Natural Gas Prices may get a boost

[dan_s]

Heavy fall nuclear maintenance season to boost natural gas power demand. Year-to-date, nuclear generation has proven to be much more of a headwind for natural gas prices and power demand, particularly during 2Q15 when nuclear generation rose to 10-year highs. That said, based on planned outage schedules we have compiled, it appears stronger-than-normal nuclear output during the spring has left generators in significant need of maintenance and refueling this fall. We count 30 reactors planning to be offline an average of 34 days between mid-Sept and late Dec, pushing average nuclear output to 84.8 GW, 3.1 GW lower than 2014 comparisons. Assuming gas plants replace those offline nuclear volumes, this would translate to 0.54 Bcf/d more gas power demand YoY. As gas power demand needs are estimated at 27.6 Bcf/d or 3.5 Bcf/d higher YoY during 2H15 to curb storage, higher nuke-related gas power demand reduces the reliance on coal-to-gas switching, limiting the downside for gas prices.