Despite more than 1 Bcf/d of natural gas production curtailments in the Gulf of Mexico because of Tropical Storm Claudette, gas cash prices were flat to down 5 to 10 cents on average at most locations on Monday except in the West, where points rose 5 to 10 cents due to the heat and an increase in demand from agriculture. August futures slipped 5.2 cents to close at $5.102 with a low of $5.02 and a high of $5.125. September settled 5.2 cents lower at $5.141.

Monday afternoon, the Minerals Management Service reported a total of 227 platforms and rigs evacuated and 1,012 MMcf/d of gas and 210,000 bbl/d of oil was shut in due to the storm. The shut in gas production is equivalent to about 7.2% of total Gulf of Mexico gas production. Most of it is expected to be returned quickly after the storm moves onshore, which is expected Tuesday afternoon, according to the National Hurricane Center (NHC).

While the storm was expected to reach hurricane status before moving ashore, it was seen having little lasting impact on supply. “We expect production back by Wednesday at the latest,” said Chris Stockton of Transcontinental Gas Pipeline, which reported a total of 400 MMcf/d of lost supply, all of which is being replaced with Transco’s storage gas.

Sea Robin reported about 200 MMcf/d of lost supply, but pipes serving the Central Gulf reported only minor supply losses. Columbia Gulf said shut ins behind its system were minimal.

However, the High Island Offshore System (HIOS) called a force majeure on its 1.8 Bcf/d offshore pipeline system. “Wind and sea conditions resulting from Tropical Storm Claudette have caused many of the operators of platforms connected to the HIOS system to cease production operations and evacuate all personnel,” HIOS said in a bulletin board notice. “The resulting reduction in system supply available to the HIOS system is severely limiting HIOS ability to meet the nominated deliveries to the downstream pipelines. As a result of this force majeure event, HIOS will not be able to meet its obligations to redeliver equivalent volumes for Shippers accounts at WC 167 until the storm subsides sufficiently to allow safe access to producing platforms and other affected HIOS facilities.” HIOS requested that all impacted shippers reduce receipt nominations to the greater of actual flow or a volume of 1 Dth/d and make corresponding reductions to their nominations to the downstream pipelines.

Among the producers affected by the storm, ChevronTexaco reported 350 MMcf/d of shut in gas production, 105,000 bbl/d of oil shut in and 1,400 workers evacuated. ChevronTexaco said Monday that it was already starting to return some personnel to platforms in the Eastern Gulf.

Unocal Corp. said 25 of its rigs and platforms in the Gulf have been evacuated including about 377 people. A total of 5,500 boe/d of production has be curtailed including 27 MMcf/d of gas production and 950 bbl/d of crude oil production.

Marathon said it shut in about 75 MMcf/d of gas production and 550 bbl/d of oil production. Anadarko said about 15 properties have been evacuated in the Western Gulf, affecting about 10% of Anadarko’s total 53,000 boe/d of gas and oil production in the Gulf of Mexico. The bulk of Anadarko’s production is in the Central Gulf.

El Paso reported that two of its 14 platforms in the Poseidon System have been shut in and two other platforms have been evacuated leading to “minimal production shut-ins.”

Shell said it evacuated 300 people and more evacuations were expected from the Western Gulf before Tuesday. About 150 MMcf/d of Shell’s gas production and 50,000 bbl/d of its oil had to be shut in. And Kerr McGee said it had evacuated the entire western Gulf, but couldn’t provide any production statistics.

Marketers, meanwhile, were trying to avoid taking any unneeded risks from scheduling supply that might be cut. Trading was relatively light Monday.

“We tried to hold back a little from trading today because we were a little skeptical about the storms,” said a Houston-based producer. “We didn’t want to get a call from somebody this afternoon saying ‘oh sorry, but you’re out of the picture.’

“We have minimal cuts here and there, obviously more on the western side of the Gulf, but they are starting to filter over more toward the Central Gulf offshore Louisiana,” he said about mid-day on Monday. “I don’t know how big the storm surge will be, but it looks pretty big. There’s a waterspout off the coast of Galveston right now. In Houston, we’re north of the storm, but it is drifting toward us.”

Gulf prices were down from weekend levels. Nymex was off and cash was trying to follow it down. “There’s also not a significant amount of weather related-cooling demand in the South or the Northeast or Midwest right now,” the producer noted. “It is kind of surprising that people are writing off the effects of the storm. I don’t know that I would yet. I think if it goes a little farther east it’s going to start impacting production pretty significantly.”

In the Northeast, the market was flat to up or down a few pennies. “Cash got paid up a little bit early. It was up 7-8 cents and was trading a little bit over the screen, but it fell back and is trading parallel with the screen right now,” said a Northeast marketer. “Oil came off a little bit too, which indicates that they are discounting the storm. It made another relatively quiet day in the Northeast market.”

He said that Dracut, MA, was trading 25-30 cents over the Henry Hub early in the morning but then moved in to about 15 cents over the hub. “Everything else was pretty close to where it was all of last week. Tennessee Zone 6 was trading about 13-15 cents over Dracut, which is where it normally trades. It was a very benign day.

“The heat, which was supposed to come in and bring temperatures up to the low 90s maybe mid 90s with the humidity, failed to materialize. Power prices are off. Last week, this week’s power prices at Nepool was trading high $60s to $70, but now it’s trading mid $50s. That’s quite a significant change. And now on top of that, the six- to 10-day forecast is now showing below normal to seasonal. We are going to continue to have some big storage injections and without any major hurricanes coming, I think we are on the cusp of seeing the high $4s, $4.90s or $4.85 on the screen and I think cash will follow.”

The National Weather Service’s six to 10-day forecast calls below normal temperatures in the Northeast, Mid-Atlantic and parts of the Southeast. In the West, the story is entirely different. The six- to 10-day shows above normal temperatures across nearly the entire western United States, except for Central and South Texas where normal readings are expected.

Temperatures are blistering hot in the Southwest currently, “Can’t talk. I’ve got to go and schedule cycle four nominations. It’s very hot out here,” was the response from one Southwest utility buyer. San Juan prices shot up about a dime and prices at most other western points were up slightly less than that, except the PG&E Citygate, Malin and Stanfield, all of which were down slightly.

“PG&E Citygate came down a little with the Nymex. But we have a little load here with the hot weather in California and the Southwest,” said western marketer. “Generation demand is up; agricultural processing and canning demand is up. Instead of trading a little behind the front month we are trading a little bit above the front month. It’s a seasonal thing that should continue for at least a little while.”

“But storage is in pretty good shape in California at this point,” he noted. “SoCal has injected a ton of gas over the last two to three months and PG&E is pretty much on track. There’s plenty of opportunity to use a bit of storage gas to offset some of the higher demand right now. Hydro also is pretty normal now. We had the late spring rains and late snow so it’s close to normal.”

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