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Opal Partial Restart Brings 395 MMcf/d of Capacity Back Online

Williams has brought into service two of five cryogenic processing trains at the Opal, WY, facility that have a combined processing capacity of 395 MMcf/d. Opal had been processing up to 1.1 Bcf/d and supplying up to 1 Bcf/d to interstate pipelines before a fire last week shuttered the facility.

The explosion and subsequent fire on April 23 damaged the biggest processing train TXP-3, able to handle up to 390 MMcf/d (see Daily GPI, April 25; April 24). Williams Partners LP restarted Trains No. 1 (245 MMcf/d) and 2 (150 MMcf/d).

Still offline are Trains 4 and 5, each able to handle up to 350 MMcf/d; No. 4 had been offline at the time of the incident. Those trains are to remain offline "to take the necessary steps to bring additional portions of the plant into service in a safe, systemic and timely manner," said Williams.

"An initial visual assessment of damage indicates that the impact was largely limited to a small area of the TXP-3 plant. Information from the company's visual inspection of the damage area indicates that there was a release of natural gas that was subsequently ignited. The company, in coordination with regulatory agencies, is focusing the investigation on the cause of the release and source of ignition."

There were no reported injuries or damage to property outside the facility. Williams has insurance for property damage and business interruption that is expected to mitigate the financial effects.

Williams expects a $10 million impact from Opal due to property damage, with excess damage covered by insurance, CFO Don Chappel said Thursday.

"We expect the business interruption loss to be very modest, particularly given that we already have two of the plants back up in operation, and we're hopeful that we can bring the other two undamaged plants into operation in the not-too-distant future..."

CEO Alan Armstrong said Williams was "working hard to get trains 4 and 5 back on, but we're going to make sure that we do it safe first, and that's what we're focused on right now."

While the facility has been offline, the lost output has been rerouted to allow gas pipeline flows into California and the Southwest (Arizona, Nevada, and New Mexico) from the Permian Basin in West Texas and New Mexico, and rerouted production from the Rockies.

"This has limited natural gas price increases in the region that could result from temporary supply shortages," the Energy Information Administration (EIA) said Thursday. The Opal plant had been sending about half of its gas to the Kern River system and close to 40% to the Ruby Pipeline. Kern River delivers gas from the Rockies to Bakersfield, CA, while Ruby transports Rockies gas to Malin, OR.

"However, these pipelines can also receive gas at the Opal Hub from a number of other production areas in New Mexico, Utah and Colorado," EIA noted. "The day of the explosion, flows to the West from Kern River dropped 0.16 Bcf/d (7%), and flows from Ruby dropped 0.08 Bcf/d (8%). Flows on both lines rebounded within the next three days, as producers rerouted natural gas through other processing plants. In particular, flows on Enterprise Products Partners' Pioneer plant have averaged between 0.45 and 0.50 Bcf/d since the Williams explosion, more than double the previous 30-day average."

Genscape Inc. had told NGI's Shale Daily that most of the Opal gas had been rerouted to Pioneer.

"Flows from Texas also increased following the processing plant explosion," according to EIA. "Flows to the Southwest on the El Paso Natural Gas (EPNG) pipeline system, which carries gas west from the Permian Basin in West Texas, increased by 0.17 Bcf/d (10%) on April 23, and by another 0.46 Bcf/d (25%) over the following two days.

"Mild temperatures in Texas likely freed supplies to flow west on EPNG to consumers in Nevada and Southern California. Flow of Canadian gas from the Pacific Northwest to Malin, OR, on the Gas Transmission Northwest (GTN) pipeline system was relatively constant, as was Rockies gas moving to the Pacific Northwest (Washington, Oregon and Idaho) on Williams' Northwest Pipeline."

The natural gas spot price increased at the Opal hub following the incident in response to the tighter supply/demand balance for Rockies gas flowing west, but "the availability of Permian production on EPNG relieved some of the upward pressure on spot prices at Opal and other Rockies trading points, which remained below the national benchmark spot price at the Henry Hub in Erath, LA," said the federal agency.

"For the past month, the Opal spot price and most Rockies prices have generally traded at a discount to the national benchmark spot price at Henry Hub. While prices increased somewhat in the days following the explosion, most prices in the Rockies remained several cents per MMBtu below Henry Hub."

The Opal explosion, which occurred at the same time as processing plant maintenance problems in the Northeast, "led to declines in total U.S. dry production last week," EIA noted. "Between April 22 and April 24, daily dry production ranged between 66.4 Bcf/d and 66.8 Bcf/d, which represents a decline of between 1% and 1.5% from the previous 30-day average."

However, "the effect of the processing plant explosion on total production has been much less than cold weather-related disruptions to Rockies production that occurred this winter."

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