Cash prices came roaring back in the Rockies on Tuesday for Wednesday's gas day as high winds, snow and colder temperatures swept through the region and Wyoming Interstate Co. projected that it would be able to restore normal pipeline operations following Saturday's pipeline rupture and explosion 10 miles south-southwest of Cheyenne, WY. Cash prices in the region jumped more than $4/MMBtu in some cases to the $5.40s.
El Paso Corp.'s Wyoming Interstate Co. (WIC) said it plans to resume normal transportation operations Wednesday only four days after a massive explosion tore apart its 36-inch diameter mainline near Cheyenne, killing a bulldozer operator who was working on the Rockies Express pipeline project (see Daily GPI, Nov. 14).
Based on nominations for gas flows Tuesday, about 745 MMcf/d of gas that would normally flow on WIC to the Cheyenne Hub in northern Colorado was not being delivered, according to data provided by Denver-based consulting firm Bentek Energy. The outage sent prices to lows not seen in years on Monday, including a 90-cent low on Colorado Interstate Gas and an average of $1.31. Questar's average Monday was $1.37 and Opal was at $1.90.
Bentek, which collects gas flow data from pipelines nationwide, said only about 114 MMcf/d of that lost supply showed up on other pipelines in the region on Tuesday. The company estimates that 401 MMcf/d of production might have been curtailed. "What's still getting through to Cheyenne Hub is mostly gas from Medicine Bow," the pipeline lateral that collects production from the Powder River Basin, said Bentek's Rusty Braziel. About 959 MMcf/d of gas was flowing to the Cheyenne Hub on the Medicine Bow lateral on Tuesday, up about 11 MMcf/d from what flowing on average Nov. 1-10.
Based on nominations on pipeline systems downstream of the Cheyenne Hub, the following supply disruptions were seen Tuesday: Trailblazer lost about 232 MMcf/d, which was down 33% from flows Nov. 1-10; Cheyenne Plains nominations were down 54%, or about 203 MMcf/d, from flows earlier in the month; Kinder Morgan Interstate noms were down 35% or 15 MMcf/d; CIG Dover deliveries were down 66%, or 222 MMcf/d; and Xcel/Public Service Co. of Colorado nominations at Cheyenne were down 21%, or about 54 MMcf/d.
Looking at Midcontinent deliveries Tuesday, NGPL's Amarillo Leg, which saw a $1 price increase on Monday, was receiving about 23% less supply (95 MMcf/d) from Trailblazer than it had received earlier in the month. Deliveries to Northern Natural from Trailblazer were down 25% or 109 MMcf/d. NGPL and Northern also were receiving less gas from Cheyenne Plains, about 78% less (88 MMcf/d) and 36% (43 MMcf/d) less, respectively. Delivery reductions at Panhandle Eastern's interconnect with Cheyenne Plains totaled about 55% (56 MMcf/d) compared to what had been flowing prior to the rupture. Reductions also were seen on ANR (56 MMcf/d), Kansas Gas Service (25 MMcf/d, down 65%), and Southern Star (27 MMcf/d, down 85%).
On Tuesday El Paso spokesman Richard Wheatley said, "They are shooting for late today or early tomorrow" to restore WIC. "Of course there's a time lag after you get a pipe repaired because you have to test the line and make it safe. We've been working pretty hard at it since Saturday... We started moving pipe to the scene Saturday night. We were fortunate. We sourced some available pipe that was in a storage yard at Wamsutter, WY. We benefited also from the cooperation of Kinder Morgan. That was some of their pipe that was in storage."
EnCana, which has significant production in the region, said the impact on its operations was "pretty minimal." EnCana spokesman Alan Boras said about 65 MMcf/d of its production was directly impacted by the rupture but was rerouted or put into storage. Boras also said that EnCana was able to provide El Paso with some pipeline that it had warehoused, which helped speed up the restoration process.
With the expected resumption of normal transportation operations, prices at CIG soared more than $4 to average in the low $5.40s, Opal was up about $3.55 to average $5.45, Kern River receipts jumped more than $3.50 to the mid $5.40s and Northwest climbed about $3.70 to near $5.50. On the delivery end, Cheyenne Hub prices slipped about 20 cents to the low $6.30s, and downstream of Trailblazer and Cheyenne Plains, NGPL's Amarillo Leg dropped more than 35 cents to the low $6.50s.
A cold front was expected to bring snow, high winds and freezing temperatures throughout the region Tuesday night. Temperatures in Denver were expected to hit a low of 18 degrees with significant snowfall and 60 mph wind gusts. However, the high Wednesday was expected to climb up to 47 degrees and by Thursday, temperatures were expected to be back up in the 60s.
Elsewhere, cash prices rose anywhere from a few cents to 40 cents on Tuesday with most daily price changes around 5-15 cents in the Northeast, 5-40 cents in the Gulf Coast region of Texas and Louisiana, 8-30 cents in the Midcontinent and Midwest, and 10-20 cents in the West.
Some Texas points posted strong gains with Carthage up about 40 cents to slightly more than $7.10 and Houston Ship Channel rising more than 30 cents to nearly $6.80. A marketer said despite mild weather in the region, she has seen pretty steady power generation loads. She also said a number of producers and end-users have started calling to line up December business, which is well ahead of the normal schedule.
In the Northeast, prices are fast approaching the $8 mark. Algonquin and Transco Zone 6 New York touched $8 on Tuesday and averaged in the low $7.90s. Meanwhile, Henry Hub cash gained about 16 cents averaging $7.42, which was about 50 cents behind near-month futures at the time. December futures still was having trouble with the $8 threshold on Tuesday (see related story). Although it reached a high of $8.22, it had fallen back to the $7.90s by mid afternoon.
Meanwhile, the markets may have to swallow several weeks of small storage injections or very weak withdrawals because of lower than normal heating degree days across the country. Consultant Stephen Smith said he's expecting a 2 Bcf injection in this week's report for the week ended Nov. 10. Consultant Ron Denhardt of Strategic Energy and Economic Research predicts an 8 Bcf injection. Heating degree days last week were about 15% below normal and are expected to be 12% below normal this week and 14% below normal next week.
"The next two weeks are also expected to see significantly lower than normal HDDs and as a result we expect two more large weekly increases in the storage surplus," Smith said in a note to clients. He's projecting a 1 Bcf withdrawal in next week's gas storage report and a 4 Bcf injection the following week, ending Nov. 24. The six- to 10-day temperature forecast is decidedly bearish, showing above normal temperatures across the western two-thirds of the nation and below normal temperatures confined to the East Coast.
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