winter weather forecast webinar · tropical pacific • attention is now turning to the upcoming...

Winter Weather Forecast Webinar

September 20, 2017

Today’s Webinar Agenda

• Key Supply and Demand Drivers This Fall

• Summer Recap

• Water Temperatures and Atmospheric Patterns that Could Influence the

Forecast

- Water Temperatures in Pacific and Atlantic, Ice Coverage to Atmospheric Blocking

• A Look at the NOAA Winter Forecast

• Analog Years to Consider

• Q&A

© 2017 Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy-Gas Division, LLC or Constellation NewEnergy, Inc., affiliates of each other and ultimate

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Key Supply and Demand Drivers

Key Supply and Demand Drivers Ahead of Winter



• As of September 8th, storage stood at 3,311 Bcf, or -179 Bcf (-5.1%) below year-ago levels, and 1.3% above 5-year

average.

– In its October Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) lowered its estimate for end

of October storage from 3.9 Tcf to 3.79 Tcf.

• Hurricane Harvey caused a drop in production down to 71.7 Bcf/day (August 30th), but it quickly rebounded to 73.9 Bcf

week ending 9/13. Over Labor Day, the Rover pipeline began phase 1A, boosting Ohio/Pennsylvania production by +0.4

Bcf/day.

• Effects of Harvey shut in shipping traffic at Sabine Pass for 2 weeks forcing the liquefied natural gas (LNG) facility to

reduce pipeline flows to the plant from ~2.0 Bcf/day to ~0.2 Bcf/day for first week of September.

Data source: EIA, Constellation

Customer Takeaway: Storage will start winter at its lowest level since 2014 as warm temperatures for the balance of September could

limit injections via higher gas burns, which have been below 30 Bcf/day the past few weeks. Forecasts for Northeast production growth will

continue to keep an eye on progress of the Rover Pipeline Phase 1B and Phase II this year.

Storage Production

Summer Review

• The Summer of 2017 came in warmer than the 30-year normal, but cooler than the 10-year

normal.

• Most of the consistent strong heat was over the West. California Independent System Operator

(CAISO) had their hottest summer on record and the Bonneville Power Administration (OR) had

their second hottest summer on record.

• National PWCDD came in around 924, which is about 3% cooler than the 10-year normal.



Data source: EarthSat

POPULATION-WEIGHTED COOLING DEGREE DAYS (PWCDD)

RANKS: THE 15TH HOTTEST SINCE 1950 JUNE - AUGUST 2017 REALIZED TEMPERATURE DEPARTURES

Winter Weather Outlook

Winter Influences

• Tropical Pacific

– ENSO (El Nino, neutral, or La Nina?)

• Pacific Decadal Oscillation (PDO)

• Atlantic Multidecadal Oscillation (AMO)

• Atmospheric Blocking

• Arctic Ice Coverage

• Analog Years



Tropical Pacific

• Attention is now turning to the upcoming winter and the early signals that may effect temperatures across North America.

• The current long term models are showing a weak tropical Pacific signal, with neutral to slightly weak La Nina conditions. This

tends to correlate to below-normal temperatures across the northern tier and parts of the East (top right).

• Some models are showing weak to slightly weak El Nino conditions, which may correlate to slightly colder conditions for the

East (bottom right).

• There is still a lot of warmer than normal water across most of the Pacific and Atlantic, which tends to have a warming effect

across North America.



Data source: NOAA and CWG

MODEL FORECASTS SHOW NEUTRAL CONDITIONS THIS

WINTER

NEUTRAL/WEAK LA NINA WINTERS

NEUTRAL/WEAK EL NINO WINTERS

Pacific Decadal Oscillation (PDO)

• The PDO is a measure of north Pacific water

temperatures, which can have a slight effect

on winter temperatures.

• Warm waters across the Gulf of Alaska tend

to correlate to colder winters across the U.S.

Cold waters tend to correlate to warmer

winters across the U.S.

• Right now this signal is pretty mixed (bottom

image).



Data source: NOAA and CWG

COLD WINTERS WARM WINTERS

CURRENT WATER TEMPERATURES

Atlantic Multidecadal Oscillation (AMO)

• The AMO is a measure of water temperatures across the Atlantic. This index has been in a mostly positive

phase since 1996. AMO phases tend to last about 25 to 30 years.

• The current positive phase of the AMO tends to have warmer winter temperature correlations across most of

the nation.

• Bottom line: The AMO is a warm signal for this upcoming winter.



Data source: NOAA

CURRENT WATER TEMPERATURES POSITIVE AMO WINTER

TEMPERATURE CORRELATION

Atmospheric Blocking Effects on Winter Temperatures

• Blocking is a mechanism to allow Arctic air to plunge into the U.S. In order to develop blocking, anomalous

areas of high pressure need to develop across the north Atlantic and northeast Pacific (top image).

• The Quasi-Biennial Oscillation (QBO) can give us clues to how much blocking may occur this winter. A positive

phase tends to limit blocking. Last winter the QBO came in at record positive levels.

• Lately, the QBO has been rapidly declining, which may open the door for more blocking this winter (negative

temperature correlation seen on the bottom left). Overall, blocking is very difficult to predict beyond 10 days

out, thus confidence with this parameter is quite low at this time.



Data source: Dacula Weather and NOAA

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Oct-

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Jan

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Jun

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Ap

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Jul-1

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Oct-

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QBO

QBO

NEGATIVE QBO WINTER TEMPERATURE

CORRELATION

Arctic Ice Coverage

• Arctic sea is below normal, however the current ice level is higher than this time last year.

• More ice coverage has been seen in the Arctic just off northern Canada.

• Overall, below-normal Arctic sea ice tends to correlate to warmer-than-normal winter

temperatures across the U.S.

2017

2016



Data source: NOAA

Summary of Influencers



Index Expected Values Correlation

ENSO Neutral Cold

PDO Neutral Neutral

AMO Positive Warm

QBO Negative Cold

Arctic Ice Low Warm

Recent Pattern Warm Warm

Sunspots Low Cold

Analog Years

• Looking back at years with similar patterns yielded two close matches (the winters of 2008-09

and 2014-15).

• The average of these winters yield cold risks for the northern tier, with warm risks for the

southern tier.

• The years are quite mixed across the Mid-Atlantic and Southeast.

• Overall, the favored years suggest a warm first half of winter and a cold second half of winter.




AVERAGE OF ANALOG YEARS (2008 and 2014)

2008

2014

Alternative Scenarios

• Our research also yielded past winters that were not close matches to the current pattern, but

showed some similarities.

• These secondary analog years (2005-06 and 2012-13) came in much warmer across most of

the nation.

• The secondary years also showed a warm start and a cold finish to winter, however the

transition to cold was delayed with these particular winters.




WINTERS OF 2005-06 and 2012-13

2005

2012

NOAA and Model Forecasts



Data source: NOAA and IRI

OFFICIAL NOAA FORECAST MODEL FORECASTS

Conclusions

• There are a lot of mixed signals for this upcoming winter, however there are some notable

differences versus last winter:

– QBO is much more negative than last year, which could keep cold shots around a bit

longer.

– Arctic sea ice is below normal, however ice coverage is higher than this time last year.

– Global water temperatures are still way above normal, but off the highs seen last year.

• Research indicates a higher chance for cold (relative to normal) across the Upper Midwest and

Northeast.

• Warmer risks are seen across Texas and the South.

• Most of the West may have warmer risks, however confidence is quite low for western Canada

(Alberta).

• Volatility could be extreme this winter.

• Research suggests a chance for a warm first half and a cold second half.



Register for Our Next Webinar

Winter Fundamentals Update Webinar

Wednesday, October 18th at 2 pm EST

30-minute format with our Commodities Management Group members who will

present a Market Fundamentals Update.

Topics will include:

•Weather Summary: Key recaps and updates from Constellation’s meteorologist,

Andrew Durante, on winter outlook.

•Fundamentals Overview: Where is supply and demand heading into winter and

what current end of October storage levels mean for current and 12-month gas and

power pricing.

•Pipeline Infrastructure Update: Status of Rover pipeline and what other projects

will follow in 2018.

•Demand Drivers: How are key drivers of demand progressing for 2018 and beyond,

power generation, liquefied natural gas (LNG) and exports to Mexico evolving?

REGISTER EARLY



http://energy.constellation.com/october_2017_webinar_registration



Disclaimer

The information contained herein has been obtained from sources which Constellation NewEnergy, Inc. and/or Constellation NewEnergy-Gas

Division, LLC, (collectively, “Constellation”) believes to be reliable. Constellation does not represent or warrant as to its accuracy or completeness. All

representations and estimates included herein constitute Constellation’s judgment as of the date of the presentation and may be subject to change

without notice. This material has been prepared solely for informational purposes relating to our business as a physical energy provider. We are not

providing advice regarding the value or advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25,

et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would cause us or any of our affiliates to be

considered a commodity trading advisor under the CEA. Constellation does not make and expressly disclaims, any express or implied guaranty,

representation or warranty regarding any opinions or statements set forth herein. Constellation shall not be responsible for any reliance upon any

information, opinions, or statements contained herein or for any omission or error of fact. All prices referenced herein are indicative and

informational and do not connote the prices at which Constellation may be willing to transact, and the possible performance results of any product

discussed herein are not necessarily indicative of future results. This material shall not be reproduced (in whole or in part) to any other person

without the prior written approval of Constellation.



winter weather forecast webinar · tropical pacific • attention is now turning to the upcoming...

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