Physical natural gas prices for Tuesday delivery were all over the map Monday. Areas impacted by Tropical Storm Harvey moved a few pennies, but points in the Northeast and California showed stout weather-driven gains. The NGI National Spot gas average rose 13 cents to $2.69.
Initial assessments show far less damage to natural gas production infrastructure than to Gulf Coast refining capacity, and for the moment the market impact is seen to lean slightly to reduced demand over lessened production capacity. West Coast prices soared as a heat wave gripped Southern California. Futures continued in their narrow range. At the close the soon-to-expire September contract rose 3.3 cents to $2.925 and October gained 3.7 cents to $2.961.
October crude oil slumped $1.30 to $46.57/bbl, but September RBOB gasoline jumped 6 cents to $1.7270.
In its 4 p.m. CDT report the National Hurricane Center said that Harvey was about 45 miles east of Port O’Connor, TX and 145 miles southwest of Port Arthur, TX with maximum sustained winds of 45 mph. Harvey was moving east-southeast at 3 mph. A tropical storm warning had been extended to east of Cameron, LA, to Intracoastal City, LA. A storm surge was issued from Port Bolivar, TX, to Morgan City, LA.
“On the forecast track, the center of Harvey is expected to be just offshore of the middle and upper coasts of Texas through Tuesday night, then move inland over the northwestern Gulf Coast on Wednesday,” NHC said.
AccuWeather.com meteorologists have Harvey's downpours continuing over Texas and Louisiana and slowly drifting northward through the end of August, exacerbating the unprecedented flooding disaster that continues to unfold.
"This is a devastating flooding event, the likes of which we have not seen in at least the last 12 years, since the Hurricane Katrina disaster," AccuWeather.com Meteorologist Brett Rossio said.
Communities will be underwater for weeks and perhaps a month or more. Power will remain out for several weeks until it is safe for crews to repair the lines. Fifteen to 30 inches of rain fell across a large portion of southeastern Texas as Harvey stalled following landfall. As of early Monday afternoon, top rainfall from Harvey was near 36 inches, AccuWeather.com said.
Additional rainfall amounts of a foot or more this week will push levees and drainage systems past their limits. Water may need to be released from Barker and Addicks reservoirs to release the strain, further inundating some communities. "There will be locations receiving at least 40 inches of rainfall when all is said and done," Rossio said.
The storm has impacted both supply and demand. Industry consultant Genscape Inc. said its Spring Rock production team was estimating Texas production for Monday at just under 15.83 Bcf/d, about 0.98 Bcf/d below pre-storm levels. South Texas was off about 0.7 Bcf/d.
“As of Evening Cycle for gas day Monday (Aug. 28), pipeline scheduled nominations showed that onshore production (defined by processing plant and gathering system interconnects) in East Texas was down roughly 510 MMcf/d since Thursday (Aug. 24),” Genscape said. “During the two weeks leading up to Harvey's initial impacts, pipe nominations showed onshore production in East Texas averaged 1,911 MMcf/d.
“Demand is down roughly 0.7 Bcf/d. Scheduled nominations show that demand (at citygates, end-users and power plants) in East Texas was down 474 MMcf/d since pre-Harvey levels of 1,188 MMcf/d (calculated as the 14-day span prior to Aug. 24).
“Using average daily gas demand from Monday through Wednesday (Aug. 28-30) as a baseline for the South Central region leading into Hurricane Harvey, Monday's gas demand impact estimate, based largely upon early cycle gas nominations, is 4.9 Bcfd,” Genscape said. “That is a net impact adjusted for 0.7 Bcf/d typical decrease in South Central demand on Saturdays and Sundays. The cumulative impact using this approach is 14.4 Bcf/d.”
In physical market trading a heat wave in southern California along with near-record power loads sent next-day prices soaring. CAISO forecast that Monday's already stout peak power load of 47,772 MW would reach 48,662 MW Tuesday, not too far from the record 50,270 MW reached during a 2006 heat storm. The high in Los Angeles Tuesday was forecast at 100 degrees, adjusted for the heat index it came in at 107. Even typically mild San Diego was forecast to see a high of 89 Tuesday, 12 degrees above normal.
Gas on Kern Delivery vaulted 70 cents to $3.64 and gas at the SoCal Citygate surged 61 cents to $3.88. Kern River came in 13 cents higher at $2.80 and gas priced at the PG&E Citygate gained 4 cents to $3.37.
Next-day power prices gained. Intercontinental Exchange reported on-peak power Tuesday at NP-15 jumped $30.77 to $132.97 and Tuesday peak power at SP-15 rose $21.70 to $139.88
New England points jumped as traders had to deal with pipeline constraints. Algonquin Gas Transmission (AGT) has restricted 100% interruptible and approximately 98% secondary out of path nominations that exceed entitlements sourced from points west of its Oxford Compressor Station (Oxford) for delivery east of Oxford. No increases in nominations sourced west of Oxford for delivery east of Oxford, except for Primary Firm No-Notice nominations, will be accepted, Algonquin said.
In addition AGT said it has restricted 100% interruptible and approximately 94% out of path nominations exceeding receipt entitlements sourced at the Tennessee Gas Pipeline interconnect at the Mendon Meter station. No increases in receipts to Mendon were being accepted.
Gas at the Algonquin Citygate rose 43 cents to $2.11 and gas bound for New York City on Transco Zone 6 soared 49 cents to $1.88. Gas on Tetco M-3 Delivery added 32 cents to $1.70, and packages on Dominion South gained 27 cents to $1.68.
Midwest points couldn't match the West Coast or New England gains. Gas at the Chicago Citygate was quoted 3 cents higher at $2.85, but packages at the Henry Hub changed hands a penny lower at $2.92. Gas priced at Transco Zone 4 rose 3 cents to $2.90 and deliveries to Panhandle Eastern added 4 cents to $2.60.
All the active weather swirling around the Gulf Coast and West Coast failed to rumble through the futures market, and traders didn't see much in the day's 3-cent gain. "I think it's been pretty steady," a New York floor trader told NGI. “Overall it's been a regular day, maybe a little quieter.”