Nearly all points rallied Monday due to a tropical storm in the Gulf of Mexico (GOM) and torrid heat levels continuing across nearly all of the southern half of the U.S. The modest 3.3-cent gain Friday by August futures and the return of industrial load from its weekend downturn were other factors in the overall bullishness.

Only Transco Zone 6-New York and Iroquois Zone 2, which fell 10 to 20 cents, were left out of quotes everywhere else that ranged from about flat to 60 cents higher. The Rockies, Southwest basins and Midcontinent recorded most of the largest gains due to localized heavy cooling demand

With Tropical Storm Dolly having passed over the northern tip of Mexico’s Yucatan Peninsula and entered the warm waters of the southern Gulf of Mexico (GOM) Monday, where it is expected to strengthen, producers have begun evacuating some operations in the western GOM. The National Hurricane Center (NHC) said Dolly could become a hurricane by Tuesday.

Shell reported having evacuated about 125 workers Sunday from its Gulf of Mexico West operations area and said it planned to bring about 60 more ashore Monday. “No further evacuations are planned at this time after today and based on current information and [the] forecast, we do not expect any impact on Shell-operated production in the Gulf of Mexico,” a Shell announcement said.

Eileen Angelico with Minerals Management Service (MMS) said the agency began posting a “statistics” report on Dolly Monday afternoon at its website (https://www.mms.gov/) and will continue to do so around 2 p.m. CDT each day until no more storm-related activity data are being received.

Two companies had reported the evacuation of four platforms and one mobile drilling rig by 11:30 a.m. CDT to the MMS in the initial Dolly posting Monday. There were no reports of either oil or gas shut-ins, MMS said.

Bloomberg news service quoted a spokesman for Petroleos Mexicanos (Pemex), Mexico’s national oil company, as saying Dolly wasn’t expected to reach Pemex facilities in the Bay of Campeche and therefore the company was not evacuating any workers.

The Dolly news didn’t appear to impress natural gas futures traders much. Although August crude oil spiked by more than $2/bbl, Nymex’s prompt-month gas contract was in negative territory for most of the day before ending with a loss of 6 cents (see related story).

Cash traders also were fairly complacent about the storm track through the less developed western Gulf. A Midcontinent/Midwest marketer, saying “nobody’s too scared about it [Dolly] yet,” added that market-area prices generally were flat to up less than a dime at mid-morning. Much like Friday, there was relatively little movement from where quotes began the day, he said.

The Midwest had begun a cooling trend over the weekend while the Northeast was entering one Monday. Both regions were due to see peak temperatures no higher than the mid 80s Tuesday. The Pacific Northwest is seeing even cooler weather, with Tuesday’s high in Portland, OR, destined to be limited to the mid 70s.

However, most of the rest of the U.S. can expect to continue baking under highs in the 90s or 100s.

Florida Gas Transmission issued an Overage Alert Day due to temperatures rising as high as the upper 90s in its market area (see Transportation Notes). Florida Gas Zone 3 and the Florida citygate rose nearly 20 cents and about 35 cents, respectively.

A hurricane watch was issued Monday morning for the Texas coast from Brownsville just north of the Mexican border to Port O’Connor.

The storm was having an impact on offshore pipeline maintenance. Transco said high seas associated with Dolly prompted it to put off from Tuesday to Thursday work that will require the shut-in of three meters (see Daily GPI, July 21), while Tennessee said a dive boat working on a platform abandonment project had to return to port, extending the outages of six meters (see Transportation Notes).

At 4 p.m. CDT the center of Dolly was about 475 miles east-southeast of the lower Rio Grande Valley in South Texas and moving to the west-northwest at nearly 18 mph. The NHC’s projected tracking had Dolly making landfall slightly north of the southern tip of Texas sometime Wednesday. Maximum sustained winds were around 50 mph.

Houston Chronicle science reporter Eric Berger said a ridge of high pressure to Dolly’s north was preventing the system from making a northward turn, “but this high pressure is forecast to weaken by midweek. The high-pressure system’s placement later this week is the key to understanding where Dolly will go, and the forecasts vary widely.”

Meanwhile, Tropical Storm Cristobal was strengthening as it moved away from the East Coast, the NHC said. Cristobal, the center of which was about 265 miles east-northeast of Cape Hatteras, NC, at 5 p.m. EDT Monday, was moving northeastward at nearly 13 mph and not expected to make landfall.

A net 10 drilling rigs were removed from the search for natural gas in the U.S. during the week ending July 18, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). The Gulf of Mexico tally actually rose by two, Baker Hughes said, but 12 rigs were deactivated onshore. Its total count of 1,534 active rigs was up 1% from a month earlier and 2% higher than the year-ago level.

©Copyright 2008Intelligence 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.