There were some exceptions of flat to slightly higher prices Thursday, but a large majority of the cash market was moving lower. Virtually all points are expected to fall Friday under the weight of a hefty storage injection, a major screen plunge Thursday prompted by the storage report, generally moderate weather, and the usual weekend drop in industrial load.

Thursday’s losses ranged from as little as 2-3 cents to nearly C70 cents in the intra-Alberta market. Most were in double digits. The few gains were scattered and generally limited to a little more than a nickel.

The Energy Information Administration trumped just about all prior expectations with its estimate of a 75 Bcf storage build for the week ending Oct. 14. The obvious bearishness of the report, suggesting that storage levels will be comfortable entering the heating season despite the massive loss of production caused by Hurricanes Katrina and Rita, was heeded by Nymex traders. They sent the November natural gas futures contract to a 57.2-cent loss on the day amid price carnage throughout the rest of Nymex’s energy complex.

Hurricane Wilma had weakened a bit to Category Four status with maximum sustained winds of ONLY 150 mph, the National Hurricane Center (NHC) said, but could strengthen back to a Category Five storm as it approached the Yucatan Peninsula Thursday. At 4 p.m. CDT Wilma’s center was about 135 miles southeast of Cozumel, Mexico, and moving toward the northwest at nearly 6 mph. While such a course was expected to continue over the next 24 hours and seemingly would have the storm pointed directly toward the Gulf of Mexico (GOM) production area, NHC’s “five-day cone” of the projected path continued to have Wilma making a sharp eastward turn after grazing the peninsula’s tip and heading toward southern Florida.

Assuming no drastic change from such a path, Wilma’s major impact on the gas market is likely to be significant demand reduction early next week as the hurricane passes over the Sunshine State and is expected to continue along the East Coast, bringing a lot of cooling rain to the Southeast, one of the few regions still experiencing air conditioning load.

Although some operators are evacuating nonessential workers from the eastern reaches of the GOM production area, no new shut-ins caused by Hurricane Wilma have been reported (see related story). BP, Anadarko and drilling firm Transocean were mentioned in news reports as already evacuating or planning to do so. A spokeswoman said Shell Exploration and Production did not expect to evacuate anyone or shut in any production.

The pace of eliminating hurricane-related shut-ins has slowed greatly again after a significant speedup a couple of weeks ago. Minerals Management Service said 68 companies reported 5,195.57 MMcf/d remaining offline in the Gulf Thursday, down a mere 46.55 MMcf/d from the day before.

Texas Eastern was among pipes indicating weekend price softness with cautionary notes to shippers about expectations of possible excess receipts and inadequate takes. “Due to the typical storage inventory levels at this time of year, along with mild temperatures across the TE system forecasted for this weekend, TE has limited ability to absorb makeup imbalance gas into the system,” the pipeline said Thursday. Besides asking customers to keep their supplies in balance, Texas Eastern said it will force balance pools if necessary.

There could be a couple of pockets of price firmness Friday. A mass of cold air will move south from Canada into the Midwest this weekend, according to The Weather Channel (TWC), which could take temperatures to five to 15 degrees below average “across both the Plains and Midwest by Sunday with highs in the 40s and 50s regionwide.” Sleet or snow may even occur in the Mississippi Valley, TWC said.

And Northwest-South of Green River, which plunged more than a dollar Wednesday and was barely higher Thursday due to a total outage of the pipeline between the Rangely and Cisco stations, is likely to be playing catch-up in prices with the outage scheduled to end Saturday. However, the rest of the Rockies market is likely to be weak; Kern River said linepack was high Thursday in all but its farthest downstream segment.

Another indicator of falling prices Friday was that late cash quotes Thursday “were falling right along with the Nymex,” according to a Texas marketer. And Texas intrastate demand, which has remained fairly hefty due to warm weather, will be greatly reduced, she said, adding that North Texas highs are due to dip into the 60s towards the end of the weekend.

Despite the persistence of high prices and extensive shut-ins going into the winter heating season, Jim Osten of Global Insight sees reason for optimism. Most hurricane-related repairs in the Gulf Coast will be completed by year-end, he said in a weekly analysis Wednesday, and Gulf of Mexico shut-ins have dropped from more than 8 Bcf/d immediately after Hurricane Rita to less than 5.3 Bcf/d in less than three weeks.

Osten ticked off several other areas of improving conditions: Tennessee, which experienced as much as 2 Bcf/d of shut-ins, will be back to 85% of normal flows sometime in December; Southern Natural’s Toca (LA) processing station, with 1.1 Bcf/d of capacity, should be partially repaired in two weeks and fully operational again in six weeks; some pipelines such as Florida Gas Transmission, Trunkline and Gulfstream are already back to normal; Texas production is near normal; and Discovery is holding an open season for 300 MMcf/d of capacity to an alternative delivery point to bypass the still-offline Venice (LA) processing point, with an in-service date due in November (see Daily GPI, Oct. 13).

The Venice, Toca and Yscloskey processing plants (damaged by Katrina) and the Grand Chenier facility (damaged by Rita) remain major obstacles to resumption of full production, Osten conceded. However, he expects that by year-end most of the plant repairs will have been made “or alternative arrangements made.”

©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.