December 2016

Please enjoy this edition of the Prospect Resources newsletter

Did You Know - How is Electricity Generated?

Classic electricity generation, while on a much larger and more efficient scale, is still utilizing a process very similar to the steam-turbine method developed by Thomas Edison. Edison used coal-fired boilers to heat water, producing high-pressure steam. The steam, in turn, rotated a turbine, which powered a generator. Spinning turbines still account for the majority of the electricity produced today.

Aside from coal, there are other methods of producing the steam. In nuclear power plants, steam is produced by heat released from a nuclear fission reaction. 

As coal and nuclear generating stations are being retired, natural gas has become an increasingly popular driver. Natural gas generation can be achieved two ways. “Simple cycle” natural gas generation involves direct combustion for spinning the turbine blades, similar to a jet engine. On the other hand, "combined cycle" natural gas generation combines the simple cycle turbine generating power on its own and a separate steam turbine generating power using the exhaust heat from the combustion process.

Alternative energy generation moves away from thermal sources. The two most common methods currently being employed and further enhanced are solar power, which captures the sun's energy through photovoltaic panels, and wind power, which utilizes the natural movement of the air to spin power generating turbines.

Landmark Energy Bill Deal in Illinois

The energy bill that has been negotiated over the past two years was finally passed after multiple changes on the final afternoon of the Illinois legislative session.

Among the provisions included in the bill are:
  • expansion of the state’s energy efficiency programs
  • changes to the state’s renewable portfolio standard
  • payments to the nuclear plants in danger of closure for 10 years
  • a 1.3% cost impact limit on all business classes compared with 2015 rates
The final wording of the bill received support from environmental groups such as the Sierra Club, the Natural Resources Defense Council and the Environmental Defense Fund.
For more details about this story, click here.

Continued Pressure on Natural Gas Prices in New England

Pipeline constraints into New England could result in the most expensive natural gas prices on the planet, according to a Bloomberg report.

The supply of gas is already severely limited by pipeline capacity. The increased demand for natural gas for use in electricity generation creates severe price shocks during cold snaps. Prices over $7.50 per MMBtu are already a reality. Over half of the generation in New England is being driven by natural gas, and additional coal plants are being retired. Environmental and consumer groups are opposing capacity increases into the area.

New England will intensify its import of liquefied natural gas (LNG) into Boston Harbor in order to help mitigate the shortages.
For more details about this story, click here.

Electricity Storage in Commercial Markets

The underground storage of natural gas is an important component in market supply and consequent pricing. The three primary facilities for gas storage are aquifers, salt mines, and depleted reservoirs.

The Federal Energy Regulatory Commission (FERC) is proposing to incorporate localized electricity storage into wholesale markets. Should the proposal go through, these markets can expect to see rate improvement.

For the complete FERC news release, click here.

Prospect Resources Inc. (PRI) is a firm that specializes in managing energy procurement (gas and electricity) for medium and large commercial and industrial clients.

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