Triple-digit price increases dominated the cash market Monday as Hurricane Katrina caused the shut-in of 8.3 Bcf/d, or more than four-fifths of Gulf of Mexico (GOM) natural gas production. Questar was the only pipe that failed to break the $9 level, and $10-plus averages were rampant throughout eastern markets.

As it had on Friday, Florida Gas Transmission Zone 3 topped all points with a $14-17 range, averaging above $16. FGT Zones 1 and 2 also recorded lofty quotes of $12.25 or greater. The pipeline had a 10% tolerance for negative imbalances in an Overage Alert Day notice (see Transportation Notes) and was highly vulnerable to production shut-ins in its Zone 3 segment.

Transco Zone 6-New York City’s spike of more than $3 led gains by several Northeast citygates that exceeded $2. Overall large increases roamed far afield from the stricken Gulf Coast region; even many western points were up more than a dollar.

Meanwhile, the expiring September futures contract shot past $12 overnight, but slipped during the session Monday to go off the board at $10.847, up $1.055 from Friday’s close.

In a highly unusual note, no Henry Hub cash quotes were recorded for Monday due to a force majeure outage declared by operator Sabine Pipe Line. Sabine noted that it had begun accepting intraday nominations for all receipt and delivery points that afternoon after canceling the force majeure, but the Hub had been shut down while cash trading went on in the morning. Following a preliminary assessment in the wake of the hurricane, Sabine said Henry Hub, which is largely underground not far from the coast, “avoided significant damage. As individual flows are reinstated, Sabine will return to full service, ending the force majeure condition previously noticed.”

Traders will be assessing Tuesday the one-day outage of Henry Hub and its market impact.

As of near noon Monday the Minerals Management Service had reports of a total of 8.3 Bcf/d in Katrina-related shut-ins (see related story).

Because it was impossible to tell Monday how long the new shortfalls in offshore supplies might last, and due to the near-certainty that storage gas is being withdrawn to make up for the plunge in new production, the government is expected to report a very small storage injection — or conceivably a net withdrawal — for the week ending Sept. 2. That would tend to keep the market bullish independent of weather influences.

But on the other side of the supply/demand coin, Katrina can be expected to result in significant load reductions by causing power outages and lowering temperatures as it proceeds on a generally northeastward tracking through the central and eastern U.S. Nearly a million customers had lost electricity in Louisiana, Mississippi and Alabama Monday morning.

The general weather outllook is little changed from late last week: very hot weather persists in the desert Southwest, but a combination of cool fronts and Hurricane Katrina’s rain will be keeping conditions moderate for late summer in most of the rest of the U.S.

The West is getting a little help in the power generation picture with the Palo Verde 2 nuclear unit having returned to nearly 100% operation Monday, although Palo Verde 1 was still a little under 20% in its ramp-up effort. However, El Paso said its linepack was running low again and could result in a Strained Operating Condition unless the situation eases.

A marketer said he concentrated on New England deliveries and saw citygates mostly in the $12-13 range Monday. Weather demand is still a little on the weak side in the Northeast, which he said makes Tuesday’s cash market a tough call on price direction, even following the Nymex spike Monday. He didn’t have anyone reporting the inability to provide gas Tuesday due to hurricane shut-ins.

Bidweek numbers “went through the roof early” with Transco Zone 6-NYC basis skyrocketing plus $3.30-3.40, the marketer went on, but the last NYC bid he saw had eased off to plus $3.10 basis. September fixed prices in general were running about $11.20-60 for the Northeast Monday, he said, so the NYC market was a bit of an aberration on citygate basis.

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