk feb. 5, 2015

8/21/2019 Energy Metro Desk Feb. 5, 2015

http://slidepdf.com/reader/full/energy-metro-desk-feb-5-2015 1/23 1

February 6, 2015 Vol 7 Issue 3

weather or not

energy metro DESK


http://slidepdf.com/reader/full/energy-metro-desk-feb-5-2015 2/232

Successful energy trading needs a trusted partner.From deep liquidity and cross-marginingefficiencies, to risk management and post-trade services, we deliver more.

CME Group has been helping customers trade energy, from the early days of the NYMEXtrading floor to the present day electronically via CME Direct – efficiently and seamlessly.

We are committed to delivering a global energy marketplace that will surpass all of yourtrading needs.

Find out how we deliver more.

www.cmegroup.com/wedelivermore

CME Group is a trademark of CME Group Inc. The Globe logo, CME, Chicago Mercantile Exchange and CME Direct are trademarks of Chicago Mercantile Exchange,Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange Inc. Copyright © 2013 CME Group. All rights reserved.

HENRY HUB/

BASIS/CME DIRECT/GLOBALBENCHMARKS/

WE DELIVER MORE.

http://www.cmegroup.com/wedelivermore

































around the desk (regular feature)

editor ’s energy market commentary emissions desk power signals weekly gas storage lotto & market buzzstrategic weather desk power movescommentary by Dr. Robert Michaels

new risk in energy conference 2015 who’s on first; data transparency woeslng forward market wire

Source: Capra Energy. LNG curves for Feb. 4, 2015 trendsetter, manufacturing barometers way upthe plan; interview with cftc’s chris giancarlodrums along the potomacreview: pondering our bits of dataBy Arthur Jones

4

678

1011

121417

18202122

Subscription Inquiries: 410/923-0688 or by electronic mail to [email protected] .Subscriber rate: US $699 yearly, MD residents, please add 6% sales tax.

Editor-in-Chief: John Sodergreen • Senior editor: Mick Rood • Reporters: Alex Cummings, Jess Wheaton • Columnist: Dr. Robert Michaels

Editorial Office: 1145 Generals Hwy, Crownsville, MD 21032 Tel: 410/923-0688 Fax: 410/923-0667 Art Director: Katharine Sodergreen ([email protected])

Copyright 2015. Scudder Publishing Group. ISSN 1552-5090Federal copyright law prohibits duplication or reproduction in any form, including electronic, without permission of the publisher.

Cover painting is by William Glackens, Central Park in Winter, 1905.

table of contents

February 6, 2015

mailto:[email protected]






around the desk By John Sodergreen, editor in chief

(Continued)

Lots of News Around the Desk This Week…

describe the foundation for the 2008

global financial meltdown. Under the

settlement, S&P agreed to pay a fine of

$1.375 billion. Missing from the settle-

ment announcement was any hint of jail

time for anybody. We recall a similar situ-

ation following the Enron/merchant en-

ergy sector implosion. Neither situation

would have happened on quite the same

scale were it not for S&P’s fraud. Yet nopokey for bad guys, all but guaranteeing

a redo in the next decade or so. Brilliant

… The Rasmussen Reports daily Presi-

dential Tracking Poll for Wednesday

shows that 51 percent of likely voters ap-

prove of President Obama’s job perfor-

mance. Forty-eight percent disapprove.

The latest figures include 27 percent who

strongly approve of the way Obama is

performing as president and 37 percent

who strongly disapprove. This gives him

a Presidential Approval Index rating of-10… Just saying… We spend a lot of

time talking about natty gas storage and

this week we read some interesting analy-

sis from Poten & Partners about floating

crude storage. Basically, the picture is

rosy. “Rates are strong and the outlook

appears favorable, at least for the next six

to 12 months. There is an expectation

that a significant number of large crude

oil tankers will be employed in floating

storage as a result of a widening contan-

go in the oil markets … ” How long willfloating storage last? Longer than we

ever thought. Price-wise, floating storage

(>$1.00/bbl/month), is twice the price

of land-based crude storage (~$0.50/

bbl/month). “Anecdotal evidence sug-

gests that land-based storage has already

reached record levels and may be filling

up to capacity. As a result, trading com-

panies have started fixing 2-million bar-

rel VLCCs on long-term charters with

storage options. When land-based stor-

age is full and stock-building continuesat a rate of 0.6, 1.3 million barrels per

day, about one VLCC equivalent will be

required every two to four days. By June

of this year some 80–110 VLCCs could

already be in use as floating storage un-

der this scenario … Removing a signifi-

cant portion of the fleet from a market

that is already tight will cause tanker

rates to go up even further, while oil

prices need to come down significantly to

Once upon a time, that Jeff Sprecher guy

and his fancy new electronic energy trading

exchange were viewed as evil incarnate to

longtime energy pit traders. They saw the

writing on the wall. ICE was the future, and

Sprecher was the guy they all believed would

put them out of jobs. Or, viewed another

way, force them to learn screen trading. In

any case, it’s not for lack of irony that in one

week in 2015, we read two rather curious

headlines. First, that Sprecher’s recent zil-

lion-dollar face-lift and upgrade to the

NYSE trading floor or ”garage,” as its af-

fectionately known, is now complete, and

second, from the CME/NYMEX , the last

true bastions of floor-traded futures in

America, most of the pit real estate will go

dark forever in New York and Chicago in

early July. CME noted in a statement that

open outcry futures volumes had dropped

to a mere 1 percent of total futures volumes

for the group. CME says that the S&P 500

futures market will remain open on the vast

Chicago trading floor and on the NYMEX,

a smidgen of options on futures contracts

will continue in Chicago and New York. We

pinged a bunch of folks for comments on

this week’s exchange news, and got no tak-

ers. Perhaps they were just tired or saying,

“end of an era …” We recall the first time we

were given a tour of the massive NYMEX

floor in the early 2000s and Bo Collins was

president of the NYMEX. It was quite a

sight; the energy was still there, most of the

brokers looked like something from central

casting, paper and junk all over the floor, the

volume as almost deafening. Collins led us

around with ease, like a brigadier, great

masses of bodies parted as we came through

the various pits. The power pit was the one

quiet spot in the joint, as we recall. Again,

these were the early days. All the brokers

had a small tablet-like gizmo that the ex-

change had recently issued, but a couple

guys admitted they made better doorstops.

Collins may have uttered something that

sounded like “Neanderthals” under his

breath, but we can’t be sure. It was a long

time ago. Change came hard to the pits, he

told us. A few years later, we had a similar

tour of the CME’s crown jewel in Chicago.

Cavernous was the only way to describe it.

But, even then, it was clear that the numbers

on the floor were on a downward trajectory.

In a few short years, you might have been

able to hear an echo, if you listened hard

enough. Our prediction for 2015: At least

two major trading-themed movies will be

shot in these soon-to-be vacant places, in-

volving thousands of extras, cameos with

lots of familiar faces, and no regrets …

Speaking of exchanges, both ICE and CME

reported stellar Q4 numbers and excellent

Q1 volumes. ICE’s Q4 consolidated reve-

nues, less transaction-based expenses,

were $800 million. For the year ended Dec.

31, 2014, consolidated revenues, less trans-

action-based expenses, were $3.1 billion. So

far this year, on the commodities side, ICE

reported a 7 percent increase in average

daily volumes, led by Brent (42 percent),

Gasoil (9 percent) and Other Oil (51 per-

cent). Natty gas is down about 13 percent,

year-over-year … As for CME, reported rev-

enues for Q4 were $841 million on operat-

ing income of $472 million, way up year-

over-year. In January, volume averaged 15.6

million contracts per day, up 21 percent

from January 2014. CME Group energy

volume averaged a record 2.2 million con-

tracts per day, up 19 percent from January

2014, including monthly records in crude

oil futures and options … It’s gonna be a

good year … Earlier this week the DOJ and

19 states plus DC announced a settle-

ment with Standard & Poor’s to resolve

allegations of a vast scheme to defraud

investors. The scheme involved residen-

tial mortgage-backed securities (RMBS)and collateralized debt obligations

(CDOs). According to the DOJ press re-

lease, S&P issued inflated ratings, which

the firm falsely misrepresented as objec-

tive, which downplayed RMBS and

CDO true credit risks. DOJ also found

that the company’s leadership ignored its

senior analysts, who warned that the

company had given top ratings to finan-

cial products that were failing to perform

as advertised. Those last three sentences



maintain the required contango and keep

the storage play profitable. We think it is

unlikely that this stock-building scenario

will play out through the end of the year.

At some point somebody somewhere will

blink. While oil demand does react favor-

ably to lower prices, we do not expect

that demand will grow quickly enough

to absorb the current excess supply of

crude oil.” The beat goes on … TheHouse passed yet two more compelling

pieces of legislation aimed at making sure

certain federal agencies think before they

act. On Wednesday, we saw the passage

of the Unfunded Mandates Information

and Transparency Act of 2015, H.R. 50,

sponsored by Rep. Virginia Fox, R-N.C.

The bill is not to be confused with the

Unfunded Mandates Reform Act of

1995. Apparently, the old bill created a

slew of loopholes that HR 50 backers be-

lieve makes it impossible to curb agenciesfrom creating costly unfunded mandates.

The legislation would make independent

regulatory agencies account for the costs

of their mandates; including an annual

review on the effect of any proposed or

final rules that might impose $100 mil-

lion or more costs on state or local gov-

ernments, or the private sector. This is

the third time around for this particular

bill. Third time is a charm? We doubt it.

Also this week, the House passed the

Small Business Regulatory Flexibility

Improvements Act of 2015 (H.R. 527),

which would amend two similar-sound-

ing laws passed in 1980 and 1996 that

were meant to make agencies account for

the impacts of proposed regulations onsmall businesses. What does the presi-

dent think of HR 50 or HR 527? The

veto pen is already warm apparently, if

either measure manages to pass the Sen-

ate this session … As we noted last time,

the registration is now open for our an-

nual New Risk in Energy Conference at

the Houston Club in Houston. See the

agenda on pages 12-13. We offer an ex-

cellent lineup and a very reasonable price.

Register soon, we only have 125 seats

and then we cut off registrations. TheHouston Club is an excellent venue, but

it’s not huge. We look forward to seeing

you there … And finally, some good news

from the E&Y research desk. While oil

and gas transaction activity slowed un-

derstandably in the fourth quarter due to

tanking prices, 2014 was nonetheless a

“notable year,” according to the firm’s

latest “Global Oil and Gas Transaction Re-

view 2014.” Total global reported deal val-

ue reached almost $443 billion last year, up

by more than 69 percent from 2013. How-

ever, the total number of oil and gas transac-

tions – the total deal volume – continued to

decline in 2014, dropping more than 20

percent from 2013. Upstream transactions

continue to dominate the transaction land-scape, accounting for almost three-fourths

of the total global deal volume. But notably,

the upstream share of total reported deal

value dropped below 50 percent for the first

time in 2014, as non-upstream deal activity

surged. Total reported deal value was up for

the year for each segment of the industry:

upstream increasing by 21 percent, down-

stream by 88 percent, midstream by 115

percent and oilfield services by 242 percent.

The number of deals, however, dropped in

2014 for each segment except the down-stream. The four big trends in 2014: bigger

deals, less acquisition spending by NOCs,

continued high interest in US unconven-

tional assets and continuing expansion of

private equity (PE) interest in the sector.

Next time, we’ll dig into E&Y’s forward

view for 2015. And so, there it is …

http://www.qbsol.com/


http://www.ey.com/Publication/vwLUAssets/EY-global-oil-and-gas-transactions-review-2014/$FILE/EY-global-oil-and-gas-transactions-review-2014.pdf






http://slidepdf.com/reader/full/energy-metro-desk-feb-5-2015 6/236 amerexdata.com

Amerex has been a trusted broker for 35 years and a trusted source of

market data for 15 years. With active brokerage desks across a wide

spectrum of energy products, Amerex knows the market. Custom

reports can be tailored for speci c needs and all reports offer enterprise-

wide subscription fees. Sign up for your free trial of Amerex Data today

at www.amerexdata.com.

Natural Gas

Natural Gas Spread Matrix

Power

Power Spread Matrix

PJM Zonal Indices

Emissions

RECs

Carbon

Liquidity.

Experience.

Market Data.

emissions desk The Senate has officially agreed that climate

change is real. A brief amendment attached

to a key piece of legislation on the Keystone

XL pipeline was intended to put Keystone

backers on record as agreeing that climatechange is not a hoax. And it did – every

senator in the land bar one, Mississippi Re-

publican Sen. Roger Wicker, voted for the

amendment.

The news that flashed across

Washington was that Capitol Hill’s loudest

anti-climate voice, Sen. James Inhofe, R-

Okla., not only voted for the amendment

but encouraged his fellow Republicans to

do the same. Then congressional news-

paper The Hill uncovered the backstory:

Inhofe told his colleagues to vote for theamendment because it did not specify that

humans cause climate change. He wanted

to get the Keystone bill through before

Democrats realized the omission and they

moved to insert language that would be

tougher to swallow.

The debate prior to the vote

brought up many climate change topics,

but ended up focused on whether the Key-

stone had any impact on the environment

or emissions levels. One Republican senator

unsuccessfully pushed an amendment that

the pipeline surely did not. Republicansblocked a second Democratic amendment

that upped the ante by acknowledging “hu-

man activity significantly contributes to cli-

mate change.”

Some Democrats told The Hill

that this was a watershed event. Repub-

licans, including presidential contenders,

have now stated that humans are involved

in climate change. Will this admission that

climate change is “not a hoax” come back

to haunt some in the next election, or will

it help them to appear less extreme in their views? The vote seems only to signal that

lawmakers remain incapable of rising above

semantic parlor games and addressing the

issue with the gravity demanded by both

the topic and their station.

Just days later, Inhofe was pub-

licly blasting the environmental appropria-

tions in President Obama’s budget. The

man who spurred his colleagues on to

the vapid vote was soon on record with a

contrary message. “I will not support any

special funds,” he said. “I will also do ev-

erything in my power to prevent $3 billion

in taxpayer dollars from going to the Green

Climate Fund.” Inhofe threw in erosion of

states’ rights, job destruction and higher

electricity prices as just a few of the alleged

consequences of the “more than $120 bil-

lion” spent on climate change initiatives

during Obama’s tenure.

The senator attacked $95 billion

in new taxes – about half of the total tax

increase proposed in the budget – that he

claimed “targeted at Oklahoma’s oil and

gas industry,” such as a repeal of the ex-

pensing of intangible drilling costs, percent-

age depletion and other provisions that off-

set the energy industry’s production costs.

Behind all the bickering is a very

real concern: further federal investigation

into whether the Keystone pipeline would

stimulate oil sands development, which

contributes higher greenhouse gas emis-

sions than conventional oil production.

Last month the State Department said oil

sands development would continue with or(Continued)

http://www.amerexdata.com/

























(Advertisement)

Like Butter: Comparing Market Spreads by ISO We’re hitting the tail end of Winter and a key seasonal trend is reduced convergence between day-ahead and real-time markets. As

a result, we thought it would be interesting to review general and seasonal market spreads by ISO. Most ISOs, aside from ERCOT,

tend to experience the greatest spread between day-ahead and real-time prices during the colder months (day-ahead greater than

real-time). This Winter trend is most recognizable in the eastern ISOs. The trend was most severe last Winter when the polar vortex

dramatically changed spreads in the ISOs. Seasonal spread averages were over $5/MWh and monthly averages were in the double

digits. More constraints in the DA market, unexpected unit outages and spikes in the real-time market all contribute to this. New

England was impacted by these Winter trends in the years prior to 2014 as a result of regional constraints. Other notable trends acrossthe ISOs include the 2013 increase in CAISO (more renewable generation was scheduled in the real-time) and high ERCOT Summer

spreads (market participant’s attempts to hedge around the possibility of real-time volatility in the hotter months). Do you want to

learn more about market spreads and the opportunities they create in the virtual trading markets? If so, check us out at www.yesenergy.com .

without the pipeline. But with WTI dan-

gling around $50 a barrel, the EPA this

week called on State to check its math.

That request led to a quick re-

buttal from the oil patch. Louis Finkel,

executive vice president of the American

Petroleum Institute, claimed EPA’s request

was just the latest excuse to delay Keystone

approval: “Keystone XL was put forward

when oil was less than $40 a barrel, so price

has little impact on the project.” He said

the pipeline means a large portion of Amer-

ican oil imports could come from Canada

instead of Venezuela or the Middle East.

“The science behind building

the Keystone XL pipeline has been settled

five times over. The State Department has

concluded the pipeline is safe to build, and

it will not have a significant impact on the

environment,” Finkel said. “After more

than six years the time for review is over.

We continue to urge President Obama to

reconsider his veto threat.”

But according to the EPA’s let-

ter this week to the Bureau of Energy Re-

sources, the State Department’s environ-

ment finding was that “lifecycle greenhouse

gas emissions from development and use of

oil sands crude is about 17 percent greater

than emissions from average crude oil re-

fined in the United States.” It also found

that sustained oil prices in the $65-75 range

would diminish oil sands production levels

due to the higher cost of shipping by rail.

“In other words … at sustained

oil prices within this range, construction of

the pipeline is projected to change the eco-

nomics of oil sands development and result

in increased oil sands production, and the

accompanying greenhouse gas emissions,

over what would otherwise occur,” EPA

official Cynthia Giles wrote. “Given recent

large declines in oil prices and the uncer-

tainty of oil price projections, the additional

low price scenario … should be given addi-

tional weight during decision making, due

to the potential implications of lower oil

prices on project impacts, especially green-

house gas emissions.”

If the letter spurs State to take a

second look at the pipeline, it may cause a

chain reaction. The president has made it

clear he won’t sign the Keystone bill if it

makes a substantial increase in greenhouse

gas emissions. But the message to the State

Department from Republican leadership

this week was equally clear: Quit stalling.

http://www.yesenergy.com/



















(Continued)

weekly gas storage lotto and market buzzMurky. Low confidence. Volatile. Three apt

terms for Q1 in the weather and gas storage

game. See Weather Desk on page 10. Un-

fortunately, the bumpy nature of the season

will continue well into next month. Though

the experts tell us that the Winter that only

partially showed up this year will be colder

than normal, it won’t come close to touching

the extremes of last year. As such, the end-of-

season tally should be fairly beefy. The seasonal

weather tea leaves suggest little room for a

surprise polar vortex or any other kind of vor-

tex this year, so you may as well stop hoping for

it … This week’s storage report came in slight-

ly lower than the market expectation and far

less than last year’s number. We’re now well

ahead of last year’s level and nearly at parity

with the five-year norm. The past 12 months

have been quite a ride indeed. Given the re-

lentless production we continue to see and

continued lack of accurate demand data in

those huge growth areas affectionately known

as the producing region, the wild ride should

continue. We’ve seen the market miss the EIA

number for many weeks now, averaging al-

most 10 Bcf per misfire, and generally, it’s

due to analysts misreading the supply and

demand scene in the producing area. We’re

appalled that in 2015, this situation has not

been fixed by FERC and EIA. How this vast

region of intrastate pipes and storage facili-

ties can’t be compelled to rpublicly report ac-

curate flow and inventory data is almost in-

explicable. It’s certainly unreasonable. We’re

sorry FERC took it on the chin for 720. We

say, give it another shot. At this stage of the

game, accurate data is essential to a well-

functioning market. Perhaps we’ll see some

movement on this topic under Chairman

Bay. By and large, analysts’ forecasts have

been pretty bad since the draw season began

back in November. Little will change until we

see the necessary policy changes. – the editor

OK, let’s run the numbers. In the most

recent week, on Feb. 5, EIA came in at

-115 Bcf and the market was looking for

a higher draw in the 119-Bcf neighbor-

hood. The Survey Index came in at -119.3.

Nonetheless, in our Wednesday Tealeaves

we had a sense the EIA report would come

in low. Our consensus came in a couple

points lower than the market at -117 Bcf.

The fact that the spread between the three

categories we track was right at the 2.95-

Bcf level (pointing to a 5-plus Bcf surprise),

and the range for the week was somewhat

w ide, pointed to a surprise. Our S/D

data for the week simply couldn’t make

the higher numbers work. Interestingly,

R euters, Bloomie and the DJ surveys all

came in over 120 Bcf. We noted that total

outages were almost exactly flat, week-on-

w eek, at 22 GW. Nuke outages were up

about 1 GW, to 2.5 GW, and coal outages

w ere down about 1 GW, week-on-week,

to 15 GW. Canadian net imports totaled

around 6 Bcf/d, down 1 week-on-week

and LNG send-outs totaled a mere 0.4

Bcf/d, down 0.3 week-on-week. Finally,

exports to Mexico totaled about 2 Bcf/d,

so, flat week-on-week. We think lots of

f olks’ forecasts may have overcompensated

f or the previous week’s uber-low 94-Bcf

pull. Next week should be higher. This

w eek’s range was well over 20 Bcf at 26

Bcf between the highs and lows. The bank

index was -116.4/-116.5 and the indepen-

dent analyst index was higher at 117.9/-

118 Bcf. Twenty-eight out of 40 analysts

came within 5 Bcf of the tape and only two

f orecasts missed the mark by over 10 Bcf.

Comparatively speaking, this was the best

Go beyond.www.icapenergy.com

ICAP ENERGY

StrengthPartnershipResilience

OVERALL ENERGY BROKER OF THE YEAR 2014

As voted by the readers of Energy Risk magazine

© ICAP plc 2014. ICAP® and other service marks and logos are service marks of ICAP plc and/or one of its groups of companies.

All rights reserved. Entities within the ICAP group are registered as applicable.

http://www.icap.com/













































week we’ve seen this year. The HighBaller

for the week at -130 Bcf was Ellen Stamm

of Schneider Electric and the LowBaller

at -104 Bcf was Raymond James. UBS is

forecasting a 165-175 Bcf withdrawal next

week, compared to 2014’s 234-Bcf with-

drawal and the five-year average of a 178

Bcf. “Over the last month, the weather-ad-

justed S/D has been 2 Bcfd oversupplied

versus last year and 1 Bcfd oversupplied

versus the five-year average. Given the cur-

rent weather-adjusted oversupply, we fore-

cast storage to exit the Winter at ~1.7 Tcf

(above the five-year average of 1.65 Tcf),”

UBS says.

For the Jan. 29 report, EIA

tossed the market a cluster bomb, calling

a -94 Bcf pull while the market’s survey

index was far higher at -109.8 Bcf (the me-

dian was -111). Our Consensus Average

was a little lower at -108 Bcf. The bank an-

alyst category was lower at -101.5/102.5

and the independent analyst category was

at -109.6/109 Bcf. The spread among the

three categories we track was wildly high at

8.4 Bcf, so we knew something was amiss.

Our editor also saw a low-side surprise (he

was at -99). Only 10 out of 40 forecasts

came within 10 Bcf of the tape and only

five forecasts managed to come within 5

Bcf of the EIA report. A lousy showing

indeed. The range for the week was whop-

pingly wide at -82 to -144 Bcf, and the

standard deviation was 10.1. We didn’t

have a winner this week, nor did we see

an honorable mention missing by 1 Bcf.

Our HighBaller for the week at -144 Bcf

was Schneider Electric and the LowBaller

was the Bentek S/D Model at -82 Bcf. So,

what did the experts have to say about Bat-

tle Damage Assessment? Bentek, the Big B,

noted that EIA’s 94-Bcf withdrawal was 13

Bcf below Bentek’s forecast. “The miss was

entirely concentrated in the producing re-

gion, which reported a 16-Bcf withdrawal

compared to Bentek’s estimate of a 29-Bcf

pull. Bentek’s total sample withdrawal for

the region was 11 Bcf on the week, which

represented a decline of roughly 67 percent

from the previous week. However, the EIA

announced a week-over-week decline in ac-

tivity of more than 80 percent. The weak

withdrawals from the salt domes imply

strong injections at fields outside Bentek’s

sample, which had a total withdrawal from

salt dome facilities of nearly 6 Bcf on the

week.”

Natural Gas Weekly Storage Forecast Comparison 20151st Quarter

Storage Forecasts

Stocks

(BCF) 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb

EIA - 2015 (131) (236) (216) (94) (115)

EIA - 2014 (157) (287) (107) (238) (262)

EIA - 2013 (135) (201) (148) (172) (194)

Storage Forecasts 1Q Score

1Q Weeks

#1

YTD

Score

Weeks

#1 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb

B. Dougherty/Credit Suisse 84.82 2 84.82 2 (119) (235) (220) (97) (115)

Metro Desk Editor Forecast 84.21 1 84.21 1 (130) (220) (221) (99) (115)

Paul Belfower/Mustang Fuel 80.28 1 80.28 1 (131) (238) (222) (109) (119)

Scott Speaker/JPM 77.57 1 77.57 1 (121) (235) (225) (97) (118)

Team Tameron/Wells Fargo 77.09 77.09 (132) (226) (225) (106) (113)

Wm. Featherston/UBS 77.03 2 77.03 2 (125) (220) (225) (90) (115)

Bentek - S/D 74.61 74.61 (126) (225) (228) (82) (113)

TFS/Tradition Energy 72.46 1 72.46 1 (122) (232) (230) (90) (117)

Platts Survey 69.45 69.45 (119) (226) (224) (104) (116)

Banks Index 68.76 68.76 (123) (221) (227) (102) (116)

Jared Hunter, Ind. Trader 68.51 68.51 (130) (222) (230) (104) (117)

EMD All Stars 66.73 66.73 (121) (229) (228) (104) (118)

Metro Desk Consensus Avg. 65.18 65.18 (122.0) (225.5) (226.3) (108.0) (117.0)

Tony Yuen/CITI Group 65.07 65.07 (119) (229) (222) (104) (122)

Gabe Harris/WoodMac 64.70 64.70 (129) (232) (229) (118) (110)

Ellen Stamm/Schneider Elec 63.70 1 63.70 1 (131) (255) (206) (144) (130)

PIRA 63.61 63.61 (126) (224) (231) (107) (117)

Ben Smith/Enercast Financial 63.40 63.40 (125) (211) (221) (110) (118)

Kyle Cooper/IAF Advisors 63.17 63.17 (120) (233) (229) (108) (111)

Bentek - Flow 62.12 62.12 (123) (218) (226) (107) (112)

Independants Index 61.50 61.50 (121) (227) (227) (110) (118)

Robry825 (05) 60.94 1 60.94 1 (124) (208) (217) (114) (118)

Donnie Sharp/Huntsville Utils 60.85 60.85 (120) (222) (218) (119) (117)

Peter Marrin/SNL Editor 59.97 59.97 (118) (222) (220) (108) (120)

A. Weissman/EBW Analytics 59.89 59.89 (125) (232) (234) (101) (126)

Surveys Index 57.76 57.76 (120) (226) (226) (110) (119)

C. Fenner/Macquarie Energy 57.53 57.53 (120) (229) (230) (104) (121)

Luke Larsen, OPIS 57.50 1 57.50 1 (112) (231) (229) (110) (115)

M. Adkins/Raymond James 56.57 56.57 (129) (211) (237) (101) (104)

Dow Jones Survey 56.16 56.16 (119) (231) (226) (111) (122)

SNL Energy Survey 55.40 55.40 (116) (226) (224) (112) (119)

“APDM” 54.15 54.15 (118) (238) (228) (108) (125)

Genscape 53.69 53.69 (121) (233) (235) (107) (122)

Ron Denhardt, SEER 52.87 52.87 (114) (230) (230) (109) (110)

Bloomberg Survey Avg. 51.48 51.48 (121) (223) (229) (111) (120)

Norse Gas Marketing 50.98 50.98 (108) (222) (226) (108) (110)

Reuters Survey 50.78 50.78 (121) (224) (227) (113) (122)

Steve Gregory, Ind. Trader 47.71 47.71 (128) (220) (234) (118) (120)

LCM Commodities 44.70 44.70 (115) (227) (233) (110) (120)

Drew Wozniak, ICAP 44.43 44.43 (113) (223) (228) (114) (119)

Asset Risk Management 43.94 43.94 (117) (233) (231) (117) (123)

R. Haidari, Thomson-Reuters 41.11 41.11 (118) (228) (235) (111) (125)

Tim Evans/CITI Futures 38.22 38.22 (122) (182) (230) (113) (123)

John Kilduff, Kilduff Report 31.73 31.73 (104) (222) n/a (121) (122)

Purple: Independent Analysts Red: National Surveys Green: Bank Analysts Black: Dartboard



strategic weather desk Exclusive Weather Forward Views from WSI, MDA EarthSat Weather and

the Commodity Weather Group

Once again we point to CWG’s Matt Rog- ers to sum up just how clear everybody is

about this Winter’s weather. In his Wednes-

day short-term forecast report this week

in advance of the EIA gas storage report,

he noted that the forward view is about as

clear Plaquemines Parish swamp water.

Actually, he said “murky.” However, in this

morning’s update, his, and everybody else’s

forward view is a bit less so. Folks are agreed

that this season will likely turnout to be

colder than normal overall. We can expect to

see many, many warmer-than-normal daysand weeks before we switch back to injections.

Also, don’t forget to send the editor your end-

of-heating season storage forecast. The win-

ner gets many (overnighted) huge Maryland

Crab cakes. Email your final tally to johns@

scudderpublishing.com . – the editor

***

Matt Rogers of the Commodity Weather

Group notes Winter 2014-15 continues to

track on the cold side. However, it is still

running significantly warmer than normal.

It is that differential that makes a bullish-demand Winter with a colder-than-normal,

January-through-February period seem

bearish instead. February is now on track

to also verify colder-than-normal weather,

but still warmer than last year. “While we

have one warmer EIA week expected next

week, the final half of February is now pro-

jected to run colder than normal and at this

pace, may even outperform last year (we

had one warm week last year in the third

week of February), but it would too little

too late in terms of overall seasonal heatingdegree-day accumulations,” Rogers says.

The next big question is March and after

two cold back-to-back March outcomes

(2013, 2014), it may be difficult to imag-

ine a third one. “Right now, our outlook

favors a warmer-leaning March based on El

Niño examples in the 2000s, but the ex-

tended range CFS and European weekly

guidance suggests that the cold February

pattern in the eastern US could persist into

the first half of March at least, offering

some last-minute, above-normal demand

episodes,” he says. He adds that we willhave to watch the situation closely as last

year’s cold March outcome was not very

clear until about the middle of February.

CWG’s first look at Summer 2015 favors a

cooler-than-normal situation that could see

lower demand than last year, but a hot June

is possible. For more information, or a free

trial of the firm’s daily reports, go to www.

commoditywx.com/free-trial .

***

Michael Ventrice, an operational scientist

with WSI, tells us that we’ve got “quite thechallenging forecast ahead for the month

of February into early March.” No kid-

din’. “Large-scale circulation across the

Northern Hemisphere is anticipated to be

driven by high-latitude ridge development

over Alaska, which is forecast to extend in

through Siberia and down into the west-

ern US. This sets up a pattern that directs

cold Arctic flow down into the eastern two-

thirds of the US for much of the month

of February in through early March,” he

says. The story of the current week will bea prolonged snowfall event for many of the

major cities in the Northeast, followed by

a shot of highly anomalous cold air down

across the eastern two-thirds later in the

week. “Our current population-weighted

eastern US averaged HDD forecast is pre-

dicted to be near 175 HDDs, which is an

exceptional 52 HDDs above average for

the time of year. Thereafter, colder-than-

average temperatures are expected to persist

over much of the eastern two-thirds of the

US through the remainder of the month asthe western US bakes under an upper-level

ridge.” During early March, he suspects

high-latitude ridge development continu-

ing over the North Pacific and Alaska,

which may shift slightly westward with time

and focus much of the colder-than-average

temperatures to over the Plains and Mid-

west. For more information on WSI, go to

www.wsi.com/industries-energy.htm . For an

excellent set of weather maps for the com-

ing weeks, click the link below for WSI’s

WeatherWise Blog: www.wsi.com/blog / .

***Phil Vida, a meteorologist for MDA Infor-

mation Systems, says that the recent pat-

tern setup has consisted of steady ridging

over western North America with tempera-

tures that are above normal in the West.

This ridge has also kept precipitation limit-

ed in the West, where snow depths remain

below normal in the Rockies, Sierras and

Cascades. The past few days have increased

moisture along the West Coast from cen-

tral California to Washington. However,

the unseasonably warm conditions thereare likely to limit the high-elevation snow

potential. The heavy rainfall in the West

will dissipate heading into mid-February

as a westward shift in the Pacific low fur-

ther enhances the western North American

ridge. The strength and placement of the

western ridge is key to the downstream

pattern in the central and eastern US,

where periods of stronger cold are seen

over the next couple of the weeks. “Look-

ing beyond the middle days of February

continues the theme of the western ridgeand eastern trough with influences com-

ing from steady low pressure in the Pacific

in the combination +PNA, -EPO, -WPO

pattern setup. The MJO also plays a role

in keeping this pattern in play heading into

late February. The second half of Febru-

ary looks to be similar to the first half with

above-normal temperatures in the West

and below-normal readings in the East,

while the central US finds itself as the area

with greatest risk to either side of nor-

mal,” Vida says. “The strong +PDO signalcoming out of the Pacific will continue to

drive below-normal temperatures into the

eastern US heading into the early days of

March. However, we should start to see

the +PNA take hold more strongly in early

Spring, shifting the coldest conditions into

the southern tier as temperatures moderate

in central and eastern Canada.” For more

information on MDA Information Systems,

go to www.mdaus.com/Weather-Services/

Energy.aspx .



http://www.commoditywx.com/free-trial


http://www.wsi.com/industries-energy.htm


http://www.wsi.com/blog

http://www.mdaus.com/Weather-Services/Energy.aspx






http://www.wsi.com/blog








power movesOriginal market commentary by Dr. Robert Michaels,professor of economics, CalState, Fullerton

The Future: 97 Percentiles Below PrincetonToday we meet David Crane, president and

CEO of NRG Energy, the nation’s biggest

IPP. Its diversified generation interests are

fueled by every energy source from coal to

wind. Crane’s pedigree is a lot better than

mine, degrees from Princeton and Harvard

Law and lots of business experience. With

all that going for him, it may not surprise

you that Crane has a philosophical bent

to go with his industry smarts. The lat-

est issue of Energy Biz summarizes some of

his recent thoughts, in an article with the

deepest title ever seen in an industry maga-

zine. The message of “Carbon Morality”

is as deep as they get: The power industry

has lost its moral stature and American so-

ciety is on the verge of doing something

awful to it.

The crisis? There’s a “fast shift-

ing moral landscape” that “threatens to

leave our industry adrift, shunned by the

customers we serve.” Good luck on the

shun, given that most people have mo-

nopoly utilities and the IPP industry where

NRG operates is unknown to most of the

public. Where’s the problem? Government

is “terminally paralyzed by partisan dead-

lock” and the “desperate public” is looking

to “the biggest remaining high-function-

ing institutions to take up the slack. That’s

us: corporate America.” In electricity, the

source of the reaction is clear, it’s “climate

change, the mother of all social issues.”

IPPs found out all too late that they were

not “the shire in the utility industry’s

middle earth” but instead “a small slice of

Mordor.” (Thanks Mr. Tolkien, and thanks

to the lucky drudge who coined “corporate

America.” It includes almost every busi-

ness in the country, and for that matter its

workers and shareholders.) But that’s just

me, Bob Michaels, and I never ran an IPP

or had my ear to the ground to sense the

public’s moral outrage over carbon (actu-

ally, not the public, but “John Q Public”).

According to Crane, the first inkling of a

problem (“we should have seen it com-

ing”) turned up in 2007, when TXU was

“forced into the hands of private equity”

by a “firestorm” over planned coal-fired

plants. My recollection is that TXU simul-

taneously misread the markets for coal, gas,

power and capital and fully deserved its fate

for wasting all that wealth. But let’s believe

Crane’s claim that the crisis started there

and was subsequently “festering just below

the surface.”

And the electricity industry’s

naifs don’t seem to notice the boil. They

complain about EPA’s carbon rule when

even some enlightened members of cor-

porate America know better. How does

Crane know this? He states (without refer-

ences) that “the most influential companies

of the modern era” (Microsoft, Google,

Facebook and Apple) are all competing to

make sure their data centers are 100 per-

cent clean energy (which one way or the

other includes fossil backup and credits).

Crane reminds us of once-progressive

Amazon, its headquarters once picketed by

folks protesting its use of ordinary power.

It takes a lot of sensitivity to see a crisis in

an item that I couldn’t find on Dow-Jones

Factiva.

Big, but it doesn’t come close to

what Crane sees coming. The carbon di-

vestiture campaign isn’t big in itself, but it’s

the canary in the coal mine (a cliché Crane

does not use). Instead he’s “concerned”

about its effect on the “hearts and minds

of American college students.” (That one

goes back to Vietnam, where the US cam-

paign to win hearts and minds was a fail-

ure.) The crisis grows as new generations

of students go through “four years of con-

stant agitation about morality-driven di-

vestment from fossil fuels.” Crane clearly

didn’t go to a college like the one I teach

at, somewhere in one of the 97 percentiles

below Princeton.

Crane has a company to run and

shareholders to protect, and his foray into

politics and morals may be a smart strat-

egy to keep them whole. If it’s really about

strategy, it helps explain why he depends

on nothing more than rhetoric to support

arguments that apply to a world my stu-

dents and I don’t live in. And neither does

the bulk of the public. For the last several

years Gallup has asked folks to rank the ur-

gency of about 16 public issues. “Climate

change” almost always comes out at the

bottom for both Republicans and Demo-

crats, educated and uneducated. Consider-

ably higher in the urgency ranking comes

“The Availability and Affordability of En-

ergy.”

Bob Michaels is a professor of eco-

nomics at California State University, Ful-

lerton, and an independent energy sector

adviser. Michaels has worked with some of the

country’s leading energy companies. A noted

speaker, energy sector analyst and a regular

Energy Metro Desk columnist, Michaels can

be reached at [email protected] .





new riski n e n e rg y

energy metro desk presents

DEFINING AND MANAGING ENERGY TRADING RISK AND POLICY

April 6-7, 2015Houston Club · Houston, Texas

_____________________________________________________________________________________________________________________________Name Title Organization_____________________________________________________________________________________________________________________________

Address City State Zip Code

Phone E-Mail (very important)

Charge my: Amex Visa MC

Account Number Exp. Date Signature

To order by phone, call 410/923-0688 or fax your order to 410/923-0667. E-mail to [email protected]. Mail your order to:Scudder Publishing Group 1145 Generals Hwy Crownsville, MD 21032. MD residents, please add 6% sales tax.

Make all checks payable to the Scudder Publishing Group.

REGISTER NOW Fill out and Fax this order form to 410.923.0667

or click here to register online. Only $995

This year’s annual event, New Risk in Energy II is a glittering array of market and policy experts, officials and analysts poised to deliver

complete, in-depth, and off-the-record presentations and new ideas on the leading issues and trends of the day.

From Dodd-Frank implementations gone wrong to new energy trading policy and strategy, from natural gas price trends to agency

surveillance priorities and new technologies, you’ll hear all about it at New Risk in Energy II – need to know information on energy

trading, risk, and the policy that drives all of it.

Join us at the Houston Club on April 6-7 for the only event you need to attend this Spring that takes a no-nonsense, deep dive on keypolicy, price and market risk issues from the greatest collection of experts we know. And, unlike other events, this one is only $995.

This year’s event features two networking receptions and 20+ speakers!

...From our editorial Rolodex of most excellent policy experts, market forecasters, officials and technologists, we bring you exclusive

analysis and price prognostications - panel discussions and stand-alone presentations - from the likes of:

Hon. Chris Giancarlo, Commissioner, CFTC; James Newsome, Founder, Delta Strategy Group and former chairman, CFTC; Elizabeth

Ritter, Partner, DLA Piper and former attorney, CFTC; Bruce Tupper, President, ICE Trade Vault; Adam Sieminski, Administrator,

EIA; Andy Weissman, President, EBW Analytics; Gabe Harris, VP Analysis, WoodMac; Kyle Cooper, Managing Director, IAF Advisors;

Keith Barnett, SVP, Asset Risk Management; Prof. Craig Pirrong, Univ. of Houston; Dr. Robert Michaels, Economist and Senior

Columnist, Energy Metro Desk; Steve Lofchie, Partner, Cadwalader, Wickersham & Taft LLP; Jim Allison, Manager, Corporate

Initiatives, ConocoPhillips; plus Matthew Hunter from the CFTC’s Division of Market Oversight and Shawn Bennett from FERC’sDivision of Analytics and Surveillance... and many more!

http://events.r20.constantcontact.com/register/event?oeidk=a07eafz1c3mcc7a3a34&llr=lkxnurbab
























































April 66 to 7:30 p.m.

Evening catered reception,

the Houston Club

April 77 to 8 a.m.

Continental breakfast, the Houston Club

8:15 to 8:45

Assessing new CFTC leadership, new GOP

leadership on Capitol Hill and policy pri-

orities for both. Q&A to follow.

James Newsome, founding partner, Delta

Strategies Group and former chairman,

CFTC

8:45 to 9:15

“Will the New CFTC Be Nicer to End-

Users?” Discussion on mandatory clearing,

trade reporting, position limits, affiliate

trades and other topics of interest to end-

users.

Stephen Lofchie, partner, Cadwalader,

Wickersham & Taft LLP

9:15 to 9:45

The evolving nature of compliance, risk

and compliance risk . Managing the nexus

of risk and compliance in the energy sector.

New risk priorities in the latter stages of

Dodd-Frank reform implementation and

other regulatory changes.

Paul Campbell, energy regulatory and risk

practice leader, Deloitte & Touche LLP

10 to 10:45

Morning keynote:

Hon. Chris Giancarlo, commissioner, CFTC

10:45 to 11:15

“Latest on CFTC/Dodd-Frank Cross-Bor-

der and Affiliate Transaction Rules Impact-

ing the Energy Space”

Elizabeth Ritter, partner, DLA Piper and

former attorney, CFTC

11:15 to 11:45

Data Risk. SDR Progress Report and the

Expansion of SDR’s around the world and

how it will impact your trade strategy and

compliance risk.

Bruce Tupper, president, ICE Trade Vault

Lauren Teigland-Hunt, managing partner,

Teigland-Hunt LLP

11:45 to 12:15 p.m.

“What Volcker Does Not Do and Why the

Markets Still have a Big Blind Spot.” What

essential or ancillary activities should be tax-

payer-guaranteed and why it matters to the

energy sector.

James Allison, manager, corporate studies &

initiatives, ConocoPhillips

12:30 to 2

Lunch

“Energy in 2015: Harbinger of a New Era

or Just the Same Old Manic Depression”

Speaker: Professor Craig Pirrong, Univer-

sity of Houston

2 to 2:45

Gas and oil supply and demand trends and

tea leaves in North America and beyond;

new activities and features from EIA. Q&A

to follow.

Afternoon keynote: Adam Sieminski, ad-

ministrator, EIA

2:45 to 3:30

Gas and power price analysis panel: “For-

ward Trends and Minefields in 2015 and

Beyond”

Andy Weissman, EBW, Panel leader

Gabe Harris, WoodMac;

Kyle Cooper, IAF Advisors;

Keith Barnett, Asset Risk Management

3:45 to 4:45

Agency capabilities and methods for sur-

veilling energy markets; working with

other agencies to carry out the mission; the

growing role of internal surveillance; trade

compliance among market participants.

Matthew Hunter, deputy director, Division

of Market Oversight, CFTC

Shawn Bennett, branch chief, Division of

Analytics and Surveillance, FERC

4:45 to 5:30

New tech session: internal surveillance pro-

grams and platforms; managing transaction

risk in real time; new tools for keeping your

trade desk compliant.

Panel leader TBA

Patrick Woody, NASDAQ/SMARTS

Louis Caron, SAS

Platform provider TBA

5:30 to 6:15

“A Random Walk through the Energy Sec-

tor”

Dr. Robert Michaels, prof of economics, Cal-

State, Fullerton, and senior columnist, En-

ergy Metro Desk

6:30 to 8Catered reception

AGENDA

REGISTER NOW

or click for more information






(Continued)

who’s on first?

Lately, gas storage forecasts have been a bit,

well, off the mark. Since the heating season

began, the majority of our 40 esteemed gas

storage forecasters have been more than

challenged to nail the weekly number. So

far this year, the average misfire – the delta

between the EIA storage number and the

market consensus average forecast has been

especially high at 10.3 Bcf. In the 10 or so

years we’ve been tracking this stuff closely,

that’s pretty high even for the usually tricky

Q1.

So, what’s the prob? Are forecast-

ers and associated quants and economists

getting worse at their trade and not bet-

ter? Unlikely. Well, in such a data-intensive

role as this, it can only be one other thing:

there’s a problem someplace with the data.

Where to begin? We received a note re-

cently on this very subject that pointed to

a potential “seams” issue between different

government agencies. Sort of like the seams

issues FERC deals with regularly between

RTOs. In this context, the seam is in rela-

tionship of data submissions and postings,

between say, FERC and EIA. The question

was raised recently about what would hap-

pen if flow data posted on public bulletin

boards by pipelines and assorted operators

didn’t sync up with weekly data submitted

to EIA? Hmm.

What if Joe’s Acme Pipeline post-

ed a 10 on a public board and later submit-

ted a 20 to EIA relating to inventory flows.

Well, since all good analysts use some form

of scrape data in their weekly forecasts, and

further assume the data posted is accurate,

such a mismatch would indeed cause fore-

casts to misfire. And we thought, huh, who

is it at the agencies who looks at this stuff

to make sure there isn’t a bit of mischief

going on? Who makes sure that disrepu-

table folks in the market aren’t arbing the

daily and weekly reports and data feeds?

Who’s on first? It’s no secret the weekly

gas storage report that EIA publishes each

Thursday morning has become the only

game in town in the gas business. It’s a big

deal. A lot of money changes hands Thurs-

day morning. There are lots of winners and

losers, and lots of momentary and longer-

term price impact.

We found that not only is the

question somewhat complicated, but so is

the answer. The solution, on the other hand,

is less complicated, although may require a

bit of political will. More on that later.

“I think it’s pretty obvious that

what is reported on electronic bulletin

boards (per FERC) is not actually what’s

reported to EIA,” a source tells us. “Fur-

thermore, it’s probably likely that neither

is what’s actually happening, but that’s

just speculation. What I would like to see

is FERC to make a rule that all storage

fields that currently have to report flows

also have to report whatever they submit

to the EIA on their 912 form. In theory

their data should match up because they’re

already reporting flows and/or inventory

levels, so it shouldn’t be anything addition-

al for them to report,” he says. “The big-

gest thing it would add would be we would

know what they’re telling the EIA, because

right now it feels like they’re posting one

thing one their bulletin boards and telling

the EIA another … ”

Our source points to an issue that

many have pondered for some time now,

but in many ways, the question itself isn’t

exactly valid. Why is this? First of all, the

storage data submitted to EIA each week

from operators doesn’t exactly match the

same type of data pipeline companies are

mandated by FERC to post daily or weekly

on various public sites.

In reality, FERC does not man-

date the posting of natural gas storage

inventory data on a weekly or daily basis,

EIA’s Chris Peterson tells us. Recall that

Peterson was a longtime FERC staffer.

“However, per longstanding open access

rules, facilities must post daily information

regarding scheduled receipts or deliveries

of natural gas – including at storage facili-

ties interconnected to interstate natural gas

pipeline grid. FERC requires the posting

of nonscheduled no-notice gas three days

after flow day. These volumes of course

can be very material at some Citygates un-

der certain weather conditions for pipes

that offer no-notice service,” Peterson says.

On the other matter of who’s

watching whom, former FERC enforce-

ment chief Susan Court, who now heads

SJC Energy Consultants in Arlington, tells

us that even if the data did sync up with

some other agency, there’s no rule that

requires FERC to compare data submit-

ted pursuant to its rules and data submit-

ted to other agencies. “And, as a practical

matter, FERC would not take that task on

because the agencies’ rules may not line

up exactly, so it would be like compar-

ing apples to oranges, or at least Granny

Smiths to Delicious.” That said, she adds

that FERC is always interested in any evi-

dence that might indicate that a company

was not complying with FERC posting

rules. “However, it generally relies on

market participants and pipeline/storage

company customers to help them out.

Such “helpers” are akin to “private attor-

neys general,” she says, “who could bring a

discrepancy to the commission’s attention

through a formal complaint or a call to the

Enforcement Hotline. Also, the enforce-

ment (office) market monitoring staff may

review or look at such data, and if they see

an anomaly they can bring it to their col-

leagues in the Investigations Division. But,

to my knowledge, there is nothing formal

or organized in place to do that routinely.”

She says that our original question, that

of willingly posting one set of data for an

EIA report and a different set of data for a

similar FERC requirement, “does raise the

possibility of some deception, so the com-

mission market manipulation rules may be

implicated. Again, the OE staff would de-

The Quest for Data Transparency



(Continued)

pend on market participants or their col-

leagues in Market Oversight to bring that

to their attention,” Court says.

So, while it seems clear that man-

dated data submissions to FERC and EIA

don’t match up entirely, it immediately

raises the question, why not? Last time

we checked, the weekly storage report is

a bonifide price-forming mechanism. Why

isn’t FERC watching this one for the sort

of mischief we initially pointed to? Good

question. Recall that EIA isn’t a regulatory

or enforcement agency. By law, if they were

to uncover some sort of manipulative mis-

chief, they’re not even allowed to transfer

the suspect data for further investigation

to some agency with penalty authority, like

the FERC or CFTC.

“EIA is nonregulatory and the

protection over the (Weekly Natural Gas

Storage Report) WNGSR data, CIPSEA

(Confidential Information Protection and

Statistical Efficiency Act), means we can-

not share it for nonstatistical purposes (like

enforcement), says EIA’s gas storage guru,

Amy Sweeney. “Our only recourse is to fol-

low up with the submitting company itself

and inform them of our observation and

ask why the discrepancy.” She adds that in

most cases, they know what’s occurred, if

submitted data is a bit screwy. In any case,

she says, what’s submitted to FERC, for

example, is as Court suggested, an apples-

to-oranges comparison. “For one thing, the

EBBs are not organized at the operator level

like our reports are so it’s not a 1:1 match in

many cases. Also, again, we collect inven-

tory data and not flow. Any adjustments to

inventories like reclassifications will lead to

differences between what is reported to us

and an EBB. Also, the folks who fill out our

storage report form aren’t always the same

folks who do the EBB posting. There is

no requirement that EIA puts forward that

they must match. These are among many

reasons things don’t always line up with us

and the EBBs,” Sweeney says. As for who

at FERC actually monitors these bulletin

board postings to make sure they’re legit,

we came up short. Who’s on first? Dunno.

FERC requires companies to report to

these bulletin boards and is also respon-

sible for using this data (though we’re not

clear how they use it), and they also have

the responsibility to audit and validate that

the postings are accurate. The FERC en-

forcement office tells us that nobody at the

agency has that specific responsibility. Does

it matter? Read on.

Throughout our various conver-

sations with folks from EIA, FERC and

the CFTC this week on the potential for

manipulation and the problems with data

submission, one issue kept resurfacing and

it had nothing to do with data submission

standards. The real problem, FERC, EIA

and various data vendors tell us is more

about transparency and not so much a left-

hand, right hand thing among agencies.

“At the end of the day, all the

trouble any of us have with forecasting

storage can eventually be pinned to a lack

of transparency in the producing region.

Whenever the EIA comes out with a sur-

prise report number, nine times out of

Nodal Exchange active traders enjoy free access to superior

risk management services, including Straight-Through

Processing (STP) of Trades, End of Day Price & Trade Data,

and Margin & Position Limit Monitoring.

Nodal Exchange also offers participants enhanced:

• Basis and credit risk management

• Capital efficiency with portfolio margining

• Granularity with cleared futures contracts on

hundreds of hubs, zones and nodes

• Price discovery with daily

marks on approximately

50,000 expiries

(703) 962.9800 • www.nodalexchange.com

the next generation

of power tradingnodal

Trim the risk with your hedge

http://www.nodalexchange.com/





























10, it’s because we didn’t nail the number

in the producing region. It’s like one big

black hole in the middle of the market,”

says Jeff Moore of Bentek.

Everybody agreed on this point.

Lack of transparency in the producing re-

gion, in terms of inventory and flow data,

seems to be the big problem for the mar-

ket. FERC famously tried to fix this matter

about five years ago with Order 720, but

it was short-lived. Peterson adds that were

the 720 mandate to be reintroduced (fol-

lowing a tweak to the NGA), it still would

require some other minor tweaks. “When

Order No. 720 was developed, the rules did

not adopt a higher standard of reporting

on major non-interstate natural gas pipe-

lines, i.e., inventory reporting. Moreover,

we (he was at FERC at the time) added a

volume threshold test that does not apply

to the interstate pipelines. (So) I can fore-

see circumstances where figures coming in

to different parts of the government may

not match due to issues like time-stamping,

coverage and definitional matters.”

Always the details. FERC Order

720 required many intrastate pipelines,

storage operators and local distribution

companies (LDCs) to post natural gas

flow and capacity data at the most signifi-

cant points within those systems. This new

source of information at the time provided

an unprecedented level of transparency to

natural gas markets across the country, but

mostly in the black hole we know as the

producing region. For a brief moment in

history, markets served by intrastate pipe-

line and storage systems had access to gas

flow and capacity data from industrials,

utilities, storage facilities and other systems

operating within state boundaries. Life was

good. According to published data at the

time, nearly 150 intrastate pipelines, stor-

age operators, local distribution companies

and others were subject to Order 720’s

data posting requirements. The party was

brief, however. On Oct. 24, 2011, the

United States Court of Appeals for the

Fifth Circuit in Texas Pipeline Association

v. Federal Energy Regulatory Commission,

held that FERC exceeded its statutory au-

thority under section 1(b) of the NGA in

issuing Order Nos. 720 and 720-A, which

required certain intrastate natural gas pipe-

lines to post information on scheduled flow

and design capacity. Section 1(b) states that

the NGA applies “to the transportation of

natural gas in interstate commerce (and) to

the sale in interstate commerce of natural

gas for resale ... but shall not apply to any

other transportation or sale of natural gas

or to the local distribution of natural gas or

to the facilities used for such distribution.”

In issuing Order No. 720, Morgan Lewis

writes that FERC relied on its grant of au-

thority in section 23 of the NGA (which

was part of the Energy Policy Act of 2005)

which allowed FERC to obtain and dis-

seminate information about “the availabil-

ity and prices of natural gas sold at whole-

sale and in interstate commerce” from

“any market participant.” The Fifth Circuit

held that FERC did not have the authority

to require wholly intrastate pipelines to dis-

close and disseminate capacity and schedul-

ing information, despite FERC’s catch-all

mandate interpretation under the NGA

involving “any market participant.”

Thank you, Texas Pipeline As-

sociation. So, OK, let’s review why FERC

pressed for these data posting requirements

in Order 720 to begin with: (a) improve

market participants’ ability to assess supply

Reigning in risk and reducing surprisesManaged Risk Services for energy andresources companiesDeloitte introduces Managed Risk services for Energy and Resources Companies

a new perspective for energy-intensive industries to provide a structured framework

to mitigate commodity risk exposure and meet corporate objectives.

It can be challenging to assess how hedge practices may impact key financial

goals — margins, customer pricing or investor return. By deploying market-based

simulations over a range of hedge strategies and potential market outcomes,

energy-intensive industries can examine portfolio tradeoffs and tailor its overall risk

exposure to meet its financial goals.

Deloitte offers our Managed Risk solution in the context of a broad risk advisory

consultancy, incorporating the industry’s regulatory and compliance requirements,

and the complexities and nuances of financial reporting for the energy industry.

We bring subject matter specialization from a variety of disciplines (operational,financial, information technology, compliance, regulatory, and strategic) and can

bring insights to clients across the business.

Find out how we can help your organization — contact us today.

Paul Campbell at +1 713 982 4156 or [email protected]

Stephen Engler at +1 973 602 5206 or [email protected]

Deloitte Center for Energy Solutions

As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/aboutfor a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clientsunder the rules and regulations of public accounting.

Copyright © 2014 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited

(Continued)

http://www.deloitte.com/




































lng forward market wireSource: Capra Energy. LNG curves for Feb. 4, 2015

Highlights

• Price levels: The Eastern (northeast Asia, Middle East,

Australia) LNG forward markets have recovered significantly,

especially in the front years, supported by continued strength in

global crude oil prices.

• Term structure: European and US Atlantic curves

continue exhibiting a steep contango, while Eastern LNG curves

have flattened due to the rally in oil prices.

• Inter-market spreads: The continued strength in

northeast Asian forward prices as compared to the US Atlantic

has expanded their inter-market spread even further, to a level

approaching $3/mmbtu in CAL 2016.

Update from the editors: Product release schedule for Feb.

16 following successful benchmarking program.

If you are interested in joining our benchmarking program and

receiving daily LNG curves and monthly reports until Feb. 16, please

sign up here: ( www.capraenergy.com/enrollment-in-benchmarking-

program.html ).

ABOUT LNG FORWARD MARKET WIRE

Capra Energy’s LNG Forward Market Wire service provides end-of-

day assessments of long-term forward prices for major LNG markets

around the world. Price curves are delivered daily via email and FTP

server to subscribers. Please contact our editors for more information:

Tamir Druz, editor/ [email protected] ; Carlos Blanco,

editor/ [email protected] .

Settle Date Day Change Settle Date Day Change

Australia (FOB) $0.148 $0.472 $0.739 -$0.022

Mideast (FOB) $0.594 $0.461 $1.185 -$0.033

US Atlantic (FOB) $2.315 $0.072 $2.905 -$0.422

Europe (DES) - - $0.591 -$0.495

CAL 2016 Price Spreads

($/mmbtu)

NE Asia (DES)Europe (DES)

Source: Capra Energy. Spreads derived from LNG curves for February 4, 2015

and demand and to price physical natural

gas transactions, (b) help market partici-

pants better understand the impact of dis-

ruptions to the natural gas delivery system

on the industry and economy, and (c) al-

low market participants to identify poten-

tially manipulative activity.

Hmm.

So, here we are in 2015, and we

still have a big problem with data trans-

parency and oversight authority. So far as

we know, numbers can’t really be gamed

between FERC and EIA. This is a good

thing. However, nobody at FERC has a

clue as to whether posted flow or capacity

data is accurate or not. That’s one to pur-

sue. Further still, we have a nonenforce-

ment authority agency (EIA) in change of

publishing key, economic reports that im-

pact price and price formation, and have no

recourse at all if they find that companies

are up to some mischief. Somehow, that

needs to change. Perhaps if storage report-

ing companies were required to submit the

exact same weekly storage data to FERC as

they do to EIA, there would be little ques-

tion about whether gaming is happening

in that market. If FERC were in the mix,

gaming the market would become sud-

denly quite expensive.

As for the data transparency

problem, we still have a big black hole in

the national reporting regime that will only

continue to hinder forecast accuracy, and

further, price formation. The impact of the

lack of transparency in the producing re-

gion will only get worse – as demand in the

region (Texas mostly) continues to grow,

production continues to grow and the best

we can do is model fractional samples and

hope for the best. At the end of the day,

this lack of transparency costs all Americans

a lot of money. Times change and policy

must change with them. The NGA and the

EPAct are in dire need of what amounts to

single line change.

“I think there are two, big, re-

lated issues facing gas storage modelers,”

EIA’s Chris Peterson says. “They are lack

of transparency (to changes in natural gas

demand) in key states where intrastate

natural gas pipelines play a big role in de-

livering natural gas to various end users,

because of how open access information

availability is set up in the NGA currently,”

and in a related way, “the lack of informa-

tion regarding natural gas receipts and de-

liveries to storage facilities in the “produc-

ing region,” where many of the region’s

facilities are served by intrastate pipes …

plus how analysts attempt to sample this

information.”

http://www.capraenergy.com/enrollment-in-benchmarking-program.html










trendsetter, manufacturingbarometers way upIt’s gonna be a good year folks, mostly. Ac-

cording to PwC’s quarterly Manufacturing

and Trendsetter Barometer Surveys, a very

wide range of key indicators improved sig-

nificantly quarter-on-quarter, including

forecasted average growth rates for this year,

hiring rates, new product launches, new

revenues growth and Capex spending. We’ll

first run through the Manufacturing Survey

findings and follow with the Trendsetter (pri-

vate company executives) Survey numbers.

Optimism regarding the pros-

pects of the US economy over the next year

increased among industrial manufacturers

to 68 percent during the fourth quarter

of 2014, up 11 points from 57 percent in

Q3. At the same time, optimism about the

world economy improved to 38 percent, up

eight points from 30 percent in the third

quarter, but still down from 47 percent in

last year’s fourth quarter.

According to the latest Manufac-

turing Barometer, 60 percent of US indus-

trial manufacturers indicated plans to add

employees to their workforce over the next

year, up from 52 percent in the third quar-

ter and in line with last year’s fourth quar-

ter. Overall, the total net workforce growth

projection rose to 1.1 percent in the fourth

quarter, up from 0.4 percent in the third

quarter and 0.5 percent in the fourth quar-

ter of 2013.

According to the survey, plans for

increased operational spending rose to 82

percent of respondents, the highest level in

nine quarters and up 13 points from 69 per-

cent recorded in the third quarter and 73

percent in last year’s fourth quarter. Plans

for new product or service introductions in-

creased to 52 percent, up significantly from

43 percent in the third quarter, while plans

for spending on research and development

increased 11 points to 47 percent from 36

percent in the third quarter. At the same

time, sentiment regarding plans for new

investments of capital remained healthy

with 43 percent of respondents planning

increased outlays in the next 12 months, up

from 36 percent in the previous quarter and

in line with the fourth quarter of last year.

Estimated industry growth rate

for calendar year 2014 was at 4.3 percent,

slightly above the third quarter’s 4.1 per-

cent and ahead of the 3.8 percent a year

ago. Ninety percent of panelists reported

positive industry growth for 2014 – 12 per-

cent double-digit growth and 78 percent

single-digit growth. Two percent were on

the negative side and 7 percent expected no

growth for this year.

The projected average revenue

growth rate over the next year projected

by respondents increased to 5.8 percent,

ahead of the prior quarter’s 5.6 percent

and a year ago (5.4 percent). Eighty-five

percent expect positive revenue growth for

their companies, with 17 percent forecast-

ing double-digit growth and 68 percent

forecasting single-digit growth. Two per-

cent forecast negative growth, 5 percent

forecast no growth and 8 percent did not

report, the survey said.

On the cost side of things, in Q4

costs remained high and prices were even

higher, respondents said. Twenty-two per-

cent of US-based industrial manufacturers

reported higher costs (off 2 points), and 8

percent reported lower costs (off 4 points),

for a net plus 14 percent higher. That was 2

points above the prior quarter’s 12 percent.

On the price side, 30 percent raised prices

(up 2 points) and 10 percent lowered them

(off 4 points), for a net plus 20 percent re-

porting higher prices (6 points higher than

the prior quarter).

Despite uncertainty regarding the

global economic outlook, 18 percent of re-

spondents indicated plans to develop new

facilities abroad, up from nine percent in

the third quarter and eight percent in the

fourth quarter of 2013.

With regard to perceived head-

winds, demand, regulatory and policy is-

sues and lack of qualified workers were

the top three. The biggest move in this

category was pinned to legislative/regula-

tory pressures. In Q3, this category topped

the list at 59 percent. Since the GOP took

control of both the House and Senate by

(Continued)

http://www.pwc.com/manufacturing-barometer






Q4, this headwind had dropped 27 points

to 32 percent, and bumped back to the No.

2 slot. Wow. Lack of demand, which rated a

43 percent level in Q3, dipped eight points

to 35 percent. Conversely, concerns regard-

ing the lack of qualified workers increased

to 33 percent during the fourth quarter,

compared to 26 percent in the third quarter

and a lowly 20 percent last year.

***

The Q4 Trendsetters Barometer’s upbeat

sentiment and 2015 forecasts had much

to do with the low cost of oil and gas. No

surprise there. When asked about the US

economy, 73 percent of Trendsetter com-

panies described it as growing, the largest

share in years, PwC noted, and double what

it had been about two years ago. “This isn’t

fleeting: Nearly two-thirds (65 percent)

said they’re also optimistic about US eco-

nomic prospects in the next year. It’s the

most positive assessment we’ve seen since

2006,” the survey said.

The Q4 survey found that among

top private company executives, 2014 was

one of the strongest years for their firms

in quite some time. Nearly 80 percent saw

revenue growth in their industry, and even

more (83 percent) project positive growth

for their own companies over the next year.

A mere 3 percent said they expected reve-

nue contraction in their industry, the small-

est percentage since before the recession.

More than twice as many private companies

saw their gross margins rise than fall.

“Specifically, many companies

have been able to raise prices more con-

sistently while their costs have held steady.

This may well reflect the collapse in energy

prices … ”

Looking ahead, Trendsetter com-

panies point to opportunities all over the

field. Nearly three-quarters (72 percent)

of private companies say they will pursue

productivity enhancements. Cost contain-

ment (cited by 64 percent) and technology

advancements (58 percent) are also on the

corporate “to do” list, along with R&D (54

percent), targeted hiring (60 percent), and

new products (57 percent).

“As the economy continues to

expand, private firms see fewer barriers

to success than in the past. In the fourth

quarter, only half of Trendsetter companies

mentioned lack of demand as a potential

obstacle, down 10 points from a year ago

and the lowest since before the recession.

(In late 2009, this measurement rose to a

high of 86 percent.) Other metrics hit new

lows as well: fewer companies expressed

concerns about foreign competition, reg-

ulatory pressures, energy prices and the

strength of the dollar. The one clear danger

sign is the steady increase in the number of

companies that worry about finding quali-

fied workers. Thirty-seven percent are now

voicing this concern, up nearly 10 points

from a year ago and at its highest since the

first quarter of 2008, when 40 percent of

companies fretted about the skills gap.”

The good folks at PwC have

surveyed global manufacturing executives

and published the results in their quarterly

report, Manufacturing Barometer, since

2003. For the Trendsetter Barometer, PwC

has surveyed senior execs from privately held

US businesses since 1995. For a copy of the

latest manufacturing barometer, go to www.

pwc.com/us/en/industrial-manufacturing/

barometer-manufacturing/index.jhtml .

For the Trendsetter survey, go to www.pwc.

com/en_US/us/private-company-services/

publications/asset s/pwc-tre ndsetter-

barometer-q4-2014.pdf .

Download a Sample ofthe ICForecast Strategic

Power Outlook

Download Now

http://www.pwc.com/us/en/industrial-manufacturing/barometer-manufacturing/index.jhtml



http://www.pwc.com/en_US/us/private-company-services/publications/assets/pwc-trendsetter-barometer-q4-2014.pdf






http://www.icfi.com/insights/products-and-tools/icforecast-detailed-production-report?utm_source=GasStorage&utm_medium=Ad&utm_campaign=icforecast











the plan

New CFTC Commissioner Chris Giancar-

lo has been on the road a lot lately, nearly

as much as his chief, Tim Massad. He’s

also been writing a great deal. We don’t

recall the last time a CFTC commissioner

cranked out an 80-page paper on how

(and why) to fix something as complex

as the swaps market. He tells us this week

he’s been pleasantly surprised at the wide-

ranging reaction to his white paper. “It was

meant to stir things up,” he says.

He also stirred things up this

week by suggesting in a speech that the

agency take the time to investigate the

reasons for the current drop in oil prices

-- before the agency blisters ahead on po-

sition limits policy. “Where are those wily

excessive speculators,” he said, according

to a Reuters story. Oddly, later on in the

same story, Rep. Mike Conaway, R-Texas,

who chairs the House agriculture subcom-

mittee with futures market oversight, was

quoted as saying the CFTC had no need to

review oil’s recent drop, and that there was

no real link to price movement and specu-

lation. Huh? Turns out that Conaway was

asked the question first, before Giancarlo’s

speech. But in the story, the quotes were

out of sequence, and the context was a little

off, suggesting a conflict. Giancarlo tells us

he’s on the same page as Conaway. “Like

the congressman, I believe that this price

movement is supply and demand-driven,but it’s my point that we should investigate

the role of speculators in this current move,

to be sure, before we finalize any position

limits proposal.”

At the top of each year we try to

ping the new folks at the agency to get a

sense of their agenda. In addition to posi-

tion limits, an area he’s been focused on a

lot lately, Giancarlo also notes that we still

have a long way to go yto resolve cross-

border matters. He says that Chairman

Massad’s recent foray abroad, ostensibly torepair frayed relationships with fellow regu-

lators, should go a long way in bringing the

rules closer to some sort of consensus. We

agree. As such, we were surprised to see

that the chairman had gotten a bit of flak

from certain lawmakers for trying to repair

these bridges with global regulators.

“I would defend the chairman’s

actions on this at any venue,” Giancarlo

says, “on either side of the aisle. Relation-

ships had become so tarnished, no move-

ment was possible (on aligning cross-bor-der rules).” He says that we’ve been hear-

ing less about cross-border issues lately,

“because the chairman obviously has had

a good deal of success in trying to diffuse

the animosity. There is a lot of hard work

ahead in working out these agreements,

but at least we’re back to where we shouldbe.” How bad had it gotten? Giancarlo

described a conversation at a meeting last

September in Geneva. He says that a senior

representative of a major global regulator

said to him, “we will not be treated the way

the US treats Guatamala, Costa Rica and

Nicaragua.” Ouch. “That’s how they per-

ceived their treatment prior to the current

environment.”

***

Another of Giancarlo’s top priority is to re-

boot the Energy & Environmental Markets Advisory Committee, which hasn’t been

active for around six years. For that matter,

the Agriculture Advisory Committee has

been idle as well. Chairman Massad will

be heading up that one. The new EEMAC

membership rolls were posted recently

along with details for the first meeting later

this month at CFTC HQ. Giancarlo tells

us the agenda for the first meeting and

schedule for additional meetings this year

will be posted in the next 10 days or so.

“I’ve been polling committee membersabout what they think we should focus

on in the upcoming meeting and for the

rest of the year. For now, position limits,

in the context of energy markets, bubbles

to the top. This will be one major focus of

our first meeting this month. The bonifide

hedge exemption in the rule will receive

special attention,” he says. And, rightly so.

“Hedging,” the former senior brokerage

exec says, “isn’t a science, it’s an art. Any-

body involved in risk management knows

this. We’ll also be exploring how the cur-rent low price environment is impacting all

of this. We’ll also be addressing concerns

about liquidity in traded energy markets.”

In sum, Giancarlo’s top priorities for 2015:

Work to develop a better position limits

rule; get the EEMAC up and running; get-

ting the swaps rule right (see white paper

below); and finally, “maintain my open

door policy to the market and staff …

work to match regs and the market in a way

that’s actually good for the US economy.”

Required Reading CFTC Commissioner Chris Giancarlo last week released an extremely thoughtful white

paper, “Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to

Dodd-Frank.” The 82-page document is a fairly comprehensive critique of what’s wrong

with current swaps policy and then proposes an alternative framework. The vast majorityof similar works we’ve seen in the past few years often fail include any viable solution at

all. While we’ve always found it fairly easy to slam former chairman Gary Gensler’s swaps

regime, which was “highly over-engineered, disproportionately modeled on the US fu-

tures market and biased against both human discretion and technological innovation,” it’s

something else to raise a reasonable alternative. Giancarlo also is fortunate to be working

with a commission with a relatively clean slate on this stuff. Chairman Massad is certainly

focused on “getting the rules right,” as he’s known to say. Commissioner Giancarlo may

have just provided the sort of roadmap necessary to get the job done. The white paper has

already created a good deal of buzz in the market and on the Hill. Give it a read, soon. Go

to www.cftc.gov/PressRoom/SpeechesTestimony/giancarlostatement012915 .

http://www.cftc.gov/PressRoom/SpeechesTestimony/giancarlostatement012915

http://www.cftc.gov/PressRoom/SpeechesTestimony/giancarlostatement012915



drums along the potomac

Follow the money. What little there is, eh?

We give the president credit for trying, but

we doubt very much his latest budget re-

quests for your favorite regulatory agencies

will be realized this year, in particular at

the CFTC. Alas. The White House fund-

ing requests for fiscal 2016 would raise

the SEC’s budget 15 percent to $1.7 bil-

lion and the CFTC, long-starved from any

significant bump since the financial market

implosion five-plus years ago, is tagged for

a would-be 29 percent budget increase to$322 million. On the SEC side, the 15 per-

cent increase is almost a no-brainer, con-

sidering the agency pays for itself through

fees and fines it collects from the many

companies it regulates. Last year, the SEC

collected well over $4 billion dollars – and

it cost only $1.5 billion to operate. That’s

a great trade. All monies collected over

that $1.5 billion figure stayed at Treasury.

It’s a profit center for heaven’s sake. The

CFTC has a different situation altogether.

For whatever reason, the CFTC fundingmodel doesn’t involve the same sort of

collection model that the SEC and FERC

have long enjoyed. When was the last time

you heard about a budget battle at FERC?

No, the CFTC has to beg for more mon-

ey the old-fashioned way. Which is odd,

considering that the CFTC has also filled

Treasury’s coffers nicely in recent years.

We think . This may change, though. The

White House budget calls for new legisla-

tion that would allow the CFTC to also be

self-funded through fees and fines collect-ed. It’s hard to tell, however, how much

the CFTC actually collects each year, since

the only numbers it publishes are the top

line for the fines it imposes for rule viola-

tions. They don’t track actual collections,

the press office tells us.

As for FERC, it’s our under-

standing that the vast majority of all penal-

ties and fees they impose on companies are

indeed collected. Unlike the CFTC, which

often deals with piddly FX fraud cases and

the like, the companies FERC dings are

typically big energy companies, utilities and

an occasional large hedge fund. And, go

figure, these companies tend to pay their

fines. In a story on this very collection issue

last year, we rang up several energy compa-

nies and asked if they paid their FERC fines

in the past. One Duke attorney we spoke

to thought it was a trick question. “Well,sure we paid our fine. Why do you think

we wouldn’t … ?” Yes, all those hundreds

of millions that FERC collects each year

are dutifully deposited into U.S. Treasury

and serve as a direct offset to agency ap-

propriations. Completely. This year, how-

ever, FERC has asked that Congress allow

the commission to spend around $15 mil-

lion above its current appropriation in the

coming fiscal year, essentially bumping the

2015 appropriation from around $320

million to $327 million. For FERC, thehike in spending is tagged mostly to the

modernization of FERC headquarters, a

new, more expensive long-term lease and

a few more staff (probably not enough).

FERC said it will need the equivalent of

1,480 staffers (in fed speak they’re known

as FTEs or full-time equivalents), to get the

job done in the coming year, which is basi-

cally flat over a two-year period. By sector,

the power business has by far the most folks

dedicated to it: 832 for FY 2016. Hydro

has 330 dedicated staffers, natty gas has282 staffers and oil market oversight has

36 full-time folks. Natty has 50 less staffers

than hydro? Yup.

Seems to us the one area FERC

may really need a bit of help in the future

is in agency security – and we’re not talk-

ing cyber security. Glen Boshart of SNL

filed an excellent story recently about the

uptick in protests at open FERC meetings.

No kidding. Folks are getting downright

rude. “FERC Chairman Cheryl LaFleur

has been relatively restrained in handling

protesters that recently have established a

habit of making speeches before the agen-

cy’s regular open monthly meetings are set

to begin. However, she acknowledged to

reporters following the commission’s Jan.

22 meeting that she may have to rethink

that strategy after she was forced to shut

down proceedings because protesters re-

peatedly interrupted her and refused tostop speaking … ” Since last Fall apparent-

ly, protesters and assorted climate change

and anti-fracking activists have singled

out FERC for more attention. We’ve not

seen the protests firsthand, but Boshart

has. We reckoned college kids on break

or junior staffers from trade associations,

right? Nope. “They definitely are not well-

meaning college kids,” he says. He says

they’re pros, sort of. Mostly grass roots

people, many in their 30s, 40s or older,

although some are younger he says. Theycan usually be spotted because they are not

dressed professionally. If you’ve not been

to a FERC meeting, it’s mostly packed

with very well-appointed lawyers and a few

reporters in wrinkled blazers and bow ties.

This last meeting, however, it seems that

the protesters wised up and wore suits.

Harder to spot therefore, Boshart noted.

The outgoing chief is viewed by some to be

soft on the protesters, according to sourc-

es. “LaFleur needs to stand up and stress

that those meetings are not open to publicparticipation, and that if anyone disrupts

the proceedings they will be escorted out,

forcibly if need be. It’s getting ridiculous,

and she’s been too soft on them.” Incom-

ing chief Norman Bay, the former FERC

head of enforcement and former long-time

federal prosecutor, may have a different at-

titude about protesters. One never knows …



_____________________________________________________________________________________________________________________________Name Title Organization_____________________________________________________________________________________________________________________________

Address City State Zip Code

Phone E-Mail (very important)

Charge my: Amex Visa MC

Account Number Exp. Date Signature

To order by phone, call 410/923-0688 or fax your order to 410/923-0667. E-mail to [email protected] . Mail your order to:Scudder Publishing Group 1145 Generals Hwy Crownsville, MD 21032. MD residents, please add 6% sales tax.

Make all checks payable to the Scudder Publishing Group.

Fax this order form to 410.923.0667

Yes! Please send me one year of Energy Metro Desk at the SPECIAL RATE of $595.

Pondering Our Bits of Data All those bits of data about us. We’re

tracked minute by minute in order to sell

us something we might like but don’t

need. Then comes Christian Rudder. He

takes hold of those billions and billions

of bits in Dataclysm (Crown, $28), and

does precisely the opposite. He uses them

to tell us who we are in the aggregate: as

females, males, blacks, Hispanics, Asians.

He’s sneaky, but his subtitle

warns us, it’s Who We Are When WeThink No One’s Looking. We’re hooked

because he’s telling us about ourselves in

lists. For example, no matter what age a

man is (between 20 and 50), the “age of

the women who look best to him” is always

20, or 21, 22 or 23. For women, the age

of the appealing man changes depending

on her age. A 20 year-old woman prefers a

23-year-old man; a fiftyish woman wants a

46-year-old man.

Rudder, one of the founders of

OKCupid dating website, explains how

the site’s questions oblige people to open

up more in private – i.e. to OKCupid –

than is the norm. His numbers-racheting

isn’t just from OKCupid, however. He’s

happy to show us how Twitter is improving

language skills, or Google unmasks us.

Numbers-mashing can reveal

our aggregate racism or words most used

in OKCupid’s self-summaries. Rudder

uses “white men as my walk-throughexample” because he understands them

best. White men’s most frequent words

from 360,000 possibilities: “the” and

“pizza.” The top words in everyone else’s

self-description: “the” and “pizza.”

When Google offers to

“autocomplete” your thoughts for you

with text from other popular searches,

if you type in “Who is the ... ” Google

suggests “richest man in the world.”

Tinker with this, Rudder contends, “and

it is humanity wondering how the other

half lives” because, “when you start fishing

for stereotypes it’s like playing Taboo but

without any taboos.”

What comes up are questions

such as, “Why do black people … like

fried chicken.” Why do Muslims … hate

America.” “Why do Asians … look alike.”

Most of these are questions that do not

get asked publicly, at least not without

attracting adverse reaction. But Rudder

isn’t sitting in judgment. He is doing whathe sets out to do, explore: “What brings

us together. What pulls us apart. What

makes us who we are.”

He does it with texts and graphs

– and a great deal of flair.

Fascinating stuff.

I loved the line: “Inside every

white man rages a music festival for

lumberjacks.”

Arthur Jones regularly reviews for

Energy Metro Desk.

review By Arthur Jones





http://www.theice.com/

energy metro desk feb. 5, 2015

Documents