As 2010 got under way biting cold settled in across the northern tier of states, sending prices spiking in the Northeast, while pipelines began tightening restrictions with an eye to an extended period of below-normal temperatures and peak demand.
Despite record levels of inventory remaining in the nation’s natural gas storage, limits on deliverability from those facilities could still create problems for pipelines on maintaining adequate linepack. That is why several of them had OFOs or restrictions on imbalance nominations in place Monday.
Prices were seeing super-spikes at Northeast citygates Monday in response, including more than $6 to a peak of $15 at Transco Zone 6-New York, according to IntercontinentalExchange. Despite very cold conditions emulating those in the Northeast, Midwest citygates only saw mostly strong gains similar to the ones in the rest of the market, which generally ranged from about a nickel to nearly 85 cents. Nearly all increases were in double or triple digits.
At least in a couple of instances Monday, pipeline companies were far from pushing the panic button yet. El Paso Corp.’s Richard Wheatley, speaking for Tennessee Gas Pipeline, said a filter change-out scheduled for Tuesday at Station 47 in West Monroe, LA was Tennessee’s main concern for now. “Otherwise we’re just monitoring system conditions based on weather,” he said, and he had no special strategy considerations based on the severe forecasts at this time.
Bottom line, there was “nothing unusual or unique going on here” with the Spectra Energy Group interstate pipes serving the Northeast (Texas Eastern, Algonquin and Maritimes & Northeast), said Spectra spokeswoman Wendy Olson. Their imbalance restriction notices “are standard operating procedure and we’ve issued them a number of times over the course of this winter. In fact, gas control said we’ve seen some of the upcoming forecasted temps already this winter. These notices are standard alerts to shippers that they need to keep supplies in balance and not take more gas out the system than they’ve scheduled.”
Requests for comment to several other pipelines were not answered.
Reaching even into the South, forecasts of below-freezing temperatures had Florida Gas Transmission implementing an Overage Alert Day (OAD) for market-area customers Sunday with 10% tolerance for negative daily imbalances. The OAD was continued through at least Monday. And Southern Natural Gas began a Type 6 OFO for short imbalances Sunday that it expected to last through Thursday.
Word that the current chill plaguing much of the country is only going to get worse in the weeks ahead helped natural gas futures rebound on Monday. The February contract recorded a high of $5.894 in morning trade and went on to close out the regular session at $5.884, up 31.2 cents from Thursday’s finish (see related story).
As if it were not already cold enough, “brutal arctic cold” is expected to thrust southward out of Canada and through the heart of the United States during the middle and late parts of the week, according to Jim Andrews, senior meteorologist with AccuWeather.com.
“The leading edge of arctic chill will reach Montana on Tuesday. From here, it will sweep south to the Texas Panhandle on Wednesday, then right to the western Gulf Coast by the end of Thursday. Slower eastward progress will find the chill beginning at Minneapolis to Omaha by late Wednesday and Chicago to St. Louis by late Thursday. A strengthening storm late in the week will accelerate the cold to the Eastern Seaboard by the start of the weekend.”
Andrews said the impact of the cold will be felt by more than half of the nation’s people. “Daily temperatures 20 and even 30 degrees below normal will be registered along the High Plains and deep into the South,” he said. “With gusty winds, AccuWeather.com RealFeel Temperatures will fall 10, 20 and even 30 degrees below zero in Minneapolis, Omaha and Kansas City, to name a few. Texas will withstand a direct hit with a hard freeze right to the Gulf. The cold could send a widespread freeze into central Florida.”
“This is the kind of a pattern, with extreme, extended cold across the most populated northern areas and reaching into the south, that tells you what your peak demand really is and what the system is capable of; right here’s where you find out how good your estimates were,” said one industry veteran.
OFOs and other pipeline restrictions were common going into the Northeast late last week and growing over the weekend and Monday; however, other than an Extreme Condition that began Friday on ANR and a System Overrun Limitation for all market-area zones by Northern Natural Gas, they were relatively scarcer in the Midwest.
Tennessee, which had lifted an OFO Action Alert for Zones 5 and 6 last Wednesday, said Monday it was implementing a Critical Day 2 OFO for Zones 1, L, 2, 4, 5 and 6 due to a force majeure at Station 47, colder temperatures and in order to maintain linepack. Tennessee had also said Sunday it was issuing an Imbalance Warning for Zones 1, 2, 4, 5 and 6 to preclude negative imbalances. In addition, Tennessee was also restricting Loan, Park Withdrawal and due-shipper imbalance nominations.
Dominion had issued OFOs pertaining to Conform Transportation Service to Scheduled Nominations and Hourly Limits on NNTN (no-notice transportation) in the PL-1 Area.
The Spectra interstates had constraints on linepack-reducing imbalance nominations in effect through Monday but had not issued any OFOs.
Although it hadn’t issued one as of early afternoon Monday, Transco said Sunday an OFO might become necessary because of “high demand on its system due to very cold temperatures in its market areas.”
The National Weather Service’s (NWS) six- to 10-day forecast posted Sunday afternoon for below-normal temperatures had receded from practically everywhere east of the Rockies but still included most of the eastern half of the U.S. The below-normal prediction for Jan. 9-13 included all areas east of a line running southwestward from western Michigan through southeastern Missouri and central Texas. The West Coast states extending into the southwestern corner of Colorado and the western edge of New Mexico in the south were the only areas where NWS looked for above-normal readings.
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