Triple-digit plunges in the Northeast and at some locations in the Midcontinent and West led a price downturn across the board Friday. Moderating temperatures in the short-term forecast for several areas, along with some easing of supply shortfalls in the Southwest and the usual weekend decline of industrial load, contributed to arresting the market's general blizzard-based strength of the preceding four days.
Losses ranged from a little less than a dime to about $2.45. Waha saw the biggest drop as intrastate Texas conditions that had caused controlled rolling blackouts earlier in the week were in partial retreat and drastic supply shortfalls in the Southwest production basins were being resolved to some extent. Permian, San Juan, Katy, Houston Ship Channel and the Southern California border were other locations recording dollar-plus declines.
Citing a combination of factors, "including an improvement in natural gas supplies and pipeline deliveries, slightly warmer local temperatures and anticipated lower natural gas demand over the upcoming weekend," SoCalGas and San Diego Gas and Electric (SDG&E) ended Friday the transmission curtailments they had imposed Thursday afternoon on interruptible and some firm noncore customers in three southeastern California counties (see related story).
Those affected by these curtailments were large natural gas consumers, such as power plants and commercial and industrial facilities, who pay a lower rate due to signed agreements that require that they cut their natural gas use should supplies run low, SDG&E said, adding that no residential customers were affected.
Although Southwest temperatures would be easing to some degree over the weekend, El Paso was asking for deliveries of extra gas into its system as it declared a force majeure and continued an emergency Critical Operating Condition (see related story). Transwestern remained under a low-linepack Alert Day, and Southwest Gas was keeping a related OFO in effect until further notice.
Pipelines, LDCs and producers should enjoy their weekend respites while they can because severe cold will be returning with a vengeance to some regions at the start of this week, particularly in the Midwest. Although Northern Natural Gas projected average temperatures in its service area of 24 Friday and 29 Saturday, both well above its normal system-weighted temperature of 18 at this time of year, it expects them to retreat to 18 Sunday before plunging to minus 2 Monday.
Spectra Energy's Moss Bluff and Egan storage facilities in East Texas and South Louisiana were experiencing much greater-than-normal pulls due to the weather. Usually their withdrawals can be 300-500 MMcf/d on peak days, said Spectra spokeswoman Wendy Olson. However, the two facilities were taking gas out at the rate of about 1.7 Bcf/d early Friday, or a little more than three times higher than usual, she said. Nominations have been sealed at both Egan and Moss Bluff, "meaning we were limiting additional withdrawals until additional capacity became available, which can occur over the course of a day," she added.
Several energy firms were among schools and other facilities in Houston that were closed Friday because of icy roads.
A Midwest utility buyer said he was "swamped here" with buying extra gas. Although local conditions would be a bit milder for the weekend, there would be a "big change to cold again on Monday" that would last through at least Tuesday, he said.
"Since Sunday, storage withdrawals in our sample (not the U.S. total) have quadrupled, and our estimate for next week's [Energy Information Administration] storage number increased substantially every day," Bentek Energy analyst Rocco Canonica told NGI. "We are still formulating the number, and it will be fairly big, but nothing compared to historical peak withdrawals for a week.
"It's been very cold and cold weather impacts on supply have been significant, but it appears that the longer-term market impacts will not be that significant. Supply will return to normal over the next week maybe two and production will resume a growth track. Suppliers have benefitted from a cold winter last winter, a hot summer last summer and another cold winter this winter. Given the production growth we have seen over the last year, what do you think is going to happen to U.S. gas prices if the summer turns cooler than normal and the winters turn warmer than normal? Who knows, maybe the string of weather favorable to gas suppliers and higher gas prices will continue."
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