Cash prices continued to rise overall Tuesday, registering dollar-plus increases in several instances, but the upticks were smaller than Monday’s spikes at almost all points. Gulf Coast pipelines with offshore connections reported shut-ins prompted by Hurricane Katrina starting to decline, but Minerals Management Service (MMS) said its count of shut-in Gulf of Mexico (GOM) gas production had risen to 8.798 Bcf/d Tuesday, or about 88% of normal output. GOM oil outages went up to 1.43 million bbl/d, or a whopping 95% of regular GOM supply, MMS said.

Assessments of infrastructure damage remained highly sketchy, as companies that provide helicopter transportation to offshore facilities had to cope with their own Katrina problems (see related story).

Tuesday’s gains were as small as 2-6 cents at some western points and generally topped out around 35 cents in the West. Eastern markets saw Niagara advance as little as a dime, but most upticks in the East ranged from a quarter to about $1.50 or so.

Florida Gas Transmission (FGT) Zone 3 numbers, which had been king of the spot price hill since last Friday, were a rare soft note in declining nearly a quarter, although their peak at $17 still topped all other points. FGT Zones 1 and 2 were still rising by about $1.40 and half a dollar respectively. The pipeline tightened the imbalance tolerance for an Overage Alert Day notice to a relatively stringent 5% Tuesday.

“We’ve been swamped [with shut-in problems] since Friday,” sighed a Florida utility buyer. There’s “almost nothing available” in FGT’s Zone 3 and not much more in Zone 2, she said. The buyer reported buying most of her company’s gas this week from other people’s storage supplies, reinforcing the perception that a very small build or even a net withdrawal could surface in next week’s storage report. Since the providers probably put their gas into the ground at around $6-8, they’re realizing a tidy profit at current prices, she noted.

Katrina weakened to a tropical depression but was still producing heavy rains as it continued a trudge through the Ohio Valley toward the Northeast, the National Hurricane Center said. The agency said Tuesday’s 10 a.m. CDT report would be its last on Katrina, but the Hydrometeorological Prediction Center (HPC) in Camp Springs, MD continued to update storm data. At 4 p.m. CDT the depression was about 40 miles southwest of Louisville, KY and moving north-northeast at 27 mph, the HPC said.

Drier weather in the next couple of days will give the hurricane-ravaged Gulf Coast areas a chance to begin clean-up operations, but it also will bring a return of hotter conditions in the lower South with highs in the 90s and heat indexes around 100 degrees or more, The Weather Channel said. However, hurricane-instigated power outages (see story in Power Market Today) would mitigate to some degree any climb in electric generation load. High heat levels will continue through the desert Southwest, but a combination of cold fronts and Katrina’s cooling rains will keep late-summer weather moderate through most of the northern U.S.

Like many others, a Gulf Coast producer was having supply problems, saying his company’s wells were “heavily shut in” with flows just starting to trickle back on Tuesday. He also reported difficulties “with pipes communicating with each other so that we can allocate gas properly.” The producer said he understood that some people at the delivery end were having to deal with no-shows of contracted gas, and that offshore producers were having to go as far afield as Tampa, FL and Houston to get helicopter services for assessing damage to their facilities.

Tuesday’s record-setting all-around strength in energy futures (see related story) should suffice to keep most if not all cash prices rising Wednesday, the producer said.

He added that he likely would have finished bidweek sales Tuesday, but held off on any new September deals “until we can be sure that the supplies will be available.”

Enercast analyst Agbeli Ameko is predicting a storage injection of 69 Bcf to be reported for the week ending Sept. 2. “Next week’s report is expected to be roughly 25% lower than average due to lost production from this storm [Katrina],” Ameko said. “…Natural gas prices are to be more influenced on speculation of lower storage reports over the next month as shut-in production is realized. This loss of production is expected to reduce injections over the remainder of the injection season. We expect total storage levels to quickly fall below the five-year running average due to this event.”

Citigroup’s Kyle Cooper calls for a build of 58-68 Bcf in his final estimation of the upcoming storage report.

Although pipelines generally were reporting moderate recovery from hurricane shut-ins, MMS was not the only entity with a contrary judgment of their assessments. Bentek Energy said its analysis of bulletin board throughput reports found that in some cases the declines from Friday to Monday were being underestimated (see related story). For example, Southern Natural Gas, which had reported being down 850 MMcf/d Monday, actually saw a flow drop of close to 1 Bcf/d, Bentek said.

Southern said about 550 MMcf/d was still shut in Tuesday upstream of its Toca (LA) Compressor Station, down from its reported 850 MMcf/d Monday. Southern was still not accepting nominations at its Toca interconnect with affiliate Tennessee until further notice, but said a force majeure that had canceled flows at several other pipeline interconnects in the area had been lifted Monday afternoon following completion of damage assessments. Flow resumed at some of those interconnects Monday night, Southern said.

A spokesman for Southern operator El Paso Corp. said its Tennessee and ANR pipelines were “getting a little [previously shut-in flow] back on, but nothing to brag about yet.” He confirmed that ANR had lost about 1 Bcf/d Monday, but had no new outage volumes for that pipe or Tennessee, which had been down 1.1 Bcf/d Monday. “We fear we may have damage to a couple of offshore facilities, but haven’t been able to get back out to them yet,” the spokesman continued. Getting helicopter service to Eastern Gulf of Mexico facilities has been a problem, he said.

Tennessee declared a force majeure event Tuesday afternoon for meters upstream of Station 527 at Port Sulphur, LA due to high water at and around the station. “Tennessee requires all operators and producers located upstream of this facility to keep physical flow and scheduled volumes at zero until further notice,” it said.

Destin Pipeline said Monday afternoon it was unable to continue deliveries until further notice due to the impact of Hurricane Katrina.

Transco still had 1.3-1.4 Bcf/d still shut in as of midday Tuesday, a drop from Monday’s report of 1.5-1.8 Bcf/d, a spokesman said. “We’re optimistic that more supplies will be returning as the day goes on,” he added. The pipeline found very minor cosmetic damage at some compressor stations, especially in Alabama, but nothing that would impair pipeline operations, he said.

A spokesman outlined these changes for Panhandle Energy pipelines: FGT losses were 600 MMcf/d Tuesday, down from 700 MMcf/d, and Sea Robin outages had fallen from 400 MMcf/d to 200 MMcf/d. Trunkline’s Terrebonne System saw no change with 450 MMcf/d remaining offline, he said.

FGT said its facilities “did not incur significant damage and are fully operational,” but it urged customers to contact suppliers for updated information regarding gas supplies. FGT also said it “will follow allocation procedures that maximize supply on its system.” The Panhandle Energy spokesman said Sea Robin had also checked out OK; Trunkline was still being inspected but no significant damage had been found there yet, he added.

Texas Eastern’s Cameron System offshore southwest Louisiana regained 20 MMcf/d to 120 MMcf/d of flow Tuesday, leaving it still 55 MMcf/d short of normal, a spokeswoman said. The Venice System offshore southeast Louisiana, which normally carries 325 MMcf/d, was still totally offline, she said. Crews were inspecting Cameron Tuesday, but no damage report was available yet, she said. An inspection of Main Pass facilities, which include the Venice system, is scheduled Wednesday.

Gulf South said its Kiln (MS) Compressor Station is unavailable due to Hurricane Katrina and it was experiencing difficulty in accessing the station site. Capacity into the Mobile, AL area through Kiln could be impacted by as much as 150 MMcf/d, Gulf South said, and it will declare force majeure if firm services are affected.

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