The Blue Bulletin
MAJOR INDUSTRIES
October 2019 Edition
Natural gas price outlook
This time last year, the financial markets were showing some concern about the evolution of natural gas prices. A warmer summer in 2018 created higher demand for natural gas to meet the air conditioning needs of our neighbours to the south, which helped drive up the prices and substantially reduce the growth of natural gas storage levels in the United States. Yet, high levels of storage are needed during winter times when natural gas demand exceeds the supply. Given this situation, the futures prices for the winter months gradually increased as winter drew closer.
And then came a particularly cold November 2018, which drove natural gas prices up to levels rarely recorded for early winter. In November and December 2018, the average natural gas spot price was around $5.08/GJ, or $1.46/GJ more than in November and December 2017.
We, of course, know what happened next. With the exception of a few spikes in late January and early March, the temperatures returned to near normal levels and the prices ranged between $3 and $4/GJ.
When winter ended, natural gas prices trended downward, settling at around $2.57/GJ, compared with $3.74/GJ for the same period in 2018. This is a significant difference caused by cooler summer temperatures and 14% higher storage levels, all against a backdrop of continued strong and growing natural gas production.
When winter ended, natural gas prices trended downward, settling at around $2.57/GJ, compared with $3.74/GJ for the same period in 2018. This is a significant difference caused by cooler summer temperatures and 14% higher storage levels, all against a backdrop of continued strong and growing natural gas production.
The price outlook for winter 2019–2020 is now developing in what might be considered a more optimistic environment than at the end of summer 2018. With the commissioning in the second half of 2018 of the Nexus and Rover pipelines connecting the Appalachian gas fields to Michigan, natural gas is more abundant in that region and in Southern Ontario where the Dawn hub is located.
Given this context, and based on a scenario of normal temperatures, the markets are expecting natural gas prices to stay below $4/GJ at the Dawn hub for winter 2019–2020.
Given this context, and based on a scenario of normal temperatures, the markets are expecting natural gas prices to stay below $4/GJ at the Dawn hub for winter 2019–2020.
New renewable natural gas (RNG) producers
To enable a maximum number of customers to consume renewable natural gas quickly, an Énergir team is working on developing partnerships with future producers. Consequently, in recent months, Énergir has been able to conclude several purchase agreements for RNG that can be distributed in the gas network over the coming years. Bringing these projects online will make it possible to add over 20 million cubic metres of RNG to Énergir’s network and help reach the target established by the Québec government of 5% RNG distributed in our network by 2025.
Confirmed new production sites :
Excellent news for customers interested in reducing their environmental impact in the future.
Confirmed new production sites :
- Engineered landfill site of the Régie de gestion des matières résiduelles de la Mauricie: RNG production from landfill gas collection
- Société d’économie mixte d’énergie renouvelable de la région de Rivière-du-Loup (SÉMER): biomethanation centre
- Québec City: biomethanation centre
Excellent news for customers interested in reducing their environmental impact in the future.
Update on the Régie de l'énergie RNG filing
Last September, the Régie de l’énergie rendered a decision concerning the provisional application of a tariff for renewable natural gas (RNG) consumption. With this decision, it approved the application of a provisional RNG tariff effective June 19, 2019. As for the definitive application of the tariff, it should be discussed this fall with the various stakeholders in the filing and the Régie de l’énergie, with final approval anticipated for spring 2020.
Considering the actual limited offer in RNG, a request list is being created to accept new provisional tariff customers according to certain conditions. The list will be based on the principle of first come, first served. Therefore, if you are interested in RNG, do not hesitate to contact your advisor in order to fill out the form as soon as possible. Énergir will get in touch with you as soon as volumes are available to meet your needs.
Lastly, Énergir reminds its customers that they also have the option of purchasing RNG directly from a supplier or producer to procure RNG voluntarily.
Considering the actual limited offer in RNG, a request list is being created to accept new provisional tariff customers according to certain conditions. The list will be based on the principle of first come, first served. Therefore, if you are interested in RNG, do not hesitate to contact your advisor in order to fill out the form as soon as possible. Énergir will get in touch with you as soon as volumes are available to meet your needs.
Lastly, Énergir reminds its customers that they also have the option of purchasing RNG directly from a supplier or producer to procure RNG voluntarily.
Update on the 2019-2020 rate case
In the May 2019 bulletin, we provided information on the 2019–2020 rate case filed with the Régie de l’énergie. So far, nothing has changed or been confirmed, but we will update you as soon as there is anything to report.
Energy efficiency and reduced consumption at BP Canada
BP, the construction materials division of BP Canada, manufactures wood fibre panels at a plant in Pont Rouge.
After conducting a feasibility study, the plant’s management decided to implement a heat recovery initiative for one of the machines. This heat, which was previously wasted, is now used to preheat the fresh air supplied by three make-up air units moving a total of 55,000 cubic feet per minute (cfm). How does it work? A glycol-water loop installed on the building’s roof is used to transfer the recovered energy to the make-up air units.
In addition, five other make-up air units, for which there is no heat recovery, now also operate more efficiently thanks to a centralized control system. This requires synchronizing the fresh-air needs based on the volumes of stale air exhausted.
All told, it will save the plant over 750,000 m³ of natural gas annually and reduce its greenhouse gas (GHG) emissions by more than 1,400 tonnes per year. Lastly, Énergir’s financial assistance program enabled the customer to optimize its ROI period.
Also interested in reducing your energy consumption? Don’t hesitate to discuss it with your advisor, who can guide you in implementing your own projects.
After conducting a feasibility study, the plant’s management decided to implement a heat recovery initiative for one of the machines. This heat, which was previously wasted, is now used to preheat the fresh air supplied by three make-up air units moving a total of 55,000 cubic feet per minute (cfm). How does it work? A glycol-water loop installed on the building’s roof is used to transfer the recovered energy to the make-up air units.
In addition, five other make-up air units, for which there is no heat recovery, now also operate more efficiently thanks to a centralized control system. This requires synchronizing the fresh-air needs based on the volumes of stale air exhausted.
All told, it will save the plant over 750,000 m³ of natural gas annually and reduce its greenhouse gas (GHG) emissions by more than 1,400 tonnes per year. Lastly, Énergir’s financial assistance program enabled the customer to optimize its ROI period.
Also interested in reducing your energy consumption? Don’t hesitate to discuss it with your advisor, who can guide you in implementing your own projects.
The latest on our energy efficiency programs
In order to continue helping you optimize your natural gas consumption, we have introduced a number of enhancements to our energy efficiency programs, effective October 1, 2019:
- More projects eligible for the solar preheating program
In the past, the solar preheating program was available only for preheating air used for heating. As of October 1, the grant is now also available for preheating air used for processes and for preheating water. All eligible projects can receive a grant of up to $200,000. The list of eligible technologies is available on the solar preheating web page.
- A more generous grant for feasibility subsidies
The maximum financial assistance available for a feasibility study has increased from $20,000 to $50,000. However, this amount, which helps cover the costs of a study to identify the opportunities for improving the energy efficiency of a building or process, cannot exceed 50% of the total study costs.
- Did you know we also offer a grant for smart thermostats?
You could receive a grant of up to $100 for each smart thermostat you install in your offices. Talk to your advisor if you are interested in this grant.
Coming soon: An energy management system (EMS) grant
Énergir is currently developing a grant for industrial customers implementing an EMS. This type of system allows an organization to continuously improve its energy performance through long-term energy and cost savings.
The grant, which will be available before year end, will be up to $350,000, divided into four distinct steps.
For more information about the EMS grant or to indicate your interest, contact your advisor or fill out our form.
The grant, which will be available before year end, will be up to $350,000, divided into four distinct steps.
For more information about the EMS grant or to indicate your interest, contact your advisor or fill out our form.
Changes in C&T prices over the last three months
From June through September, the price of emission units on the market initially increased significantly, climbing from US$17.10 on June 18 to a high of US$17.84 on July 3. It then trended generally downward, reaching US$17.02 on September 19.
The third auction of emission units for the year was held on August 20. The final selling price of current vintage emission units was set at US$17.16 (CAN$22.82), while that of future vintage emission units was set at US$16.85 (CAN$22.41). The selling prices were relatively in line with the consensus among analysts, and so the market did not experience any particular volatility when the results of the auction were made public.
The third auction of emission units for the year was held on August 20. The final selling price of current vintage emission units was set at US$17.16 (CAN$22.82), while that of future vintage emission units was set at US$16.85 (CAN$22.41). The selling prices were relatively in line with the consensus among analysts, and so the market did not experience any particular volatility when the results of the auction were made public.
Carbon pricing consultations
Énergir is actively monitoring the carbon pricing developments in Québec and Canada.
On September 18, 2019, the Ministère de l’Environnement et de la Lutte aux changements climatiques (MELCC) held a day of pre-consultation on the proposed C&T changes regarding the:
At the federal level, this summer Environment and Climate Change Canada (ECCC) published a document on the proposed regulatory approach for the Clean Fuel Standard (CFS). This standard is intended to reduce the carbon intensity of fuels distributed in Canada beginning in 2022 (liquid fuels) and 2023 (gaseous and solid fuels). In the document, ECCC presents a detailed description of the regulatory requirements that would result from the CFS for the liquid fuels group as well as general design elements of the CFS that would apply to all fuel groups. Énergir submitted its comments to ECCC in August 2019 and intends to continuing monitoring the standard’s development.
On September 18, 2019, the Ministère de l’Environnement et de la Lutte aux changements climatiques (MELCC) held a day of pre-consultation on the proposed C&T changes regarding the:
- free allowance for the 2024–2030 period
- new support measures for the industry
At the federal level, this summer Environment and Climate Change Canada (ECCC) published a document on the proposed regulatory approach for the Clean Fuel Standard (CFS). This standard is intended to reduce the carbon intensity of fuels distributed in Canada beginning in 2022 (liquid fuels) and 2023 (gaseous and solid fuels). In the document, ECCC presents a detailed description of the regulatory requirements that would result from the CFS for the liquid fuels group as well as general design elements of the CFS that would apply to all fuel groups. Énergir submitted its comments to ECCC in August 2019 and intends to continuing monitoring the standard’s development.
New investment project approved by the Régie de l'énergie
On July 10, 2019, the Régie de l’énergie approved, via decision D-2019-080, the investment project to supply natural gas to a new Kruger Tissue Plant in Sherbrooke.The project will enable Énergir to supply the new Kruger plant with natural gas for its paper production needs. This new project, whose costs are estimated at $4.5M, will foster the region’s economic development. The work to connect the plant should be completed by September 2020.
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