A slew of pipeline maintenance and one of several blasts of cold air expected to move through parts of the country in the weeks ahead did little to spark any interest from natural gas traders this week. Most prices outside of the West finished the April 8-12 week in the black, although gains were limited to less than a dime at most market hubs. Permian Basin locations posted far more substantial increases that pushed prices back into positive territory, and the NGI Weekly National Avg. rose 8.5 cents to $2.35.
Waha prices shot up $2.42 to 23 cents, still around $2.45 below benchmark Henry Hub but a vast improvement from the negative prices seen in recent weeks. Now that El Paso Natural Gas Pipeline concluded a significant maintenance event that was restricting flows out of the Permian, prices got some relief -- although the reprieve might be short lived.
EPNG is set to replace a section of the 1103 line downstream of the Guadalupe compressor station, work that is expected to last through Thursday (April 18). EPNG could put pressure on Permian exports if the maintenance-restricted operating capacity of 725 MMcf/d is met by future nominations, according to Genscape Inc.
The 428 MMcf/d reduction falls short of constraining the month-to-date average of 733 MMcf/d. However, the month’s maximum of 838 MMcf/d would equate to 150 MMcf/d of Permian outflow getting backed up, the firm said.
“Though EPNG has stated it does not anticipate any impacts to shippers, an uptick in flow during the next week could continue to help keep Waha prices depressed,” Genscape analyst Matthew McDowell said.
Weekly prices in the Midwest rose a couple of pennies at best, and Midcontinent gains were only slightly larger.
Appalachia prices were down on the week as the coming cold snap did little to sway traders. Not even multiple maintenance events throughout the greater Northeast could salvage prices overwhelmed by the seasonal lull in demand. Texas Eastern M-3, Delivery was down 6 cents on the week to $2.465, while Transco Zone 6 NY dropped 8 cents to $2.49.
New England price points did manage to churn out some moderate gains of close to a dime.
On the West Coast, however, it was a sea of red as mild weather and improving storage inventories have crushed demand. Northwest Sumas was down 20 cents to $2.285, and PG&E Citygate dropped 35.5 cents to $3.33.
Futures action was less exciting as the Nymex May contract settled within a penny of its previous close on three days this week. The prompt month ended the April 8-12 period down 4.8 cents at $2.66.
While weather generally makes for splashy headlines in the natural gas market, that wasn’t the case this week despite forecasts calling for a few more cold weather systems to track through the country in the coming weeks.
“The weather side of things is looking very tame, with demand forecasts over the next couple of weeks averaging not far from normal, which at this point in the year is pretty weak in terms of absolute demand, as we need to see some extremes to really move the needle much as far as getting weather to have an impact on the natural gas landscape,” Bespoke Weather Services chief meteorologist Brian Lovern said.
At this point, barring an abrupt flip to strong cold very soon, attention will be turning toward looking for the first notable heat event to get a measure of how burns will behave with some meaningful cooling degree days, but the firm does not see such an event on the horizon at this time.
While production levels are still well off their highs from a couple of weekends ago, and liquefied natural gas (LNG) exports have started to ramp back up following maintenance, current burns are very loose thanks to a huge drop in nuclear outages the last couple of days, according to Bespoke. This makes it “very difficult to get any rally going.”
The market tried firming up early Friday given the LNG news and some strong cash prints early on, “but cash weakened throughout the session, and the weak burns were too much to overcome,” Lovern said.
The firm does expect that some tightening will show up sooner rather than later, given the lower prices and higher LNG exports, “although as loose as the data is right now, that’s not saying a lot.”
Balances are currently weak enough so that Bespoke cannot rule out a dip down to the $2.60-2.62 range, but it said that prices under $2.65 would prove to be difficult to sustain given that tightening should be more notable at such lower prices. Still, it would “need to see balances improve a good deal before putting together a rally that can take us toward the $2.75 level.”
Led by steep declines in the West, spot gas prices slid into the weekend despite an expected cold snap that was set to linger through early next week. Part of the massive storm that affected the country’s midsection earlier this week was forecast to progress eastward across the region, according to AccuWeather.
The storm slated to close out the weekend in the Northeast was expected to bring severe thunderstorms and tornadoes to the South. In the Northeast, however, the forecaster was expecting the storm to mostly produce drenching rain.
“Monday is likely to be rainy and mild across much of the region. A few heavier thunderstorms may join in over the central Appalachians and mid-Atlantic coast. However, in part of eastern New England, an easterly wind may hang on and create raw conditions along the coast,” AccuWeather senior meteorologist Alex Sosnowski said.
It was possible that enough rain would fall on part of northern New England, where there was still a substantial amount of snow on the ground that could cause urban and small-stream flooding through early Tuesday. Dry weather was forecast to return to the mid-Atlantic and southern New England on Tuesday, AccuWeather said.
Meanwhile, after a prolonged soggy, chilly winter, the West is enjoying a return to the mild conditions for which the region is known. The lack of demand sent prices in California tumbling as much as $1 lower at Southern Border/PG&E, where prices averaged $1.09. Malin dropped 14 cents to $2.24.
Over in the Rockies, Transwestern San Juan plunged 54 cents to $1.30, although most other pricing hubs slipped 20 cents or less.
The regional weakness comes as Rockies Express Pipeline (REX) is scheduled to begin planned pipeline work Tuesday that could limit up to 1.59 Bcf/d of total gas in northern Colorado consisting mostly of eastbound flows, but also a small amount of deliveries and receipts on gas days Tuesday through Thursday. The work is expected to limit flows through Segment 200 to zero, as well as shut in a short list of various delivery and receipt points in Segment 160.
Flows through Segment 200 have averaged 0.95 Bcf/d and maxed at 1.42 Bcf/d during the past 30 days, according to Genscape Inc. The affected delivery points averaged 23 MMcf/d and maxed at 141 MMcf/d, and the affected receipt points averaged 10 MMcf/d and maxed at 141 MMcf/d in the past 30 days.
“Therefore, we expect to see on average a total impact of 0.98 Bcf/d but up to a maximum of 1.59 Bcf/d,” the firm said.
Light demand in the West likely served to further weaken already weak prices in the Permian Basin, as regional locations posted declines of as much as 18.5 cents at El Paso Permian, which averaged just 35.5 cents.
A slew of pipeline maintenance events had little effect on spot gas prices. Prices across Appalachia slid about 5 cents on average even though Texas Eastern Transmission (Tetco) is scheduled to begin additional maintenance on Monday that could bring volatility to the M2 and M3 zones.
Tetco plans to conduct an outage at its Waynesburg, PA, compressor station that is scheduled to last until April 29. In its latest maintenance calendar, the pipeline indicated that depending on nominations, restrictions to interruptible and secondary services may be required, and that receipts on the Waynesburg interconnect with Columbia Gas Transmission (TCO) and the Crayne interconnect with Equitrans Pipeline could experience higher-than-normal pressures. However, TCO also included this event on their maintenance calendar, and according to its operators, the pipeline will not be able to take any receipts at the interconnect.
“Tetco has received a consistent 189 MMcf/d from TCO at Waynesburg month-to-date, and it has delivered an average of 64 MMcf/d to Equitrans at Crayne over the same time period, both of which could be shut in for the duration of the event if TCO’s worst-case scenario interpretation is correct,” Genscape analyst Josh Garcia said.
However, Tetco has 78 MMcf/d of firm capacity at Waynesburg, meaning 111 MMcf/d of receipts are at risk, assuming all firm capacity is utilized and only nonfirm nominations are affected. Tetco also has 98 MMcf/d of firm capacity at Crayne, which is more than any single day’s nominations at that meter month-to-date, according to Genscape.
“Additionally, the only impact might truly be higher pressures. Tetco has a variety of additional interconnects for reroutes with both TCO and Equitrans, so this event should not impact the system as a whole,” Garcia said.
Farther downstream in the Northeast, Tennessee Gas Pipeline (TGP) from Monday (April 15) through April 23 is scheduled to perform maintenance at Compressor Station 245 in Herkimer County, NY. Operational capacity at the station would be reduced to 777 MMcf/d for the duration of the event.
Flows through the station toward New England had averaged 799 MMcf/d over the 14 days leading up to Friday, reaching highs of 965 MMcf/d within that period, according to Genscape. Flows will be reduced by 188 MMcf/d compared to the 14-day max.
“Northeast temperatures are warming but remain in heating degree day territory, with forecasts constantly being revised,” Genscape analyst Dominic Eggerman said.
Additionally, TGP plans to perform pigging runs close to the MLV 843 throughput meter further upstream in northern Louisiana. Operational capacity would be reduced to 422 MMcf/d from April 15-24, which would limit about 260 MMcf/d based on 14-day max nomination. “TGP has a variety of reroute options at this part of the system,” Eggerman said.