Major Pipelines Moving WCSB Crude Oil

 

Enbridge Mainline and Other Enbridge Systems

CER Map

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Kinder Morgan Natural Gas Pipeline NGPL

 

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The PJM Reliability Resource Initiative (RRI)

The PJM RRI was a one-time, expedited process launched by PJM to address near-term concerns about resource adequacy due to factors like significant load growth (e.g., from data centers), accelerated generator retirements, and the time it takes for new resources to complete the standard interconnection process.

Here are the key points about the PJM RRI:

• Purpose: To quickly bring "shovel-ready" generation resources online that can most effectively contribute to grid reliability in the PJM region.
• Mechanism: It allowed a limited number of new or upgraded generation projects (up to 51 were ultimately selected) to bypass the standard queue and join Transition Cycle #2 (TC2) of PJM's reformed interconnection process. This accelerated the study and approval timeline.
• Project Selection: Projects were selected based on a weighted scoring formula that primarily considered:
• Market Impact Criteria (e.g., Unforced Capacity (UCAP) and Effective Load-Carrying Capability (ELCC), which measure reliability contribution).
• Commercial Operation Date Viability Criteria (e.g., the planned in-service date and the project's readiness, such as permitting, equipment, and financing).

Result: The initiative successfully selected a mix of projects, including uprates to existing natural gas and nuclear facilities, as well as new battery storage and gas construction, with the goal of adding significant reliable capacity to the grid.

In short, the PJM RRI was a temporary, emergency measure to boost the grid's resource capacity and maintain reliability in the face of rapidly changing electricity supply and demand dynamics.

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"The extent to which projected AI-driven electricity demand materializes in the future will have consequences for those investors who back today's construction of data centers and related power plants"

"This year, we are going to put $300 billion into building data centers in this country. Is all of that needed?" said Himanshu Saxena, chairman and chief executive at private-equity firm Lotus Infrastructure Partners, which invests in power plants. "I have no way of telling."

To protect against risks, Lotus seeks to sign long-term contracts with large users of data centers that have solid balance sheets, so-called hyperscalers such as Google, Amazon and Microsoft, instead of the operators of the facilities serving them or other intermediaries, Saxena said.

"If I'm selling power to somebody, I want it to be a Google on the other side. I do not want it to be a middleman or a [data center operator], because I can't see what they would be doing in 15 years," he said. "If you are doing a deal with a heavily levered data center company and 10 years from now they go under, our contract is worthless."

The sheer volume of capital required to build generating plants and data centers with tens of thousands of power-hungry digital processors makes speculation more difficult than in previous infrastructure booms, said Todd Bright, co-head of private infrastructure for the Americas at Partners Group. He is also a partner at the Swiss private-equity firm.

"[There were] very low barriers to entry compared with building data centers," Bright said of past infrastructure booms turned into busts. As an example, he cited the "build it, they will come mentality" that predominated in the rollout of fiber-optic systems for broadband services during the late 1990s, which hurt telecommunications companies when the dot-com bubble burst.

Source: WSJ

https://www.wsj.com/articles/power-sector-investors-hedge-bets-on-ai-boom-607c1de2

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Waldorf Production loses court case for restructuring

 

Waldorf Production UK Plc, Re - Find Case Law - The National Archives

The judgment in Re Waldorf Production UK Plc [2025] EWHC 2181 (Ch) concerns the proposed restructuring plan of Waldorf Production UK Plc (“WPUK”), an oil and gas company operating on the UK Continental Shelf. The plan aimed to enable WPUK to continue trading while pursuing a solvent sale, involving a cross-class cram down of dissenting unsecured creditors—Capricorn Energy and HMRC—who opposed the plan. The restructuring was supported by a steering committee of bondholders holding 84.8% of the bonds. The court examined the statutory preconditions under the Companies Act 2006, including whether dissenting creditors would be worse off under the plan than in the relevant alternative (likely administration or liquidation), and whether the plan was fair.

Justice Hildyard concluded that although the statutory conditions for sanctioning the plan were met, the plan was ultimately unfair. He found that WPUK and its bondholders failed to engage meaningfully with the dissenting creditors during the formulation of the plan, offering only a 5% recovery without negotiation or justification. The court emphasized that the benefits of the restructuring—particularly the potential for a solvent sale—depended on the compromise of the unsecured creditors’ claims. Drawing on recent Court of Appeal decisions, including Re Petrofac, the judge stressed that fairness requires a genuine attempt to negotiate a reasonable compromise with all stakeholders, especially when the restructuring benefits are derived from their concessions.

The judgment also highlighted troubling conduct by WPUK’s former management, including the payment of a US$76 million dividend based on flawed accounts and the failure to engage with HMRC regarding significant tax liabilities. These actions contributed to WPUK’s financial distress and undermined the credibility of the restructuring plan. Ultimately, the court refused to sanction the plan, inviting the parties to pursue further negotiations and potentially return with a revised proposal that fairly allocates the benefits of the restructuring among all creditor classes.

See also: https://oginsights.blogspot.com/2025/07/waldorf-production-north-sea-operator.html

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Permian Part II

The Permian continues to deliver record gas volumes. At the same time, gas demand at the US Gulf Coast continues to grow as more LNG facilities come online.

Yet gas pricing at the Permian remains in negative territory with a $5-7/mcf discount to pricing at Gulf Coast hubs. Egress remains constrained but should ease with pipeline expansions and Matterhorn coming online.

 

Looking forward and further downstream, record LNG exports could see a softer LNG flush market – expect merchant revenues (i.e. excess volumes above contracted SPAs) at Gulf Coast LNG facilities to decline in the coming years.

 

In contrast, pipeline revenues will see growth with pipelines being booked to capacity. Further optionality for pipelines in the case of lower LNG excess volumes trading by supplying existing and new gas power plants in the Gulf Coast region – Texas will be an attractive region for power intensive datacenter development.

 

More generally, the US should see c.2.5% load growth per year over the next 10 years – with 60% driven by datacenters, 40% from reshoring/reindustrialisation and  electrification (20% each). This will need to be met by building new gas generation, renewables (onshore solar), and grid stabilisation with BESS. Coal retirement delays (which kicked off during the Biden administration) will also be needed in a truly “all of the above” solution.

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German onshore FiP award prices decline again

Feed-in Premium (FIP) Mechanism

In Germany, most new large-scale renewable energy installations, including onshore wind, receive support through a sliding Feed-in Premium (FIP), known as the Market Premium (Marktprämienmodell).

The FIP is the difference between the "Reference Value" (the price awarded in the auction) and the "Market Value" (the average market price achieved by the power, adjusted for the specific technology and time of generation).

FIP Payment = Reference Value - Market Value

The producer sells the electricity directly on the market and receives the FIP as a top-up payment.

The "Ceiling" Price

The "ceiling" or maximum price is set by the Bundesnetzagentur (Federal Network Agency) for the auctions.

This is the highest price (in cents per kilowatt-hour, or ct/kWh) that bidders are allowed to submit in the tender.

Ceiling Price (Maximum Bid): For example, the ceiling for onshore wind auctions in 2024 and 2025 was set at 7.35 ct/kWh.

The "Actual" Price (Reference Value):

The "actual" price is the Reference Value/Award Price that a successful project secures in the auction. This is the price that is used to calculate the FIP.

Actual Price (Reference Value): This is the winning bid price, which is generally below the ceiling price.

The Bundesnetzagentur has kept the ceiling stable because the "upward trend in bid volumes has not yet led to a significant decrease in the award prices" (meaning the actual winning bids are still relatively high).

In summary

Ceiling Price: The maximum allowed bid in the onshore wind auctions (e.g., 7.35 ct/kWh for 2024/2025). This price is a cap on the Reference Value.

Actual vs. Ceiling: The actual awarded price (Reference Value) in the auction is typically lower than the ceiling price. The FIP payment is then calculated based on this Actual Award Price minus the actual market revenue.

Results Show Increasing Competition and Decreasing FiP 

Tender Date (Closing)	Maximum Bid Price (Ceiling) (ct/kWh)	Average Volume-Weighted Award Price (Actual) (ct/kWh)	Difference (Actual−Ceiling) (ct/kWh)
Dec 2020	∼6.20 (est.)	5.91	(0.29)
May 2021	6.2	5.91	(0.29)
Sep 2021	6.2	5.79	(0.41)
Feb 2022	6.2	6	(0.20)
May 2022	6.2	6.3	0.10
Sep 2022	6.4	6.34	(0.06)
Feb 2023	7.35	7.3	(0.05)
May 2023	7.35	7.31	(0.04)
Aug 2023	7.35	7.32	(0.03)
Nov 2023	7.35	7.33	(0.02)
Feb 2024	7.35	7.33	(0.02)
May 2024	7.35	7.33	(0.02)
Aug 2024	7.35	7.33	(0.02)
Nov 2024	7.35	7.15	(0.20)
Feb 2025	7.35	7	(0.35)
May 2025	7.35	6.83	(0.52)
Sep 2025	7.35	6.57	(0.78)

Key Trends

• Maximum Bid Price (Ceiling): The ceiling was adjusted upward significantly in 2023 (from $\sim 6.2$ ct/kWh to 7.35 ct/kWh) due to rising costs for construction, financing, and operation. This higher ceiling has been maintained through 2025.

• Near-Ceiling Bids (2023-2024): After the ceiling was raised, the Average Award Price (Actual) came very close to the Maximum Bid Price (Ceiling) for all of 2023 and most of 2024. This indicates that developers needed the full support price to cover their increased costs, leaving very little competitive margin.

• Falling Prices (2025): Starting in late 2024 and continuing into 2025, the Average Award Price began to show a noticeable decline, moving further below the ceiling. This suggests that competitive pressure has increased, likely due to a better project pipeline (more permits) and potentially stabilized or reduced costs, leading to lower subsidy requirements. The auction in September 2025, for example, saw the average bid fall to 6.57 ct/kWh, a significant drop.

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