Overall Gains See NYC Hit $20; Some West Points Fall
Although cold temperatures were easing off a bit in some of the southernmost states, there was still plenty of weather-related demand elsewhere to keep prices on the rise at most points Wednesday. The Northeast, with Transco Zone 6-New York City peaking at $20, continued to lead the general price parade higher, with most non-Northeast points ranging from about a nickel to 60 cents higher.
San Juan Basin and California were the exceptions to the overall trend, recording flat to moderately lower numbers. PG&E citygates fell about a nickel despite the utility projecting that system linepack would start dipping below its minimum target levels Thursday. El Paso kept an Unauthorized Overpull Penalty notice in effect through at least Wednesday, but that failed to avert a wee bit of San Juan/SoCal border softness. Other western points tended to see some of Wednesday's smallest advances despite widespread winter storm warnings in the mountainous regions.
Reports of wellhead freezeoffs were extending into northeast British Columbia (see Transportation Notes), but the situation is starting to ease, said spokespeople for Duke Energy's Westcoast and TransCanada's NOVA pipeline systems. NOVA, which reverted to normal imbalance tolerances after acting Tuesday to discourage drafting, said linepack was at the low end of its normal range (9.2 Bcf Wednesday compared to 10.2 Bcf Monday) but improving despite Wednesday temperatures of minus 30 degrees C. in Alberta. Linepack on Westcoast was 2,559 MMcf, compared to a desired 2,900 MMcf, but rising slightly along with temperatures. The pipeline reported minus 21 degrees C. thermometer levels in Fort St. John, BC.
A Northeast trader wasn't surprised at regional prices continuing to climb, saying, "We had 3-12 inches of snow depending on where you are." Wednesday's New York City school classes were canceled on the preceding night, which the trader called "very uncommon. They knew what they were in for and they got it."
KeySpan reported setting a gas sendout record earlier this week in its New York City service area (see related story), but said conditions would be moderating towards Friday.
"As long as it can," a Gulf Coast marketer replied when asked how long the current bull market will hold up. "Seriously, I don't really know," he continued, but swing prices were running up near the end of trading Wednesday, which usually hints at higher prices on the succeeding day. He reported selling Transco Station 65 in the vicinity of $6.10 early, but said the point was fetching as much as $6.30 near deadline.
One source noted that despite Wednesday's continued gains, the Gulf Coast is nowhere close to matching recent spikes in Northeast delivered prices, "so I guess transportation is an even hotter commodity than the gas itself right now."
However, the strain of feeding the Northeast's heavy demand was creating an unusual premium on Tennessee's 500 Leg in Louisiana, a producer observed. Although the pipe's 800 Leg was about even with Henry Hub in the mid $6.00s Wednesday, the 500 Leg was nearly 30 cents higher. "It [500 Leg] usually trades about 5 cents back from the Henry Hub, but I saw it trade over the Hub due to restrictions," the producer said. "Tennessee is short from bringing so much gas to market, so they are cracking down."
Noting that Florida Gas Transmission was keeping an Overage Alert Day notice in place, a Florida utility buyer commented that the 20% tolerance for negative imbalances may seem pretty loose to shippers on other pipelines, "but the penalties are really stiff if you exceed 20%."
February numbers were softening a bit, according to a marketer, but he didn't see much downside for them because forecasts have very cold weather lasting into the first week of the month.
Utility buyers in both the Southeast and Rockies didn't plan to obtain any baseload for February, saying they had enough winter term supply lined up to handle most needs and would dip into the daily market if necessary for anything else.
A marketer reported tiny baseload Michigan citygate purchases in the high $5.80s and mid $5.90s on the MichCon and Consumers Energy systems respectively. He explained the small volumes as due to having all but two of his customers' supply already termed up through April.
"It's really busy on the floor," said a Texas analyst. "Wednesday has been the most hectic trading day so far this bidweek."