newsletter we are going to do a year-end review of the events that made
news in the energy markets and talk about what events are likely to
move them in 2011. Shown below are price changes for key energy
commodities in 2010.
Highlights of 2010
The newly operational Rockies Express
Pipeline that stretches 1,679-miles from northwestern Colorado to
eastern Ohio opened the door for Midwest and Eastern markets to an
additional 1.8 billion cubic feet of natural gas per day. As expected,
the pipeline reduces the disparity of regional prices.
The U.S. Energy Department approves
financial help for the construction of two nuclear reactors in Burke
County, Georgia. This paves the way for the first new reactors to come
online in the United States since Tennessee's 'Watts Bar' plant in
1996, and the first built since Louisiana's 'River Bend' plant in 1977.
continuation of a disturbing trend, Somali pirates hijacked a
Saudi-owned tanker carrying two million barrels of crude oil. Somali
pirates went on to capture 37 ships by November, and have been
increasing fleet sizes and scope of action in the Indian Ocean. The UN
stated that as the Somali Civil War continues, the violence
employed by the pirates is likely to increase.
related construction begins on Vogtle nuclear units 3 and 4 in Burke
County, Georgia. Estimated completion for units 3 and 4 are 2016
and 2017 respectively. US Nuclear Consortium identifies building sites
for up to 30 more reactors throughout the country. DOE predicts that
demand for electricity will increase 28 percent by 2035, providing a
need for increased nuclear power generation.
On April 20, 2010 an explosion
aboard the $365 million Deepwater Horizon rig, owned by Transocean
Ltd. and leased and operated by BP, kills 11 crew members and
injures 17 others. This event captures the attention of the entire
world and leads to a moratorium on any new drilling in the Gulf of
Mexico. Crude oil prices spike quickly to over $90 per barrel.
Hurricane Season begins with ominous
forecasts for the number, severity, and path of these storms. Over the
next four months we experience many scares with 20 named storms forming
in the North Atlantic. Despite the number of storms, none of them makes
contact with the U.S. mainland, making this one of the worst forecasts
in many years.
The leaking oil well in the Gulf of
Mexico is finally capped after nearly three months. This catastrophe
surpasses even the infamous Exxon Valdez oil spill of 1989. Estimates
for how much oil was lost range from 4 million to 200 million gallons.
Fortunately oil and natural gas prices fail to rise as severely as
predicted. Attorney Generals of the Gulf states challenge the drilling
moratorium on the grounds it does more harm than good to their already
battered local economies.
Natural gas productions from the
Marcellus and Barnett shale formations (Appalachian Mountains and 17
counties in Texas, respectively) continue to astound market
participants and drive gas prices lower. According to estimates from
the Energy Information Agency, shale gas represented 16% of
production in 2009 and will grow to 26% by 2035.
Leaked emails reveal prominent scientists
manipulated data to further a broader agenda tied to promoting the idea
of global warming. This scandalous information suggests researchers
presented false information and silenced any would-be critics of the
suspect-science. Leading political and media proponents have gone
silent for the time being as great doubt has been cast on the
legitimacy of claims of man-made global warming.
Voters made sweeping changes in the
House and Senate replacing many incumbents. Now that Republicans
control the house and John Boehner (R, OH) has become Speaker of the
House we could see a change in energy policy, specifically the fate of
subsidies for ethanol fuel and solar and wind power.