12
Jul

Wrap – Week Ended 07/10/15

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Comments and questions about The Wrap will be addressed in the Monday post. We fully expect a nuclear talks agreement to be reached this week. Please tune into the top section of the Monday post for some of our current thoughts and look for a special section outlining the big points there in the interior of the Tuesday post.

If you have questions about Z4 Research / Zman's Energy Brain please send them to zman@zmansenergybrain.com.

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wrap 071015

10 Responses to “Wrap – Week Ended 07/10/15”

  1. 1
    zman Says:

    The forecast has improved again. No cold spot in TX/OK

    http://www.cpc.ncep.noaa.gov/products/predictions/long_range/seasonal.php?lead=12

  2. 2
    Baylor Says:

    My comment at the end of Friday's coments was basically asking why are we needing to do an Iran deal?  Why is that somehow so urgent "all the sudden"?

    How does doing this deal help the United States or the safety of our country beyond certain leanings that seem to be blowing in the wind recently?

    I've not invested much time on the topic other than to know with 100% certainty the deal will get done and it won't benefit the United States.  I hope to be wrong, but this is just the next step in the process.  I'm just not clear on why we are engaging in assisting someone who has shown little to no interest in sitting at the grown up table and behaving accordingly.

  3. 3
    zman Says:

    re 2 – good question. 

    The administration and international community have indicated that without a deal, should Iran want to move ahead, they could have a working nuclear device in 2 to 3 months, a much shorter time frame than the prior refrain of 12 months (the rolling theory for some time now).

    So the idea would be that doing this deal forestalls an Iran who says they only want a peaceful nuclear program from but wants a bomb from actually building a bomb since just about no one believes that they truly want it for peaceful purposes and since the program was discovered by the outside world over a decade ago and not announced by Iran that reinforces that suspicion.

    I think the deal gets done as well. Whether or not it is beneficial to the rest of the world will depend upon how verifiable the arrangement is.  Ernest Moniz, the US energy secretary, has spoke to the importance of unfettered access to Iran's scientists and facilities (not sure if he means all military or not) but the idea of a verifiable roll back of their program without that kind of access seems to be a good deal for Iran and not for the west.

    Also influencing the decision if not the timing is that most of the world also sees Iran as a potential money pot.  Oil industry repair and regrowth, nuclear parts sales, arms sales.  Delegations from multiple countries are awaiting the OK to put presentations on the table for a wide range of products and projects.

    Finally, you have Obama in the waning stage of his presidency, trying to deliver on rapprochement with Iran which was one of his early years objectives. So time is running out for that under his reign.   

  4. 4
    nrgyman Says:

    RE 1:  That forecast looks to be for the summer of 2016, if I'm reading it correctly.  This is the current (2015) 3 month forecast for July, Aug and Sept posted from the CPC website:

    http://www.cpc.ncep.noaa.gov/products/predictions/long_range/lead01/off01_temp.gif

    Wonder what the effect will be on temps from the strengthening El Nino in the Pacific?  

  5. 5
    zman Says:

    re 4 – Thanks, too right, my apologies, was looking through a list of them and copied in the wrong one. 

    The correct one is here and has the colder spot in the middle of the country, drifted somewhat north from the last iterations. West a bit hotter looking to my eye as well 

  6. 6
    Baylor Says:

    Thank you for the thoughts in 3 z.  That's why my opinion is we 100% get a "deal".  For over a decade now, Iran has been a year or so away from getting a bomb.  As long as these tlks have dragged out, they've seemingly eaten up the 2-3 months they may have before they get a bomb. 

  7. 7
    Baylor Says:

    re 4,5  – how much would a "cold spell" like is what is predicted in the texas / oklahoma region affect NG consumption, especially given the hotter than normal areas that are predicted?

  8. 8
    zman Says:

    re 5 – here's the correct one:

    http://www.cpc.ncep.noaa.gov/products/predictions/long_range/seasonal.php?lead=1

    Cool spot drifted north, leaving much of GC normal, bit more of west under really hot weather conditions

  9. 9
    zman Says:

    re 4 – re el nino, generally not that big a deal unless its a really strong one. Have noted a few stories on it of late, nothing on the severity however, at least that I've seen. We did studies on them at Jefco and unless they really are strong ones the correlation to temps wasn't very strong. 

  10. 10
    zman Says:

    re 7 – Tough to try and translate a weather map like that into numbers with any degree of accuracy but it's pretty neutral on the weather mix and a bit of an improvement over the last read. Big driver this year is loss of nearly 13 GW of coal fired capacity that will mostly be replaced by natural gas. At 100% utilization and an industry average heat rate for the NG facilities that replace it, that's up to 2.9 Bcfpd of incremental natural gas demand. They don't produce at 100%, more like 60% over a year's time but that's still a pretty big number, again subject to weather.   If you put that on a year's time, assume the 60% annual average and give it all to NG (and almost all of it will go to NG) then you're looking at 5 to 7% bump vs recent year NG consumption (about 600 Bcf) for electricity generation. 

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