Beset by yet another transportation setback — this one unplanned — several Rockies points saw lows of 1, 2 or 3 cents Monday while Cheyenne Hub averaged less than a nickel and CIG was only a couple of pennies higher. All Rockies numbers plunged anywhere from a little less than half a dollar to nearly a dollar. However, the rest of the cash market was flat or stronger based on rising temperatures in the Midwest, Friday’s quarter rise by October futures and the return of industrial load from weekend hiatus.
Non-Rockies points ranged from flat to about 60 cents higher, with the largest gains occurring in the Midcontinent as its primary market area in the Midwest was due to see a jump in temperatures. Chicago’s high of around 79 degrees Monday was forecast to rise to around 90 Tuesday, according to Madison, WI-based Weather Central.
An equipment fire at the Cheyenne Plains Compressor Station early Sunday afternoon caused a complete shutdown of Cheyenne Plains Gas Pipeline and the cessation of deliveries into the pipe from WIC and CIG (see related story). Monday afternoon Cheyenne Plains announced it was beginning “free flow operations” that allowed limited volumes to begin moving again, but the price damage had already been done.
It is well known that the Rockies market has insufficient takeaway and storage capacity relative to the size of its production, so when planned maintenance or an unexpected pipeline disruption further backs up gas into the region it can have a devastating impact on pricing, as has happened earlier this year and especially in the last week.
As an example of the increasingly limited amount of storage options for Rockies gas, Northwest reported that as of Saturday inventory levels at the Jackson Prairie storage facility stood at 22,294,559 Dth, or 96.6% of the total working gas capacity of 23,086,883 Dth.
Associated Press (AP) reported that Mexico’s state oil company, Petroleos Mexicanos (Pemex), said Sunday it had repaired a key natural gas pipeline that was damaged by terrorist bombings early last week (see Daily GPI, Sept. 11). Gas was due to start flowing Monday on the 48-inch diameter line that runs through the states of Chiapas and Veracruz to the northern state of Tamaulipas, according to a Pemex press release, AP said.
As expected, Tropical Storm Ingrid was downgraded to a tropical depression over the weekend and remained out at sea. It was dissipating Monday east-northeast of Antigua in the Lesser Antilles, The Weather Channel said.
“I am so glad I don’t have to trade the Rockies,” said a source who sells gas on behalf of some independent Gulf Coast producers. She expressed shock that CIG and Cheyenne Hub averaged a nickel or less Monday and could command prices no higher than about a dime and 15 cents, respectively. Commenting on a consultant’s contention that Rockies producers theoretically could begin to accept negative prices if shutting in a well would damage the reservoir (see Daily GPI, Sept. 17), she said that in her experience in a former job with a producer, the company never shut in its Rockies production “because we were afraid of losing wells.”
The Midwest may be warming up, the source continued, but the Northeast will stay pretty cool throughout the week and the South is seeing below-normal temperatures, so she was a little mystified by Monday’s strength in Gulf Coast prices. However, she expected most markets to keep rising Tuesday due to the October natural gas futures contract adding another 37.4 cents Monday to its Friday advance.
Ron Denhardt of Strategic Energy & Economic Research is looking for a 71 Bcf storage build to be reported for the week ending Sept. 14.
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