Infinity Insights - Volume 14, Issue 13
MONTHLY UPDATE - MARCH 2025 EDITION
NATURAL GAS
NYMEX Natural Gas is trading around the $4.10 mark. Spot natural gas has been on a steady incline since August 2024.
The most recent EIA Natural Gas Inventory Report for week ending 2/21 showed a net withdraw of 261 Bcf, the second biggest draw observed this season. Current inventory sits at 2,078 Bcf. Inventories are 23% below the year ago mark and 11% below the 5-year average.
Inventories have tightened with two major Arctic blasts January and February, record LNG feedgas, and growing demand for natural gas power generation. Injection season begins in April. There is speculation we may enter injection season with the lowest inventory levels in recent years. It appears natural gas prices are high enough to incentivize producers to increase production. The latest figures show production volumes moving towards record highs, exceeding 104 Bcf/day.
EIA’s Short-Term Energy Outlook forecasts US Henry Hub will average $4.00 and $4.20/MMBtu in 2025 and 2026, respectively. The forecasted prices have increased significantly since EIA’s prior Short-Term Energy Outlook published in January.
Spot month natural gas has support at $3.25 with resistance at $4.50, notably greater volatility than referenced in our last publication.
Calendar year 2025 finds support at $3.92 with resistance at $4.98. Calendar year 2026 has support at $3.71 with resistance at $5.20. Calendar year 2027 has support at $3.31 with resistance at $4.79, another increase across the board versus prior month, especially for CY ’25 and ‘26.
Global natural gas prices ($/MMBtu):
Henry Hub (USA): $4.10↑
NBP (UK): $13.20↓
TTF (Dutch) $14.14↓
JKM (Japan/Korea) $13.99↓
Geothermal
In our September 2024 Infinity Insights we discussed geothermal becoming a more viable energy source and energy storage solution. We focused on two companies, Sage Geosystems and Fervo Energy.
February 26, 2025 the Railroad Commission of Texas released a statement that the first permitted geothermal well has been issued for Sage Geosystems. The well is located south of San Antonio in the Anaconcho Formation in Christine, Texas, and will provide 3MW of storage capacity to the San Miguel Electric Cooperative. According to Sage Geosystems, depending on duration and demand, the storage system can operate at between $.02 and $.04 per kWh. San Miguel Electric Cooperative provides power to nine member cooperatives across 47 counties in South Texas, servicing over 200,000 homes. The cooperative has big renewable ambitions. Along with the Anaconcho Formation geothermal well, known as EarthStore, Miguel Electric Cooperative is planning a 400MW solar farm along with 200MW battery storage by 2027.
In a December 2024 press release Fervo Energy announced it had secured $255 million in new funding for geothermal projects nation-wide. Fervo’s first geothermal project, Cape Station in Beaver County, Utah received Department of the Interior approval to deploy up to 2GW of power generation. Fervo expects Cape Station facility to start producing electricity in 2026.
Our take: considering the massive steps forward with advanced drilling and fracking, geothermal power generation and storage presents great opportunities. Not only is geothermal considered a renewable, clean energy, but it is a consistent generator, not intermittent like wind and solar. This characteristic makes geothermal power generation a great option for base load generation. We are pleased to see alternative generation sources enter the market as demand skyrockets.
CenterPoint Energy Moving Mobile Generators to San Antonio
CenterPoint Energy’s 15 mobile diesel generators that came under scrutiny in the wake of Hurricane Beryl for not being used are finally being utilized. In March 2024 CPS Energy, the city owned utility that services the San Antonio area announced plans to shut down 2 of its 3 natural gas-powered generators at the Braunig Power Station by March 31, 2025. The Braunig Power Station gas-powered generators are around 60 years old, well beyond their serviceable life. The three units produce about 859 MW of power but have become uneconomic to continue service, needing millions in repair and maintenance.
Tuesday, February 25th ERCOT approved a $54 million plan to move CenterPoint Energy’s diesel generators to San Antonio this summer. The 15 generators will be in place for two years, producing about 30 MW of generation per generator.
San Antonio and CPS Energy are in a unique geographical location in that a tremendous amount of transmission is needed to service their load. The region is heavily transmission dependent because a large amount of their power comes from South Texas solar and wind generation. Transmission infrastructure would take years to buildout. According to Bill Flores, chair of the ERCOT Board of Directors “this is a solution to bridge that gap, to lower that chance of load shed.”
The plan to move the generators to CPS Energy relieves CenterPoint Energy customers of costs associated with leasing the generators. The average CenterPoint residential customer will have a bill reduction of about $2 per month by 2027.
The plan does not go without scrutiny. Doug Lewin, an energy expert wrote in his Texas Energy and Power newsletter “we’re talking about way more than $100 million in ratepayer money – all to maintain an inadequate status quo for two years, ultimately with nothing to show for it. Arbitrarily building a portfolio of zombie power plants – at huge expense to ratepayers – when better alternatives are clearly and obviously available, is, to put it mildly, not something ERCOT should be doing”. Lewin argues that large battery installations could fill the gap for the retired generation, providing more reliable service and long lasting assets for the grid.
Our take: Mostly positive to see the leased equipment actually being used and removed from CenterPoint Energy’s expenses. Diesel power generation produces about 25-30% more CO2 than single cycle natural gas plants. A more permanent and less polluting solution would be preferred.
Weather
NOAA’s forecasts are showing near to above normal temperatures for both short and long-term forecasts for the more heavily populated east coast and cooler temperatures for the west coast. Current drought monitor shows the Southwest in experiencing drought conditions. Spring rains are expected to help alleviate the current drought in the Southwest. Spring officially begins 3/20/2025.
Market News
The US economy is showing signs of slowing down. Q4 2024 real GDP grew at an annual rate of 2.3% vs. Q3 2024 which grew at an annual rate of 3.1%. Equity markets have retreated over the last 2 weeks, down 7 of the last 9 trading days.
Personal consumption expenditures or PCE price index ticked lower in January, up .3% for a 2.5% increase over the last 12 months. December’s reading came in at an annual rate of 2.6%, pointing to a likely decrease in inflation. The Atlanta Federal Reserve’s GDPNow Model is forecasting a 1.5% annual contraction in the US GPD, this would be the first GDP contraction since 2022. Worth noting, the GDPNow model is highly driven by a growing trade deficit as imports outpace exports. Growing imports can be attributed to uncertainty of future tariffs under the new administration.
Client Spotlight: Abbey Residential
Abbey Residential: Building Communities and Giving Back
Since 1984, Abbey Residential has provided exceptional apartment living across Texas, Alabama, Florida, and Georgia, with most communities in the Greater Houston and San Antonio regions. As a leading residential management firm, we are committed to creating premier housing experiences and positively impacting the communities we serve by supporting vital causes and investing in our residents and employees.
Supporting the Houston Food Bank
This year, our Houston communities participated in the Houston Apartment Association Annual Food Drive, collecting food and donations for the Houston Food Bank. We are committed to combating food insecurity and helping families in need.
Supporting Veterans Through Grateful Americans Charity
Abbey Residential collaborates with Grateful Americans Charity, an organization working to end Veteran homelessness and suicide while addressing issues like PTSD. Our Southwest Vice President serves on its Board of Directors. This partnership provides resources to help Veterans rebuild their lives.
Investing in Employee Growth and Education
We invest in our employees through programs covering 100% of fees for industry-related courses and tuition reimbursement for college and trade schools. This commitment fosters growth, excellence, and outstanding service across our team.
Advocating for Our Furry Friends
As annual sponsors of Houston’s Barktoberfest benefiting Houston Pets Alive, we help animals find loving homes. This event unites pet lovers to raise funds and awareness, with many deserving cats and dogs finding forever families.
Engaging with Local Businesses and Communities
We actively engage with local chambers of commerce and initiatives supporting small businesses. By building relationships and networks of support, we strive to uplift the communities we serve.
Life...The Way It Was Meant to Be
With core values of Integrity, Honesty, Excellence, Respect, Loyalty, and Fun, Abbey Residential creates comfortable living environments for a range of budgets while enriching the lives of residents, employees, and communities.
As we grow, we remain focused on building vibrant communities and uplifting those we serve. At Abbey Residential, we’re not just supporting residents—we’re building a brighter future for all.