Prices plunged at all points Tuesday as the latest tropical storm threat to offshore production began an overland trek through Texas with its accompanying demand destruction from power outages and heavy rains that would help to cool off what had been an ultra-sultry Lone Star State through Monday. Of course, the previous day’s dive of 66.3 cents by September natural gas futures also contributed to the cash market softness.

Further downward pressure on spot gas numbers was applied by forecasts that high temperatures in most of the U.S. early this week would be evaporating over the next couple of days. The cooldown will already be under way Wednesday in the Midwest, New England and south-central section. The Northeast and South will see little change in highs, but Northeast citygates already were peaking in the mid 80s or less Tuesday.

Overall losses ranged from about 15 cents to $1.15 or so. All of the triple-digit declines occurred in the Rockies, although regional highs will be rising a few degrees Wednesday.

A marketer in the region acknowledged that the Rockies will be getting a little warmer Wednesday, but said conditions would still be relatively moderate with overnight lows dipping into the lower 60s. Also, extra supply is getting put into the Rockies market with interruptible storage injections ending Tuesday at the Jackson Prairie facility and Northwest requiring interruptible balances there to be taken to zero by Aug. 15, he noted (see Daily GPI, July 29).

September natural gas futures will have neutral guidance for Wednesday’s cash market, although further spot price drops are expected due to falling cooling load. After spending time in both negative and positive territory, the prompt-month contract ended the day in exactly the same spot where it started (see related story).

Northern Natural Gas indicated a steep decline of cooling load upcoming in its Midwestern market area. A bulletin board posting said the normal system weighted temperature at this time of year is 72 degrees. It projected that conditions would be slightly warmer than that with averages of 74 Tuesday and 73 Wednesday, but then the average is expected to drop to 68 Thursday and 69 Friday.

A Texas-based marketer said Henry Hub, which had averaged $9.20 Monday, was down to the mid $8.60s at mid-morning Tuesday. And the Chicago citygate plunged about 70 cents from Monday’s $9.15 average, he said.

The marketer said he expected that producers would start returning workers to facilities offshore southeastern Louisiana Tuesday, but maybe not until Wednesday for those off southwestern Louisiana and the upper Texas coast.

Although Florida Gas Transmission extended an Overage Alert Day into at least its second day Tuesday, traders apparently didn’t expect it to continue. All Florida Gas production-area zones along with the Florida citygate recorded steep drops.

Tropical Storm Edouard was downgraded to a tropical depression Tuesday afternoon after coming ashore shortly after daybreak that morning in the Sabine Pass area of southeast Texas. It never developed enough to attain hurricane status, but remained a strong tropical storm while making landfall with maximum sustained winds of 65 mph.

On Monday Edouard’s landfall had been predicted to occur around midday Tuesday in the vicinity of Galveston, TX, south of Houston. The actual location shifted to the east near the Louisiana border and was earlier than expected because the storm turned more toward the northwest than expected and accelerated in forward speed during the night.

Minerals Management Service (MMS) said 555 MMcf/d in offshore shut-ins were reported to it Monday, but that didn’t reflect the full production impact of Edouard. The deepwater Independence Hub had been expected to start restoring 800-850 MMcf/d to the Gulf Coast market during the weekend following a four-day outage to inspect the integrity of leak repairs on its export pipeline. However, the restoration effort was delayed due to the heavy seas generated by the storm.

And southern Cameron Parish in the southwestern corner of Louisiana, home of some major gas processing plants, was being evacuated Monday, prompting the shutdown of several of the plants. That undoubtedly was boosting the suspension of extra production that afternoon, as MMS only posted the shut-ins reported to it by 11:30 a.m. CDT.

MMS confirmed a sharp increase in Edouard-related shut-ins, saying it had received reports from 45 companies Tuesday (up from 16 a day earlier) of 946 MMcf/d in gas shut-ins. The agency also reported 77,819 b/d in oil shut-ins (a nearly sevenfold increase from Monday’s 11,539 b/d). Platform and mobile drilling rig evacuations rose to 154 (up from 23) and nine (up from six), respectively, MMS said.

Midstream operator Targa Resources shut down its Stingray and Barracuda processing plants because of the Cameron Parish evacuation, said President Joe Bob Perkins, adding that combined plant throughput had been 450 MMcf/d recently. Despite some road condition issues, employees had already started repopulating the Stingray facility Tuesday morning and those at Barracuda would be doing the same, Perkins said. Both plants would be ready to handle any restored offshore production by Tuesday evening, he said.

Tennessee added two meters Monday afternoon to a list of those affected by its request for shut-ins by producers behind the Grand Chenier and Sabine processing plants, which were being shut down. Its list had 34 meters upstream of Grand Chenier and 17 meters upstream of Sabine. A Tennessee spokesman confirmed that flows behind the two plants had been taken to zero Monday.

Transco said it had been informed by WFS Liquids Co. that the Cameron Meadows Gas Plant was in the process of restarting operations and should be capable of full processing recover later Tuesday afternoon. Transco also said Crosstex Energy Services planned to have the Sabine Plant back in operation by Wednesday morning, prompting Transco to reinstate a 100,000 Dth/d limit on receipts at the UTOS tailgate (see Daily GPI, Aug. 5).

Shell said there was no tropical storm impact to operated production in the Gulf of Mexico, and that with Edouard no longer a threat to its offshore operations, it would issue no more updates. “We will commence with regularly scheduled crew changes and the redeployment of the limited number of personnel we evacuated throughout today [Tuesday] and tomorrow [Wednesday] as weather allows.”

Edouard was already beginning to weaken as it moved inland through southeast Texas, the National Hurricane Center (NHC) said. It canceled a hurricane watch from west of Intracoastal City, LA, to Sargent, TX, Tuesday morning and that afternoon discontinued all coastal tropical storm warnings.

At 4 p.m. CDT the storm’s center was about 35 miles north-northeast of Houston, NHC said. Edouard was moving to the west-northwest at nearly nine mph, which represented a slowing pace, and maximum sustained winds had decreased from around 65 mph upon landfall to nearly 35 mph.

The storm’s course was expected to take it through Central Texas where its rains, if not winds, will be welcomed by a drought-troubled area. Relief from the heat also will be regarded as a blessing after Texas set a 2008 record for peak electricity use Monday and just barely missed eclipsing the all-time record.

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