High U.S. heat levels outside the Northeast, Midwest and Pacific Northwest, a prior-day screen jump of 21.7 cents and the possibility of Tropical Storm Alberto being christened over the weekend pushed prices higher at a large majority of points Friday.
A few flat points, along with moderate declines at some in the West, were outweighed by overall gains that ranged from 2-3 cents to a little more than 30 cents.
The Weather 2000 consulting firm said it considered the chance of a tropical disturbance in the Gulf of Honduras being classified by the National Hurricane Center (NHC) by Monday as “very high in our opinion. We believe there are 80% odds that NHC will announce official advisories in association with Tropical Depression #1 and/or Tropical Storm Alberto within the next 72 hours.” Weather 2000 urged all interests in and bordering the Gulf of Honduras, the Yucatan Channel between Cuba and Mexico’s Yucatan Peninsula, the Straits of Florida and the Gulf of Mexico to closely monitor the system’s progress.
As of Friday the disturbance’s location in the Gulf of Honduras, which is north of Honduras and east of Belize in Central America, made it very remote from the Gulf production area. However, any potential threat to offshore platforms should be clearer on Monday. Weather 2000 said the system’s initial vector should be to the north or northwest toward the Yucatan Channel over the weekend. Once in the channel, it could veer west into the Gulf, continue north toward Florida or turn east into Cuba. “Thereafter, directions are wide-ranging within the Gulf of Mexico (or even stalling before entry), and expect computer model projections and media forecasts to be all over the place and quite changeable until an actual center to this storm is formed,” the consulting firm said.
“While no computer model or weather service is even hinting at this, we must advise that our research warns that a path through the Yucatan Channel (avoiding all land), over the [85 to 90-degree] Loop Current, and into the heart of a low-shear Gulf of Mexico, could physically support a storm [with winds] eventually breaking 75 mph (i.e., hurricane strength).”
A spokeswoman for Minerals Management Service in New Orleans said the federal agency was not getting any indications Friday afternoon of new offshore shut-ins related to the possibility of a tropical storm, “but we’ll be watching this system.”
The Northeast and Midwest were destined to remain on the chilly side into the weekend. Forecasts said Milwaukee, WI would barely clear the 60-degree level for its high Saturday. However, highs in the 90s or greater would prevail throughout most of the southern half of the nation, and weather almost that hot would extend into parts of the Rockies and central Plains. Denver was expecting a high just under 90 degrees Saturday.
Predictions of peak temperatures in Florida hitting the mid to high 90s over the next few days prompted Florida Gas Transmission to substantially tighten the tolerance for negative daily imbalances in an existing Overage Alert Day Friday. In addition, Gulfstream Natural Gas, which also delivers into the Florida market, said the weather forecasts caused it to anticipate operating near its maximum capacity, so shippers were asked to closely match nominated receipts and deliveries (see Transportation Notes).
Florida Gas Zone 3 recorded Friday’s biggest price gain.
Further evidence of the effects of this year’s rapid storage refill came from ANR, which said it was cutting its storage injection capacity of 1.5 Bcf/d in half for the June 10-30 period. That is expected to restrict interruptible storage nominations (see Transportation Notes).
After ending a 12-day string of high-linepack OFOs last Sunday, SoCalGas had a new OFO in place for Saturday (see Transportation Notes). Unlike several instances during the previous run of OFOs when Southern California border prices managed to rise anyway, this time the negative OFO influence caused border numbers to fall about 15 cents.
“It’s very hot here, so prices are strong,” said a Midcontinent producer. All of his weekend supply was staying in Oklahoma on intrastate OGT because power plants in the state were running full out, he said. In fact, the producer added, the demand from power generators was so strong that “I was short one dekatherm in deliveries to one plant, and [the plant operator] made me make it up.”
He noted that OGT traded about 20 cents or so above Panhandle Eastern, ANR Southwest and NGPL-Midcontinent Friday because it was so hot in the Midcontinent but cool in the Midwest. It’s not that gas was in short supply, but it just can’t serve Oklahoma markets very well on the interstate pipes, he said.
Even with a small screen retreat Friday, the producer expects most cash prices to continue rising Monday. Besides the hot weather, there will be the usual return of industrial load from a weekend hiatus. Also, natural gas has some catching up to do, he said, reporting that he was seeing more than a $5 premium on an MMBtu basis over gas for energy liquids.
Obviously, Monday prices could record major spikes if a tropical storm is in place at that time and showing any inclination at all of moving toward the offshore production area.
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