Spot gas prices were up — but relatively moderately outside some sections of the West — at most points Monday as traders returned to their offices to find Tropical Storm Edouard had sprung up offshore southeast Louisiana during the preceding afternoon. In fact, the big rally Monday that had been predicted going into the weekend (see Daily GPI, Aug. 4) due to forecasts of major heat in much of the U.S. was rapidly fizzling with prices tending to retreat as trading proceeded, a couple of sources said.
Three points that were either flat or down about 15 cents were the only exceptions to overall cash strength. The market saw increases of anywhere from a little less than a nickel to about 75 cents. Gains tended to be smallest in the Rockies, where temperatures would be getting cooler Tuesday.
Nymex traders were obviously unimpressed by Edouard as prompt-month natural gas futures plunged by 66.3 cents. Nymex’s petroleum-related contracts were also taking heavy price hits after a government report on high inflation boded ill for the near-term U.S. economy (see related story). The screen dive and the relative lack of offshore outages from the tropical storm are expected to make Monday’s cash market rally short-lived, with lower spot gas quotes considered likely Tuesday.
Minerals Management Service (MMS) said 16 companies had reported the shut-in of 555 MMcf/d of gas and 11,539 b/d of oil by 11:30 a.m. CDT. The companies also said they had evacuated 23 platforms and six mobile drilling rigs, according to MMS.
The storm was expected to remain well offshore before making landfall, possibly as a Category One hurricane, around midday Tuesday in the vicinity of Galveston, TX, south of Houston. Along the way it would plow through the heart of Gulf of Mexico (GOM) exploration and production infrastructure. However, Edouard’s impact on production and personnel evacuations reportedly were light.
Shell Oil said it was beginning “limited evacuations of approximately 40 personnel from some of its Gulf of Mexico West operations area” Monday. It added that no further evacuations were planned, “and based on current information and forecast, we do not expect any impact on Shell-operated production in the Gulf of Mexico.”
ExxonMobil reported beginning preparations for heavy weather associated with Edouard at its Gulf of Mexico and southeast Texas operations, including “preparing those structures for heavy wind and rain, and identifying personnel for possible evacuation to shore. Currently [as of Monday morning] there is no impact to production, and no personnel have been evacuated.”
Edouard developed so quickly that news reports said there wasn’t time to evacuate some of the platforms and drilling rigs in its path.
Gulf Coast cash prices were up 17 cents or so around 9:30 a.m. CDT but had been higher than that earlier, said a producer. Because of how quickly the storm formed, “we’re hearing of only minimal supply cuts and evacuations,” he added.
Only 45 minutes later prices were slipping further, said another Gulf Coast trader. Henry Hub was up about a nickel from Friday at that point around $9.10 after starting the day at $9.35, and Hub bids were down to $9.06, she said. “I guess it [Edouard] is not considered much of a threat.”
It’s been a very hot summer in North Texas, the trader continued, “but we can’t get the Northeast to heat up,” referring to the limited price impact of widespread high temperatures.
The major heat wave predicted for early this week in many areas was proving to be less than what was expected last week. Only the southern end of the Northeast will see a high above 90 Tuesday. The Midwest was a mixed weather bag; while such locations as Chicago and Minneapolis could expect highs to fall from the upper 80s to the mid 80s Tuesday, others such as Cincinnati would be rising from the low 90s to the mid 90s, while Detroit was expecting little change from a peak in the mid 80s.
The heat is fairly intense across the southern third of the nation, with predicted highs in the 90s and low 100s stretching from the South through the desert Southwest. Although coastal areas of Louisiana and Texas will be getting cooling rains Tuesday, the story in the rest of the South will be searing heat, according to The Weather Channel.
And the Pacific Northwest, which had been recording mild to cool temperatures in recent weeks, will finally get some cooling load as a high of 94 is forecast in Portland, OR, Tuesday.
El Paso cited low linepack in saying it had set the probability of declaring a Strained Operating Condition or Critical Operating Condition to high.
A four-day outage of the Independence Hub platform was supposed to have ended Saturday night and begun the restoration of 800-850 MMcf/d into the Gulf Coast market. However, majority hub owner Enterprise Products Partners wasn’t able to resume Independence production as planned during the weekend due to Edouard, said spokesman Rick Rainey. Enterprise will further evaluate the situation later this week, Rainey said.
The Houston Ship Channel was closed to inbound traffic Monday morning due to the storm’s approach and the one at Lake Charles, LA, was expected to follow suit.
Around midday Tennessee asked that all production upstream of the Grand Chenier and Sabine processing plants be shut in immediately due to the plants’ suspending operations. Richard Wheatley, a spokesman for pipeline parent El Paso Corp., said the company understood that many residents of Cameron Parish, LA, where the plants are located, were being evacuated. El Paso began taking nonessential personnel off its GOM facilities, both in the pipeline group and in the exploration and production unit, Sunday afternoon and was continuing to do so Monday, he said.
A hurricane watch was in effect from west of Intracoastal City, LA, to Port O’Connor, TX.
At 4 p.m. CDT the storm’s center was about 135 miles south-southeast of Lafayette, LA, and about 215 miles east-southeast of Galveston, the National Hurricane Center (NHC) said. It was weakening slightly while moving toward the west-northwest at nearly 7 mph. Maximum sustained winds were near 45 mph, down from 50 mph earlier, the NHC said. Despite the lower-speed winds, Edouard was gradually becoming better organized in the afternoon, it added.
©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.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |