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Rockies Prices Plummet on WIC Rupture; Midcontinent Points Spike

A rupture on El Paso Corp.'s Wyoming Interstate Co. (WIC) pipeline system about 10 miles south-southwest of Cheyenne, WY, on Saturday cut about 770 MMcf/d of gas production flowing to the Cheyenne Hub, backing up gas in the region and disrupting a large number of western and Midcontinent market locations.

With supply backing up on Colorado Interstate Gas (CIG), prices collapsed to a daily low of $0.90/MMBtu and averaged only $1.31, down more than $3.60 from levels on Friday. Other Rockies points also went into tailspins. Kern River receipts, Northwest Pipeline in Wyoming, and Opal prices all plummeted $3 or more.

Meanwhile, some Midcontinent locations jumped nearly $1 and most other western markets gained from 30 to nearly 85 cents.

The pipeline rupture occurred Saturday at about 9:30 a.m. when the driver of a bulldozer working on the Rockies Express pipeline struck the 36-inch diameter WIC pipeline causing an explosion (see related story). The driver, who was identified as Bobby Ray Owens Jr., 52, of Louisiana, an Associated Pipe Line Contractors employee, was killed. The rupture, which was in a remote area of ranch land, led to a massive fire that was extinguished Saturday afternoon.

El Paso spokesman Richard Wheatley said despite the loss of 770 MMcf/d of gas that was flowing through the ruptured line the company still expects to be able to continue serving markets, including customers in the Denver area and cities in the Midcontinent region. He said El Paso was rerouting some of the production using CIG's system and potentially other systems. However, he also said that significant gas production that was tied into WIC would have to be shut in or rerouted by shippers until pipeline repairs can be made.

WIC stretches 600 miles from southwestern Wyoming to eastern Wyoming and northern Colorado. Its terminus is at the Cheyenne Hub where it connects to Trailblazer, Kinder Morgan Interstate, CIG, Public Service Co. of Colorado and Cheyenne Plains. The entire WIC system has a design capacity of about 1.9 Bcf/d.

Bentek said the rupture would lead to "significant regional flow dislocations and basis disarray."

One producer told NGI that all of his company's production on WIC was being shut in. "We have firm on that pipe and over the weekend they just cut everything to zero," he said. "They originally told us it might be back up [Sunday] but then they pushed that back. Right now they are saying maybe by cycle four on Tuesday, which is about 3 p.m. MST.

"But if they are projecting it out that far there are a lot of things that can go wrong," he noted. "We don't have too much confidence in it happening that soon. This was a pretty major incident. Just to reduce the pressure in the pipe, shut things down, investigate what happened and then replace the pipe and test it seems like it would take several days, if not longer."

However, he noted that temperatures in the region are near normal, demand is limited and storage is full. The situation with storage actually has ended up being a significant problem because several other pipes are flowing at or near capacity and producers behind the WIC system have few places to park their gas.

Wheatley said the company was optimistic that repairs could be completed in "several days."

"WIC delivers the largest volume of gas into the Cheyenne Hub where gas flows east on Trailblazer, Cheyenne Plains and CIG into the Midcontinent markets. Based on Sunday evening cycle nominations, WIC deliveries were down by 215,715 MMBtu into Cheyenne Plains and [down] by 263,001 MMBtu into Trailblazer," Bentek reported. "Most of the balance came out of CIG.

"On the supply side, pipelines curtailing deliveries into WIC include [Rockies Express], down 118,787 MMBtu, TransColorado down 80,242 MMBtu [and] Questar down 57,585 MMBtu," Bentek said. "WIC delivered an additional 25,451 MMBtu into Overthrust. On TransColorado, the gas backed up all the way to Williams' Raccoon Hollow gathering/production area. Williams possibly can reroute some of the gas to Kinder Morgan's Rocky Mountain Natural Gas Pipeline serving the western slope of Colorado."

Bentek also said that although WIC throughput normally flows east, some of the gas may now head west. However, flow patterns will be disrupted because Northwest Pipeline already was flowing at 100% of capacity to the Pacific Northwest. "There is some capacity available on Kern, which can be expected to absorb at least 200,000 MMBtu/d of the problem," Bentek said. "Questar pipeline is also able to absorb some of the Western Slope supply. Additional supply can probably be absorbed by Northwest pipeline, which can take gas south to interconnects in the San Juan basin with El Paso and Transwestern pipelines."

Bentek said that WIC's Medicine Bow lateral which carries Powder River Basin production to the Cheyenne Hub was unaffected by the rupture. "Had that lateral been affected it would have knocked out another 950,000 MMBtu/d."

A Rockies marketer noted that much lower Trailblazer deliveries into NGPL led to a spike on the NGPL Amarillo Leg. Prices there rose nearly $1 to about $6.90. Other Midcontinent points also jumped. Demarc rose more than 55 cents to the low $6.80s. ANR southwest was up more than 50 cents. Oneok was up by a similar amount.

The Cheyenne Hub climbed more than 80 cents to the $6.50s, while points on the southwestern end of Kern River added about 50 cents from Friday's levels to the low $6.20s.

Colder weather, stormy conditions and continued generation demand in the Pacific Northwest sent Sumas to $7.10. Malin jumped over $7.00, and PG&E Citygate rose nearly 70 cents to about $7.30. Meanwhile, despite mild weather and continued weak demand in Southern California, the rising tide across the West pushed border prices up nearly 50 cents to the low $6.20s.

Cooler weather and rising futures prices also prompted 5- to 25-cent increases in the Northeast cash market Monday, 10- to 50-cent increases in the Gulf Coast region and 15- to 20-cent increases in parts of the Midwest.

It was rainy and mild in the Northeast with temperatures in the 50s and 60s for most of the region. The Southeast was expected to warm up into the 70s, and the southern Plains states were seeing highs in the 50s Monday. The northern Plains and Upper Midwest were in the 40s and 30s.

The latest six- to 10-day forecast from the National Weather Service calls for a large area of above normal temperatures across the entire country west of the Mississippi River, below normal temperatures east of the Mississippi and a thin corridor of normal temperatures in between. In the eight- to 14-day forecast, the area of above normal temperatures spreads much farther east and below normal temperatures are confined mainly to the East Coast.

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