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ERCOT Storage: The Future Operating Model?

Calgary, Alberta (August 9, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released a report exploring the future state of the ancillary services markets in the Electric Reliability Council of Texas (ERCOT).

From managing weather swings to energy outages to fluctuating prices, energy producers, utilities and consumers throughout the U.S. have astutely been watching ERCOT and its next steps. Power systems typically have mismatches between the load forecast, the actual load, the energy traded and the energy produced for every hour and through the day. Ancillary services are the tools used by system operators to balance generation and load in real time, taking care of these forecasting errors.

EIR analysts now expect these markets to saturate with energy storage, displacing gas and coal generators as the marginal bidders and lowering the price for all ancillary services. The report presents a monthly forecast for all ancillary services prices, settling at the average expected marginal cost for storage assets by the end of 2023.

“We expect ancillary services prices to fall 35%-65% from 2021 levels as storage assets become the marginal bidder for these services later this year,” said Ryan Luther, report author and senior vice president of Enverus Intelligence Research.

“We calculate the average annual gross profit for storage assets pursuing an ancillary service strategy will fall ~50% from 2021 to 2023 if ancillary service prices decline according to our forecast. Ancillary strategy profits should still outperform a pure arbitrage strategy and we expect storage assets to prefer ancillary service strategies. We expect falling ancillary services prices will force many coal and gas assets into early retirement at the detriment of grid reliability. We believe ERCOT urgently needs to establish a new market for dispatchable reserves to preserve grid reliability.”

Key takeaways from the report:

  • When storage assets become the marginal bidder of ancillary service markets, EIR analysts expect their bids to move from near zero to attempt to cover the assets’ cost of capital and, if deployed, at least break even on its operating cost.
  • EIR analysts expect little to no participation of wind assets in Regulation Down services since their bids would need to at least compensate for lost production tax credit revenue and potentially offset the cost of undersupplying power for PPA agreements.
  • EIR analysts expect falling ancillary services price will force many coal and gas assets into early retirement at the detriment of grid reliability.
  • EIR analysts believe there is a need in ERCOT to establish a new market for dispatchable reserve to preserve its reliability, such as its proposed Backstop Reliability Service.
Graph Showing Forecast of Ancillary Service Requirements and Storage Project Capacity

Storage assets will soon have enough capacity in ERCOT to service the entire ancillary service requirements.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

5 Reasons To Attend SPARK 2022

2022 is on course to be an exceptional year for oil and gas. Exceptional, for the flurry of geopolitical events shaping the market. Exceptional, for the spectacular turn of events from 2020 – one of the industry’s most challenging years to date. But if 20+ years serving oil and gas has taught us anything, it is that things change fast. Every day still holds its share of surprises, risks and uncertainty.

Yet as the industry experiences inflation impacting drilling returns, stringent regulations and related compliance challenges, there’s never been a better time to invest in digital transformation.

So, to help you make the right investment, every year Enverus organizes SPARK – the premier energy conference bent on empowering energy companies to transform their oil and gas operations with analytics, automation and outsourcing. This time, we are back in person in San Antonio from Aug. 22-24, 2022.

And if last year is any indication, you can expect to attend an event designed with you in mind, with engaging sessions and networking opportunities to reunite with friends.

Still need some convincing? Here are five reasons why you don’t want to miss SPARK 2022.

Reason No. 1: Find More Ways To Keep Opex Down


It’s no secret that operating costs are the biggest controllable cost for the industry. In many cases, opex can be HIGHER than all general, administrative, interest, royalties and transportation costs combined.

That’s because, for a long time, there was no true way to scale production without adding headcount. But the option to hire more staff or settle for less efficiency is no longer viable.

Enter digitalization. Digitalization makes automating the oilfield possible, in the process making day-to-day operations more efficient. It also provides oil and gas operations with insights and the ability to take immediate action based on those and trim operational expenditures.

Now, with the advent of field intelligence, AI and big data, a new opportunity has emerged to move from siloed data systems and legacy software to integrated data and unified solutions with even more reduction of operational expenditures.

By joining our SPARK 2022’s “From Field to Finance: Faster Visibility Into Operations” session, you will get a glimpse into how connecting the field to the office helped one of our customers gain accurate, real-time visibility into operational spend using our integrated Source-to-Pay solutions.

With the power to access real-time data anywhere at any time, they were able to make production changes based on smart product insights to trim expenses and balance production. So that operations team could focus on the exceptions to save time, minimize costs and produce more oil.

 

Reason No. 2: Hear the Quantifiable Benefits of Digitalization, Straight From Your Peers


Speaking of peers and digitalization.

There truly is no denying the power of digitalization. Digitalization streamlines oil and gas operations improving productivity as well as efficiency and increasing cost savings. It also enhances communication and collaboration across teams and with suppliers.

Difficulties arise when trying to quantify the value of digitalization at the well. Since digitization is often part of large improvement initiatives, it is difficult to correlate results directly to bottom-line operational metrics such as operating costs or production volumes. But not for our customers.

Through our SPARK sessions, you will get to hear about the tangible and intangible benefits of digitization, directly from your peers. Whether this means faster invoice cycles, faster spend visibility, reduced manual touchpoints with automatic invoice approvals or better well performance management.

 

Reason No. 3: Stay Ahead of Investors’ Expectations


We all know investors expect returns from operators. Though maximizing those returns require COOs and VPs of Supply Chain and Operations to pay close attention to spend. It is often a struggle to get the right data to find opportunities to save on operational materials.

And if costs cannot be reduced, it impacts an operator’s ability to maintain profitability and negatively impacts the overall value of the company to investors.

Our Enverus’ Source-to-Pay solutions allow operators to demonstrate cost control initiatives are in place, which increases the value of a company to investors.

Not only that, as leaders in intelligence automation, we continuously update and improve our solutions so you can gain the most up-to-date granular and comprehensive understanding of your revenue and costs.

By attending SPARK 2022 you will get an exclusive glimpse into what’s next in terms of intelligent automation and spend management, in the field and in the office, so you can level up and deliver on expectations from shareholders and investors.

 

Reason No. 4: Gain Operative Advantage Over Your Competitors


Data is essential to make informed decisions. In oil and gas, it is used for everything from exploration and production to marketing and sales.

But that data is mostly siloed, spread out across different systems and departments, which means only 10% of it actually influences business decision-making. It’s hard to paint an accurate picture of what’s going on with disparate or missing pieces.

On top of this, when you work with multiple software applications, it creates challenges for the end user who must interact with different user interfaces and data outputs. Not only is it a management nightmare and a major drain on resources but it also means your employees are having to reconcile various data sets and attempt to extract valuable insights from those.

So, what’s the solution? How can you tie in real-time insights with decisions-making, your business goals with actual outcomes and go beyond data insight? The short answer: with data consolidation to break down data silos and intelligent automation to promptly identify missed opportunities and inefficiencies.

You can hear the complete answer at SPARK 2022 where you will discover how by integrating diverse data, we allow operators to augment decision-making and gain the operative advantage over competitors.

 

Reason No. 5: Keep Up With Oil and Gas Industry Trends


Oil and gas faces waves of changes. While capital discipline and operational management remain a priority, new trends are emerging, like the mounting pressure to decarbonize and the increasing recognition of ESG as a competitive advantage.

Being aware of those changes or updates in oil and gas has never been more crucial. Yet, knowledge and competency gaps are rife, even as demand increases. This leaves many operators struggling to keep up amid all these changes.

But how do you keep up with the latest industry trends? Well, you have the obvious choices like reading news on industry websites, subscribing to blogs and building relationships with suppliers and your peers.

Though two years of pandemic meant most in-person events were cancelled or postponed. And while we all went virtual, it was clear the virtual experience could never replicate the in-person engagement.

It’s true that going virtual makes it easier to access information wherever and whenever you want. But when it came to engagement and networking, virtual felt lackluster, never quite living up to the expectations set by in-person events.

2022 marks the return of our in-person SPARK conference during which you will have the opportunity to reconnect with experts and peers.

During sessions, you will hear from others in oil and gas on how they’re navigating new trends. And in between sessions, you will be able to exchange information on challenges and gain new insights you may not have thought otherwise.

 

Conclusion


While the industry continues to go through changes, we’ve never been more excited to welcome you at SPARK where you will:

  • Learn how to amplify investment ROI, lower opex and alleviate pressures from price inflation with digital transformation
  • Gain knowledge on how to leverage technology to streamline your operations, so you execute more time and cost-efficiently
  • Gain exclusive insight on how streamlining operations aids in navigating mission-critical initiatives, like ESG
  • Network and learn from your peers

Intrigued? Sign up to join us at the 2022 SPARK conference in person at the La Cantera Resort and Spa from Aug. 22 to 24.

How To Overcome Your Biggest Asset Development Challenges and Grow Your Returns

NAVIGATE TODAY’S TOUGHEST MARKET CHALLENGES TO BUILD YOUR STRONGEST FUTURE ENERGY STRATEGY

Labor shortages continue to restrict operator’s ability to ramp production, inflation is driving up costs, investors now prioritize businesses with a sustainability strategy, and securing quality inventory is paramount. The market rewards operators who prove they have an accredited portfolio management strategy, make smart development plans, operate efficiently and learn from their experiences.

Investing in technology is a proven way to improve efficiency and boost returns across a company. Below we highlight the most common challenges faced by operators through each phase of the asset lifecycle and provide the solution.

PHASE 1: EVALUATE AND ACQUIRE

Challenge: There are so many factors that influence asset value, making thorough technical analysis tricky when you are on tight deadlines. When you need to evaluate multiple assets quickly, you either sacrifice technical due diligence for speed or miss out on opportunities because you’ve spent too much time evaluating the wrong ones or not accounting for all the factors that influence performance.

Solution: Operators in this stage of the asset lifecycle should focus on a solution that allows them to benchmark future inventory and forecast existing well performance using insights like geological models, spacing, completion designs and ESG metrics in one place. This makes technical analysis of multiple assets much faster, allowing you to uncover more opportunities and value them with confidence to de-risk capital investments.

PRISM example

Conduct rapid total inventory evaluation to understand both current production and potential future locations. Knowing asset development running room informs investors of corporate strategy and current outlook.

PHASE 2: DESIGN & DEVELOP ASSETS

Challenge: In this stage of the asset lifecycle, it is vital to understand what is driving the productivity of current producing wells to optimize designs and lower risk. To do this, you need to validate potential design scenarios before you drill using your own proprietary data. Many operators say they spend too much time moving data between various platforms, across teams, and merging mixed datasets to analyze real-time production with historical data. The difficulty in this task exponentially increases when updating and maintaining models with new data.

Solution: The only way to eliminate risks quickly, before putting money in the ground, is to run simulations and understand the impact from different variables on productivity, using nearby historical data. Model future developed locations before you drill by quickly loading your own proprietary production data with robust Enverus production data in PRISM. This saves you the headache of having to import Enverus data into your reserves software and increases forecast accuracy and helps you inform capital spending decisions on drilling plans.

PRISM Example

Analyze multiple factors before drilling, like number of wells, intervals, spacing, completion methods and timing tied to economics, so you optimize individual well performance and project returns.

PHASE 3: SOURCE & EXECUTE OPERATIONS EFFICIENTLY

Challenge: Efficient and cost-effective sourcing of materials and services and streamlined processes are critical during drilling and completion operations so your projects stay on time on budget. Real-time cross-team collaboration and communication between field operations and supply chain and accounting teams on during these processes can be difficult.

Solution: Digitalizing your sourcing, ordering, fulfillment and invoicing on one platform allows you to make operations much more efficient because you can automate some of the workflows, cutting down on wasted time. Improving spend management becomes second nature as operations gets a near-real time view of incurred spend for more accurate project forecasts and budget tracking, supply chain can negotiate win-win price contracts with suppliers and finance and accounting gets timely, high-quality reporting.

Total Spent vs. AFE by Spend Category

Lower operations cost with improved spend insights. You can negotiate price contracts, choose preferred vendors and view costs by AFE to spot outliers to minimize overspend.

PHASE 4: MONITOR AND OPTIMIZE PERFORMANCE, ENSURING OPTIMAL RESULTS

Challenge: Being able to access and analyze up-to-date well performance metrics is critical to make sure you’re getting the best results from your designs. Many operators prefer to use their own proprietary data for the technical workflows required to make these decisions, but this is only part of what is needed to effectively manage your assets. ​While your proprietary data may be your competitive edge, sometimes that data can still contain gaps. To be confident in your decisions, you  need to be able to benchmark your conclusions against a trusted third party source. ​

This is where operators run into a data workflow gap. A lot of our customers say they spend too much time and money moving data between various platforms and that it’s difficult to easily share findings across teams.

Solution: Enverus solved this issue, making it quick and easy to integrate proprietary data with trusted Enverus data in PRISM, so you can effectively monitor your designs in near-real time, and increase confidence in these critical decisions. This capability, combined with Enverus ESG

Analytics, allows you to quickly understand performance so you can quickly intervene with underperforming wells to maximize upside.

Enverus ESG Analytics

Continuously update your subsurface model with proprietary well results and incorporate geological, geophysical and engineering data and learnings in one place and apply to future development plans.

STAGE 5: P&A AND DIVEST

Challenge: Being able to analyze shut-in wells to find P&A targets, figure out the upside of shut-in wells and which wells could be recompleted in an economic, sustainable way can be difficult without the right data.

Solution: Evaluate the production profiles and different designs of wells and ESG land use efficiency to find the most economic next step.

mapbox

Evaluate ESG land use efficiency with calculated fields from pad detection to understand land use.

Navigating today’s market is tough, but with a technology partner with solutions for every stage of the asset lifecycle, you will accelerate evaluation and development of operating and non-operating assets, de-risk investments, maximize capital efficiency and deliver returns, faster. This full lifecycle perspective into your business empowers you to break down information silos across teams, helping them work quickly and well together to better manage capital.

E&P Asset Lifecycle

Most Enverus customers have long known that we are helpful with understanding how investors view them, the acquisition and divestiture of producing assets, benchmarking performance against peers, and monitoring industry activity. However, few of them know how much we can impact the daily operations of an oil and gas company. This includes asset development planning, staying ahead of the drill bit after the plan is underway, and managing development and operating costs effectively. So, when it comes to the everyday business of running oil and gas companies, Enverus can help you add value across the asset’s lifecycle, making us the most essential partner an operator can have.

Request more information about how Enverus can help you optimize your asset management by filling out the form below.

Looming Recession and Weaker Global Demand Expected to Push Oil Prices Below $100/bbl by Year End

Calgary, Alberta (August 3, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released Macro Forecaster, a new report that assesses the continued impact of COVID-19, the Ukraine war and weakening global economy on near-term oil and gas balances.

“Until July we have argued that Brent pricing was well supported at $100/bbl. However, the downside risks are becoming more prominent, and we now expect some sort of European recession by the end of the year. This will loosen balances by 1-2 MMbbl/d as weaker global demand emerges. We expect Brent to drift to the mid-$80s/low-$90s by year-end,” said Bill Farren-Price, one of the report’s authors and a director at Enverus Intelligence Research.

The report noted recent strength in U.S. gas prices. “The NYMEX summer strip traded at a wide range from ~$5.50-8.00/MMBtu in July. For summer 2022 and winter 2022-2023, our supply estimates are based on guidance that has zero elasticity. However, next summer we expect supply growth to push prices downwards to around $4.50/MMBtu. As for demand, industrial activity and power generation are showing no signs of slowing.”

Frequently asked questions answered in the report:

faq oil and gas

The Macro Forecaster combines EIR’s former PetroLogicNear-Term Gas Market Outlook reports and elements of the Completions, Crews and Consumables report into a consolidated view of the energy industry.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus

Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research

Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Inflation Reduction Act of 2022: Initial Takeaways from Enverus

The Inflation Reduction Act of 2022 would restore tax credits for solar and wind projects to their full rates and ensure they stay in effect at those levels for at least another decade, removing the ambiguity and unknowns that were bad for business. In addition, the act would introduce tax incentives for standalone storage and hydrogen projects as well as expanding and extending 45Q carbon capture credits. It also includes other measures that encourage energy efficiency, electric vehicle adoption, and investment in advanced manufacturing. If it passes Congress, it would provide a great boost to all things related to the energy transition.

So, what happened?

Ongoing efforts aimed at energy security and climate change since the Build Back Better plan failed have finally come to a head with the newly proposed legislation (this time supported by Sen. Joe Manchin, D-W.Va.) called the Inflation Reduction Act of 2022. Among other things, the legislation will invest nearly $370 billion in energy security and climate change programs over the next decade. This investment will aim to incentivize further renewable energy development, increase electric vehicle (EV) adoption, encourage energy efficiency, and even target emissions from oil and gas infrastructure and the agricultural sector.

To pay for the investment, the bill introduces tax and prescription drug reforms, which should result in a net $300 billion reduction in the deficit over the next 10 years. Most of the benefits of this plan come from tax breaks, meaning this proposal reduces the cost of renewable energy without burdening the cost of traditional energy. The bill has been submitted to the Senate and voting could be set to begin as early as next week. Thanks to the budget reconciliation process, the bill will be able to circumvent the Republican filibuster. It must then pass through the House before President Biden can sign it into law.

So, what does it say?

Within the 725-page legislative text, it is the Title 1, Subtitle D – Energy Security that is of interest to understand what is being proposed in terms of energy.

A few highlights (by no means an exhaustive list) of measures included in the act are:

  • The tax credit qualification for wind, solar and several other types of electricity producing facilities has been extended to those starting construction before Jan. 1, 2025 (previously Jan. 1, 2022).
  • Production Tax Credit (PTC), which is claimed by wind projects has been modified.
    • The base PTC amount has been decreased to $0.003/kWh (previously $0.015/kWh). However, this is counteracted by the measure that the base production tax credit amount is multiplied by five (back to $0.015/kWh) should the facility meet prevailing wage and apprenticeship requirements. It is worth noting that this base credit is always adjusted for inflation. The base PTC for projects starting construction in 2022 is $0.026/kWh when adjusted for inflation.
    • The phaseout clause which reduced wind project PTC over time has been removed (previously 40% reduction to the base PTC rate). The removal of the phaseout is not retroactive.
    • There are new PTC uplift bonuses applicable to the calculated base rate based on meeting domestic content or energy community requirements. These credits can be stacked (10% uplift each).
  • Investment Tax Credit (ITC), which is claimed by solar projects has been modified.
    • The base Investment Tax Credit (ITC) amount has been decreased to 6% (previously 30%). However, this is counteracted by the measure that the base ITC is multiplied by five (back to 30%) should the facility meet prevailing wage and apprenticeship requirements.
    • The solar ITC phaseout clause is removed (previously 26% going to 22%). The removal of the phaseout is not retroactive.
    • There are new ITC uplift bonuses added to the calculated base rate based on domestic content, energy community, and low-income community requirements. These credits can be stacked (10% uplift each).
    • Solar projects now have the option to claim the PTC in lieu of the ITC.
    • Energy storage projects now qualify for the ITC (previously not available for standalone storage). The ITC is available at the base 6% rate for any projects starting construction before Jan. 1, 2033. Afterwards, it starts phasing out (5.2% before Jan. 1, 2034 and 4.4% before Jan. 1, 2035).

In addition to the above amendments, solar and wind facilities (in fact, any electricity generating facility with greenhouse gas emission rate of 0) starting construction after Dec. 31, 2024, will be eligible for a new technology neutral PTC or ITC which will stay in effect until the latter of the below two options:

  • A gradual phase out begins when the applicable year occurs. The applicable year is the calendar year in which the annual greenhouse gas emissions from the production of electricity in the U.S. is less than or equal to 25% of the emissions in calendar year 2022. In the next three calendar years after the applicable year, the applicable credit to the plant is reduced to 100%, 75% and 50% of the base rate respectively. Thereafter, the incentive is no longer available.
  • The calendar year 2032.

Additionally, it is worth noting these additional measures introduced by the act:

  • Tax credit qualification for carbon oxide sequestration facilities has been extended to those starting construction before Jan. 1, 2033 (previously Jan. 1, 2026). The 45Q tax credit amount follows a similar structure to the PTC based on prevailing wage, apprenticeship and domestic content requirements.
  • A PTC has been put in place for hydrogen facilities with a similar structure to the PTC based on prevailing wage, apprenticeship and domestic content requirements. There is an option to opt for the ITC in lieu of the PTC.
  • A PTC has been put in place for nuclear facilities, which are in service before enactment, with a similar structure to the PTC based on prevailing wage and apprenticeship requirements.
  • Tax credit qualification for EV charging stations has been extended to those placed in service before 2033. Similar structure to the ITC based on prevailing wage and apprenticeship requirements.
  • A $7,500 tax credit for new EVs placed in service before 2033. There are reductions and limitations for applicability based on where the battery components are sourced, price of the EV, and taxpayer’s income.
  • Direct pay option is only afforded to few applicable entities and technologies. However, tax credits will now be saleable for cash to other companies not related to the seller. This removes the complex tax equity structures that were relied upon previously.
  • Renewable fuel and residential credits have been extended and expanded.
  • Increased royalty rate on offshore oil and gas leases from 12.5% to a minimum of 16.66% and maximum of 18.75%. The minimum bid was also increased from $2/ac to $10/ac.
  • Royalties will now be paid for gas flared on federal lands (previously only for gas sold).

So, what does it mean?

To summarize, it means nearly all things related to the energy transition got positive news. Existing tax credits were increased and extended. New tax credits were introduced for nascent or emerging technologies.

The above changes certainly impact the economics of solar, wind and storage projects significantly. All else equal, they increase the tax credit amounts afforded to upcoming solar and wind projects. Additionally, the implementation of an ITC for storage will certainly make the economics for standalone storage projects more attractive. The extension of the 45Q for carbon capture and the new PTC for hydrogen will have similar positive impacts on investments in these technologies.

Although the ability to sell tax credits for payment in cash is nice, it isn’t quite the direct pay alternative that the industry had been hoping for (although that also had shortcomings).

So, what does it not mean?

First off, there are still a few more steps before this gets signed into law.

Additionally, as good as these measures may look for these technologies, they don’t solve some of the immediate structural problems such as the all too apparent supply chain issues, ongoing anti-dumping/circumvention related concerns, location and security of rare earth minerals reserves and manufacturing, or the aging and frail power grid. Although the incentives for domestic manufacturing and mining of pretty much anything used for renewables will help, it is not an overnight solution. Additionally, labor shortages remain an issue and it is unclear that the incentives will make domestic manufacturing competitive with global supply.

It is ambitious, but it still isn’t a clear roadmap of how we meet climate goals in the U.S. (and certainly not abroad). It provides support for the technologies and investment necessary to add more renewable sources of energy and build a grid that can support the ever-increasing amount of intermittent electricity generation. However, it isn’t the silver bullet.

So, what is next?

At Enverus, we are always helping our clients not only understand but quantify the impact of these kinds of changes on the energy industry. Our suite of data and analytical tools served through our SaaS platform along with the insights that our team of analysts create from them are invaluable to staying ahead of the energy transition.

Disclamer

This piece was written to summarize the essence of the legislation as we understand it. As always, consult qualified law professionals before making any business decisions.

If you would like to read the full bill, you can find it here.

 

Interested in learning more about how this will impact the energy industry? Join our team for a live webinar Tuesday, Aug. 9. We’ll take a deep dive into these details and their impacts. Register below.

Grid to Garage: Residential Charging Policies Key To Maximizing Energy and Consumer EV Benefits

Calgary, Alberta (July 20, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released a report evaluating the recent rise in electric vehicle (EV) charging and potential strain on electric grid distribution.

As drivers hit the road this summer, increasing demand for gasoline as prices at the pump top record figures, EIR analysts have unveiled EV Adoption Impact on Distribution Networks – A Trickle Change in Charging. As more consumers buy EV vehicles, EIR’s new report dives into the impacts of increased EV charging on the distribution grid. By combining charging behavior, historical demand and adoption forecast, EIR analyzes scenarios to anticipate when EV charging demand could become problematic to the distribution network. The report also analyzes the potential for EV charging to balance excess wind generation during low demand hours at night.

“It is unlikely for EV charging to become problematic to the existing grid infrastructure in the near future. However, residential charging policies will be crucial to defer infrastructure upgrades,” said Ryan Luther, report author and senior vice president of Enverus Intelligence Research.

“Proper EV charging policy implementation could hinder wind generation curtailment and reduce the need for energy storage,” Luther said.

Key takeaways from the report:

  • EV adoption will likely not pose a significant issue to the distribution grid until 2035.
  • Inefficient charging methods may expedite the upgrades to existing residential transformers with as little as 10% EV adoption.
  • Status quo can be maintained with most current residential transformers by implementing smart charging at least until 70% EV adoption.
  • Residential EV charging could act as a strong contributor to balancing wind generation during nighttime.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus

Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research

Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Energy Levelized — Episode 11: Powering Up the Power Markets

In our latest episode of Energy Levelized, we discuss how U.S. state and federal regulators are managing the integration of renewable technology, increased power demand following COVID-19, and rising summer temperatures. Morgan Kwan and Ian Nieboer interview Adam Jordan, managing director for Enverus Intelligence Research managing director, on his perspectives on renewable energy, growing demand and the latest power industry news.

In this podcast we discuss:

  • The Biden administration’s tariff freeze on solar imports and effects amid supply chain issues.
  • Energy generation mix, decline in coal rise in renewables, and if nuclear energy has a future.
  • Investments in ERCOT, the growing demand from crypto currency and increased population.
  • Energy storage systems as a solution for growth areas and reliable pricing for consumers.

Energy Levelized is available on your favorite podcast platform. You can listen to our latest episode here and find all our episodes here.

 

E-Book: Renewable Energy Project Siting Guide

The early stages of a renewable energy project begin with determining the plant motivation, siting a location, defining the generation and securing an offtake or a power purchase agreement (PPA). Siting a renewable energy project is complex, involving multiple economic, environmental and market factors. Traditionally, power project siting required developers to complete the resource-intensive task of pulling information from various sources.

Approval to build a renewable plant is a multi-phase process, with each study costing hundreds of thousands of dollars without a guarantee that you can proceed with a build. Since upwards of 70% of projects are withdrawn from the interconnection queue, simplifying the siting process is essential.

With accurate data on the power grid, existing applications, forecast generation and land data, developers can uncover opportunities within minutes.

In this guide, you can learn more about the screening criteria top renewable power developers use to filter areas by market potential, the highest return of investment and parcel attributes.

View the free e-book below. No personal information is required to access it.

Access E-Book Now

Upstream M&A Falls to $12 Billion in a Volatile Market

Calgary, Alberta (July 14, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading energy data analytics and SaaS technology company, is releasing its summary of 2Q22 upstream M&A. Overall, Q2 was a challenging quarter for negotiating deals as volatility roiled both commodity and equity markets. Despite that, about $12 billion was transacted in upstream M&A as numerous private equity (PE) firms brought their investments to market looking to cash in on high oil and gas prices; PE sellers accounted for about 80% of the quarter’s deal value.

“As anticipated, the spike in commodity prices that followed Russia’s invasion of Ukraine temporarily stalled M&A as buyers and sellers disagreed on the value of assets,” said Andrew Dittmar, director at Enverus Intelligence Research. “High prices, though, also encouraged a rush by PE firms to test the waters for M&A. While not everyone that is going into the market is getting what they deem to be a suitable offer, enough are to drive modestly active upstream M&A.”

U.S. Deal Value by Region Last 12 Quarters

Table showing U.S. Deal Value by Region Last 12 Quarters

Source: Enverus M&A Analytics

The Permian Basin was the largest contributing play to deal value, and it remains the main engine of Lower 48 M&A. About one-third of the quarter’s total deal value came from a merger of equals between private Colgate Energy Partners III, which is focused on the Delaware Basin part of the Permian, and public Centennial Resource Development. For the bigger private operators like Colgate, a merger with a similarly sized public counterpart can be an attractive move as it achieves larger scale and a public listing at the same time.

Looking beyond the Permian, large multi-region deals for non-operated interests contributed a substantial part of Q2 M&A value. One of these was an agreement between Grey Rock Energy Partners and Paul Ryan-affiliated Executive Network Partnering Corp to form Granite Ridge Resources. The $1.3 billion combination formed a new public non-operated working interest owner with further consolidation plans. It also showed how special purpose acquisition companies or SPACs can be used to circumvent the challenges of IPO markets.

“Public equity markets are retaining a multi-year trend of being essentially closed for private E&Ps to launch a traditional IPO,” added Dittmar. “That leaves M&A as the main exit route. There is appetite on the public company side to buy out private E&Ps, but public companies need to keep the valuation paid on these deals in line or less than where the market is pricing their own stock. With E&P equity valuations still modest, in many cases there may not be much room to raise offer prices.”

The disconnect in perceived value between buyers and sellers is affecting both producing assets and undeveloped future inventory. Historically, existing production was a bit more straight forward to value, but at current commodity prices buyers want to bake downside protection into their offers. Untapped inventory is even more challenging to estimate value on, and right now buyers are only willing to pay for high-quality locations in well-established areas.

One way for public companies to get more deals done is to increase the use of relatively cheap debt financing in M&A. In recent weeks, there has been an uptick in the use of debt to pay for deals. By using debt, companies can drive accretion to their key shareholder return metrics, and the additional cash flow from the new assets can also be used to pay down the loans and keep leverage in check. Provided banks continue to be willing to lend and E&Ps willing to borrow, this has the potential to fuel further deals.

“Looking forward I don’t think we will see any shortage of assets available for sale by private equity firms across every major shale play,” concluded Dittmar. “The challenge is finding buyers willing to pay their asking prices. Public E&Ps remain chiefly concerned with getting capital back to shareholders and being too aggressive on M&A can smack of growth investors don’t want. That said, the flood of offerings should create opportunities for shrewd deal makers to unlock value with M&A and, if we avoid a major recession, the fundamentals for energy prices still look strong.”

Members of the media can contact Jon Haubert to request a media version of the full report or to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

OPEC Spare Capacity Is Limited, Mr. President

Calgary, Alberta (July 11, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, is cautioning about the limited benefits U.S. President Joe Biden’s trip to the Middle East will have on increased oil production or changes to crude prices. The report, OPEC – Supply Capacity Constraints, points out that OPEC spare capacity appears to have almost entirely eroded as oil production by the group has ramped higher over the last year. EIR analysts argue that political pressure on major OPEC oil producers to increase supply as Russian oil is progressively sanctioned are therefore unlikely to yield immediate results.

“If President Joe Biden is hoping that his July trip to the Gulf will yield an immediate and significant tranche of extra oil supply from Arab Gulf producers, he will likely be disappointed,” said Bill Farren-Price, report author and a director at Enverus Intelligence Research. “A more likely outcome is that if talks go well, Riyadh commits to increase supply over the medium term.”

Key takeaways from the report:

  • A reported conversation between France’s President Emmanuel Macron and UAE leader Mohammed bin Zayed backs EIR’s assessment that there is very little sustainable spare oil production capacity within OPEC countries as the organization winds up the output cuts imposed in mid-2020. Amid the progressive loss of Russian exports into the EU countries in 2H22, this reinforces EIR’s bullish outlook for Brent, which we expect to move above $120 heading into 2023.
  • Aside from sanctions-bound Iran, EIR reiterates its view that consumer pressure on OPEC countries for extra oil supply in the very near term is unlikely to produce positive results. EIR analysts do, however, believe Saudi Arabia could increase supply towards its official 12 MMbbl/d ceiling if it deploys additional rigs over six to 12 months. Unless domestic refining is squeezed, stocks drawn from storage or direct-burn crude reduced, that capacity is not immediately available now.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Deciphering Minerals Upside: An Analytics-Intensive Approach

With West Texas Intermediate oil at $100+ per barrel and Henry Hub natural gas quadruple its 2022 open, non-operated interest investors have an unprecedented opportunity to cash in on commodity prices as each operator drills to drive their own capital return strategy. But absent a working interest, non-ops lack any decision-making power in an operator’s go forward development profile.  To buy minerals ahead of the drill bit and assess the changing value of an existing portfolio, non-operators need good leading indicators of producer next steps, starting with guidance and disclosures and graduating to a more nuanced analysis of operator behavior.

As investors, we can no longer rely solely on tried-and-true indicators of drilling, such as permits and rig activity (aka, “line of sight”). The industry is in flux and the playing field is repositioning as operator interest shifts to different U.S. basins, DUC inventory backlog continues to burn, M&A accelerates, and development responds more sluggishly to demand with operators seeking to return more value to shareholders instead of reinvesting all their profits. To estimate the timeframe over which their minerals will be developed, a non-operator needs to consider how acreage development will evolve for each operator active in their area given the range of options those operators have available and market pressure.  That requires analysis of proved developed producing (PDP) acreage on an operator-by-operator basis and untangling the complexities of proved undeveloped (PUD) reserves. It’s all about having the right data and workflow.

High grading operator PDP potential

The rising tide lifts all boats, but as mineral and royalty owners we certainly know that not all E&Ps are created equal or benefit uniformly from higher commodity prices. Low-cost operators and those with prime acreage positions and large drilling inventory are at an advantage. Even within a sub-basin, we shouldn’t think of E&Ps as uniform producers. Production can vary based on what formations are targeted (critical in the stacked pay of the Permian), an operator’s holdings across basins, production economics, and the range of hydrocarbons each operator produces (e.g., dry gas, grades of crude, NGL).

Using PRISM, we can begin assessing EUR based on type curves assigned to each well in an operator’s portfolio and see which locations E&Ps are most levered to. In just minutes, we can understand where an operator’s go forward production profile will move based on current production and inventory.

From a non-op investment point of view, it’s important for us to see who is most active in each basin (and not necessarily just our area of interest), how producers are shifting PDP focus, and what drilling activity is required to maintain decline profiles. For some operators, this profile might be maintained through continued development in the same areas based on inventory and rig activity. However, given ongoing repositioning, investors should never assume that operators will continue replacing production, even in areas where they have inventory.

Production by operator and allocation into each basin

Figure 1: Production by operator (left) and allocation into each basin (right).

Putting a value on undeveloped upside

Under the current state of the market, undeveloped drilling activity is the greatest source of uncertainty that requires a more complex analysis to assess PUD upside. We need to see ahead of the bit based on what is disclosed in filings and read between the lines to glean the value of undeveloped go forward production, land and drilling program economics. We also need to better assess the economics of each operator’s portfolio as they rearrange or refocus following M&A. At the end of the day, investors really want to know just how long they can continue to collect royalties from their portfolio.

Mining the Past for Insights

To understand how to move forward we need to understand historical activity to see how we arrived at today’s strong production output.

Using PRISM, we can look at well count over time across operator positions and see when and where production came online. From the historical well count chart, we can see well counts have returned to pre-pandemic levels. A shift in capital discipline and emphasis on free cash flow point toward sustained production and returns, which is great from a minerals and royalties perspective because it would indicate that new wells could be developed on our properties, adding to revenue streams. But we have noticed an interesting shift in production from the Delaware to the Midland Basin where a greater backlog of inventory (DUCs) exists.

Rig activity provides a better indicator of go forward PUD production. DUC draw down is impacting go forward development in the short term as drilling continues to lag pre-pandemic rig count (Figure 2), but it may not return to past levels and, from a non-op position, it’s important to dig deeper to determine whether this basin-level recovery trend will actually add any new production to our portfolio. Indeed, the following PRISM charts show that for one non-op interest owner in the Delaware the trend is flat compared to the steep uptick for the Permian.

Basin-level drililing vs. drilling actvity on a mineral company's position

Figure 2: Basin-level drilling vs. drilling activity on a mineral company’s position.

While Permian rig recovery has been steady, rig activity has been flat for some minerals-exposed companies in parts of the Delaware, as the above example illustrates. Continuing with this example in PRISM, we can dive into current rigs and allocation for the minerals exposure to identify the operators and regions at play. This is where line of sight can help reduce uncertainty of which wells will be put on production.

From PRISM we can easily see the operators who have line of sight wells in the minerals position and their status from permit to DUC and completion. We can then see which operators will contribute the most to the near-term production profile for our example minerals position. Using offset well analysis we can better forecast the go forward production profile and get accurate EURs for the formations DUCs are drilled in which will directly impact near term cashflow.

Operator benchmarking

Looking further ahead, it’s important for minerals and royalty investors to understand the economics of the land in their portfolio as well as the operators drilling the wells. From PRISM we can drill into operator benchmarking to assess the value of a mineral position’s economics and how operators compare on a peer-to-peer basis.

Breakeven for Delaware and Midland Basins based on associated LOE and productviity metrics

Figure 3: Breakeven for Delaware and Midland Basins based on associated LOE and productivity metrics.

The above scatterplot shows the relative strength of top operator wells (P10 – P90) and compares hydrocarbon recovery and costs to gauge the breakeven costs across the Permian. It’s clear that the Delaware Basin provides superior economics, but activity is shifting away to the Midland Basin. To untangle what is driving this trend, we’ll need to isolate operator activity for a clearer picture of go forward activity. From PRISM we can quickly identify Devon and EOG as the top producers in the Delaware.

Top operators in the Delaware Basin

Figure 4: Top operators in the Delaware Basin.

Even though overall production in the Delaware has leveled off, Devon’s rig count within the mineral position has dropped from 10 pre-pandemic rigs to two or three, which better informs our view of the go forward revenue stream. The operator has not pulled rigs completely out of the Delaware, but it has rearranged its rigs within Lee and Eddy Counties. With PRISM’s ability to overlay your own minerals and royalty position alongside operator acreage, inventory and activity, it’s easy to understand the upside.

Conclusion and key takeaways

Our industry has been rocked by market forces over the last two years, including a global pandemic, geopolitical events, Wall Street’s desire for disciplined growth and shareholder value, a hyperfocus on ESG, and the energy transition, all of which are shaping the go forward strategy for every energy company. The oil and gas industry of the past will not resemble the oil and gas industry of the future. As mineral and royalty investors, the evolving oil and gas landscape presents pitfalls and opportunities to realign. Now more than ever, analytics and contextualized data are what will make or break your portfolio going forward.

To get more details on how to better forecast production timing from line of sight well activity including Frac Crew tracking, and better understand how operator development strategies will affect development of your minerals, email [email protected] or call 1-800-282-4245.

Enverus’ forecasting tools provide pre-generated and customizable production forecasts and economics in one platform to gain visibility into operator behavior, near-term cashflow, and asset value to help non-operators confidently make business decisions.

Impact of Electric Vehicles on the North American Power Grid

There is growing speculation that electric vehicle (EV) charging could threaten the stability of the North American electrical grid. According to Enverus Intelligence Research, EV charging could significantly impact the power grid in 2035 or at 70% adoption of EV.

In this analysis, Enverus Intelligence Research reviewed the residential load profile and effects on EV charging using the data point that the average American household owns two vehicles, with an average daily driving distance of 30 miles. Three scenarios were evaluated:

Worst-Case Scenario: Assumes EV owners have negligible battery management and perform charge during peak consumption on the fastest charging mode.

Battery Management Scenario: Assumes charging is during peak consumption, but charge time is more than six hours.

Smart Charging: Assumes delayed charging when household electricity consumption is lower and charging set to more than six hours.

Figure 3 - Household Daily Load Profile Scenarios

 

MORE REPORT INSIGHTS

Wind Energy and EV Charging

A significant challenge with wind generation is excess energy produced during the night when demand is low, which leads to clean energy curtailments. Implementing smart EV charging could be an effective way to utilize some excess renewable energy when vehicles are likely to be charging.

Russian Sanctions Impacting EV Adoption

We predict that sanctions on Russia will affect the nickel market globally, increasing battery prices and slowing EV adoption. The chart shows that EV penetration in the U.S. won’t surpass 15% until 2031, and EV stock won’t reach 30% until 2035. Therefore, we believe it is doubtful that capacity concerns regarding EV charging will be a significant issue soon.

Read the full report below for complete analysis.

Why Shift Factors Matter – Marblehead Congestion

Marblehead Xf has been one of the top day-ahead and real-time MISO constraints this year. What you might not know is that some transmission outages caused dramatic changes in shift factors for this constraint. Our product, Panorama, uses topology-based shift factors to accompany our other market-leading congestion tools. Why does this matter? Identifying these changes ahead of time can give you an edge on the market.

To illustrate the importance of having accurate shift factors, we’ve taken a snapshot from our Price Decomposition module for the AMMO.HANN_1.AZ pnode. The middle section (blue line) shows the hourly day-ahead LMPs, while the bottom section displays the individual day-ahead constraint impacts. Within the bottom section, Marblehead’s impact can be seen in the shaded green areas. You can quickly identify three distinct periods. In the first period (yellow box), Marblehead’s impact is slightly positive; in the second (red box), it flips to negative; and in the third (green box), it’s back to positive at a much greater magnitude.

Price Decomposition module for the AMMO.HANN_1.AZ pnode

While this is a great postmortem tool, we can also use our product to predict future shift factors. The image below shows what you would see if you looked at the Marblehead constraint on the first day of the April auction (March 15). The top section shows shift factor using the actual transmission outages on March 15, while the bottom section shows exposure for the upcoming month using the planned transmission outages as of the same day.

To quantify the financial implications of the shift factor change, we evaluated one of the previous top paths and compared it to the April top path using Panorama shift factors.

Source Sink ON P/L OFF P/L
Previous top path AMMO.PENOCTG1 AMIL.MRDSA.ARR $4,231 $974
Panorama top path AMMO.PENOCTG1 AMMO.HANN_1.AZ $19,917 $10,647
Change in sinks AMIL.MRDSA.ARR AMMO.HANN_1.AZ $15,687 $9,672

Assuming you bought in the April prompt auction, the Panorama top path would have resulted in a gain of almost $20,000 per megawatt (on peak), more than $15,000 higher than using the March top sink.

Maybe you weren’t directly impacted by this change but would like to be better prepared in the future for similar situations. If so, please fill out the form below and one of our specialists will get in touch with you.

Latest PetroLogic Report Underscores Oil Supply Constraints

Calgary, Alberta (July 6, 2022) — Oil balances remain tight and prices are comfortably pinned above $100 with risks to the upside, according to Enverus Intelligence Research’s latest PetroLogic report, Supply Constraints Dominate. In it, analysts outline their oil and gas fundamental view and price outlook for the near-to-medium term. EIR is a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company.

“Despite signs of a slowing global economy, U.S. oil demand has yet to respond to higher prices as it nears pre-pandemic levels. Similarly in Asia, India’s recourse to extra discounted Russian oil has steadied consumption while we expect China to make a strong recovery in the second half of the year after COVID-19-related lockdowns.” said Al Salazar, lead report author and senior vice president of Enverus Intelligence Research.

“The Freeport outage cut a cumulative ~24 Bcf of feed gas demand as of June 20, loosening U.S. gas balances and helping inventories recover around half of the deficit to the 5-year average compared to our previous outlook. On the production side, gas out of the Haynesville is expected to grow about 2.2 Bcf/d E/E in 2022 and about another 0.3 Bcf/d E/E in 2023 as takeaway capacity out of the play becomes constrained,” he said.

Bill Farren-Price, co-author of the report, noted that OPEC-10 oil production had fallen back in May with Nigeria and Iraq output declining and more than offsetting gains in Saudi Arabia and the UAE. “President Joe Biden’s planned July visit to Saudi Arabia will set expectations for supply coordination later in the year,” he said.

Key takeaways from the report:

  • For 2023, EIR forecasts global oil demand growth of ~1.6 MMbbl/d Y/Y, ~0.6 MMbbl/d lower than the IEA initial forecast.
  • In May, India became the second-largest importer of crude oil from Russia. The benefit of discounted Russian oil combined with the removal of fuel tax for Indian consumers has produced a gasoline price of ~$4.73/gallon, lower than North America and supportive of steady demand.
  • Russian production rebounded 150 Mbbl/d in May from April at 9.3 MMbbl/d, reflecting success in diverting cargoes from Europe to India and China, although that challenge is set to become steeper as sanctions are implemented and insurance bans hit Russian and Russia-chartered vessels.
  • On gas, the Freeport LNG outage compounded tightness in Europe after Gazprom cut gas supply 40% to Germany via Nord Stream 1 and to Italy by 15%, making it more difficult for European countries to achieve their new 80% storage target by November.
  • Production growth from key gas plays in the Northeast such as the Marcellus and Utica is expected to be flat in 2022 and 2023 as incremental production continues to rub up against takeaway constraints.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus Intelligence Research’s expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

70% of the Interconnection Queue Will Be Scrapped. Who Will Be a Winner?

There has been an increase in demand and adoption of renewable power sources in North America. Since 2007, we have experienced a boom of solar and wind power joining the grid, generating a hefty amount of clean power.

In the next four years, ISO queues are crammed with 700 gigawatts of planned projects across seven ISO looking to come online between 2022 and 2025. However, many of these proposed projects will not be built, because the power demand has grown but not enough to need 700 gigawatts.

Developers, investors and off-takers are analyzing the current queue in detail for the probability of these plants coming online … and the ones that will fall to the side.

Enverus Interconnection Queue Report

Read the full report and learn how to analyze the queue for winners and losers.

Forward Curves, Part 3: How Do Curve Building Tools Work?

In our previous blog, Why Do Traders Need Forward Curves?, we identified some of the challenges that are faced when traders are trying to predict prices in the future.

Curve building tools, such as CurveBuilder from Enverus, can automatically calculate and generate forward curves based upon multiple numerical inputs, through a very simple user interface.

Once the user has set up the curve calculation logic, it will automatically create the forward curve on the desired basis (hourly, daily, etc.)

A monitoring view allows one to easily check if all curve calculations succeeded or if errors occurred. It has an in-built graphical tool to view your curves and export values to excel.

You can also setup quality checks on curves and see if any failed. For example, we may want to monitor percentage changes in the monthly tenors or we may want to check for gaps in the curve. From our workflow tool integrated with CurveBuilder, you can set up email notifications of the status of the curve and validations.

CurveBuilder also gives you the ability to set up how you would like your curves to be built. Most of our clients use the auto build, where curves are automatically built as soon as the daily settlement prices are published. You could also schedule your curves to run at set times in the day for business or technical reasons. You can also build curves in real time based on live data from Trayport, Refinitiv, Bloomberg, ICE and CME.

CurveBuilder also simplifies unit and currency conversion for your data. For example, NBP contract is natively in £/Therms; but if you wanted to view it in €/MWh, then it’s easy to set the currency and unit on your NBP curve to a different one from the underlying futures instrument and CurveBuilder will automatically do the conversion. CurveBuilder also allows you to define your rounding method and decimal precision for those contracts you may have that specifies the precision of the prices.

CurveBuilder comes with APIs that make it simple for you to feed them into your downstream systems like ETRM or ERP. We also have out-of-the-box adaptors to make the integration quick and seamless. You may have instances where price corrections are issued; CurveBuilder will automatically re-run your curve if the curves are set to auto build, and then feed the new curves downstream.

CurveBuilder also allows traders to upload their marks. Traders may want to upload their marks to the central repository and compare to a benchmark for example. Our Excel plug-in allows traders to consume forward curves in Excel and then upload data from Excel to the trader mark and view the uploaded data in MarketView, our front-end system for traders.

In essence we make creating, managing and maintaining curves simple so you can focus on what’s important to you — trading!

Learn more about how Enverus’ CurveBuilder can revolutionize your forward curve management today.

Enverus Earns 2022 Great Place to Work Certification™

Austin, Texas (June 21, 2022) — Enverus, the leading energy SaaS and data analytics company, is proud to announce that it has been certified™ as a Great Place to Work® for 2022-23. Headquartered in Austin, Texas, and with offices around the globe, Enverus has been certified in Canada, India, Spain, the U.K. and U.S.

This prestigious certification is based on a survey on what current employees say about their experience working at Enverus, and a culture brief highlighting the company’s culture and competitive benefits. Eighty-four percent of those surveyed said Enverus is a great place to work.

Great Place to Work® is the global authority on workplace culture, employee experience and the leadership behaviors proven to deliver market-leading revenue, employee retention and increased innovation.

“Great Place to Work Certification™ isn’t something that comes easily — it takes ongoing dedication to the employee experience,” said Sarah Lewis-Kulin, vice president of global recognition at Great Place to Work. “It’s the only official recognition determined by employees’ real-time reports of their company culture. Earning this designation means that Enverus is one of the best companies to work for in the country.”

“Retaining top talent, especially in today’s hyper competitive market and amid ‘the great resignation’ era, is a universal challenge for companies big and small,” said Jeff Hughes, CEO of Enverus. “To have 84% of our employees respond so favorably is unbelievably gratifying and speaks to the culture our team has worked so hard to create. We pride ourselves on creating an environment where the whole person can thrive, both personally and professionally. It’s a privilege to be leading these incredible, talented individuals who remain unwavering in their commitment creating the future of energy.”

According to Great Place to Work research, job seekers are 4.5 times more likely to find a great boss at a Certified great workplace. Additionally, employees at Certified workplaces are 93% more likely to look forward to coming to work, and are twice as likely to be paid fairly, earn a fair share of the company’s profits and have a fair chance at promotion.

Want to join our growing team? Explore career opportunities at Enverus today!

Great Place to Work Canada, Spain, India, United States, United Kingdom

 

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Great Place to Work Certification™
Great Place to Work® Certification™ is the most definitive “employer-of-choice” recognition that companies aspire to achieve. It is the only recognition based entirely on what employees report about their workplace experience – specifically, how consistently they experience a high-trust workplace. Great Place to Work Certification is recognized worldwide by employees and employers alike and is the global benchmark for identifying and recognizing outstanding employee experience. Every year, more than 10,000 companies across 60 countries apply to get Great Place to Work-Certified.

About Great Place to Work®
Great Place to Work® is the global authority on workplace culture. Since 1992, they have surveyed more than 100 million employees worldwide and used those deep insights to define what makes a great workplace: trust. Their employee survey platform empowers leaders with the feedback, real-time reporting and insights they need to make data-driven people decisions. Everything they do is driven by the mission to build a better world by helping every organization become a great place to work For All™.

Learn more at greatplacetowork.com and on LinkedIn, Twitter, Facebook and Instagram.

Forward Curves, Part 2: Why Do Traders Need Forward Curves?

Energy trading companies need to know the current market price for all forward deals that were made on their trading desks so that they can properly evaluate every deal and generate a profit and loss (P&L) report and evaluate their risk exposure.

This current market price comes from the forward curve, which is normally owned and generated by the risk team, controlling or other middle office departments, and not by the front office, to prevent potential P&L manipulation by the traders.

In general, the forward curve is generated from the available forward prices.

On very liquid markets, like WTI or Brent crude oil, forwards are traded constantly for many months in the future. To build a forward curve for those products, one could simply extract the currently traded forward prices from a market screen.

But it’s not always that easy. In many markets, you don’t have the luxury of publicly available real-time data for the next 12 monthly forward prices that you would need to easily create a one-year forward curve.

This is where our product CurveBuilder comes into play.

These are some examples where a forward curve generation is more complicated and where we would need the help of math and formulas to generate a forward curve.

  • Trading for a certain product might be done OTC (“over the counter”) under bilateral agreements and not via a trading platform. Price data for those markets is provided by data providers, like Platts, who call market participants to get the latest price information of those markets. That data might have gaps or does not get published regularly.

In this case, one would need to work with interpolation to fill the gaps. And on days where the data was not published, the previous forward curve could be used.

  • A company has been trading crude oil futures on a market with much lower liquidity than the two major crude oil products Brent or WTI. This could be, for example, Nigerian crude oil. Most trading activity is happening on the first two forward months, but not beyond. How would we generate a forward curve for this market?

One solution could be to use a forward curve from a similar market (e.g. Brent) and extrapolate the forwards beyond the two available front months from the Nigerian crude oil market based on the shape of the Brent forward curve.

  • A company has a gas delivery contract that is priced based on a Rhine River oil price index, which is published monthly, but there is no forward market for those prices that could be used to create a forward curve.

In this specific case, the oil gets shipped down the Rhine River from Amsterdam, one would identify a strong price correlation between Amsterdam oil prices and the monthly Rhine River price index. A forward curve could be built by applying a mathematical correlation formula onto the existing Amsterdam oil forward curve to generate the forward curve for the Rhine River price index.

In our next blog on forward curves, we will discuss how CurveBuilder can manage these challenges.

Learn more about how Enverus’ CurveBuilder can revolutionize your forward curve management today.

New Successful Collaboration Between Enverus and Lead Consult-Data

Austin, Texas and Sofia, Bulgaria (June 17, 2022) — LEAD Consult, a specialist in providing enterprise service bus solutions, business and IT consulting services to the energy and financial sectors, is proud to announce the successful cooperation with Enverus, the leading energy SaaS and data analytics company, on providing the energy companies more robust, quick and easy way to integrate Enverus products MarketView and CurveBuilder into their own systems and services.

Through its ESB – Lead Universal Loader 3, Lead Consult offers a pre-built connector to Enverus’ MarketView and CurveBuilder products that can easily be integrated with any other existing system (ETRM, ERP, Risk) or service solely through configuration, with no additional implementation effort. The stand-alone and system independent platform of Lead Consult turns the heavy implementations and integration into quick and easy no-code task.

The need for system and services integrations grows exponentially with new services and functionalities of the systems which cover more and more aspects of the business and the growing information which is processed every day. The facilitation, acceleration and maintenance of these complex and time-consuming integrations becomes a must for the energy business preventing the need of excessive manpower and keep costs low.

This approach can significantly accelerate any project implementations and results by linking Enverus’ data API with any downstream or upstream systems such as ETRM, CTRM, PFM and many more.

Wendi Orlando, VP Product Management at Enverus said “Through this unique collaboration with LEAD Consult we are able to offer our customers very quick integration of our systems and services into their existing IT Infrastructure, and be significantly more efficient than the competition.”

Dragomir Stanchev, CEO and Founder at LEAD Consult, said: “We are more than happy to work with Enverus, expanding the horizons of both companies, making it easier for existing and future Enverus customers to easily use the company’s excellent Market Data services, especially with regards to Renewables Data, without worry about the time-consuming technical details. Today the energy companies need more than ever good market data which is delivered in a quick and reliable manner and Lead Consult is the right partner to facilitate the delivery process.”

About Enverus
Enverus is the leading energy SaaS company delivering highly technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About LEAD Consult
LEAD Consult is a dynamic, customer-oriented company, specialized in providing software solutions as well as business and IT consulting services in the energy and financial sectors. Our deep industry knowledge together with excellent skills in management consulting, technology and innovation allows us to challenge the conventional thinking and deliver exceptional results that have a lasting impact on businesses and companies worldwide.