With Hurricane Emily’s projected path shifting a little south to the northeastern Gulf Coast of Mexico, the futures market breathed a sigh of relief on Monday, bringing fixed cash prices down as well. Basis, however, widened at many market points due to the continued oppressive heat and humidity across most of the country that kept power generators active.

The near-month gas futures contract tumbled 19.7 cents to settle at $7.652/MMBtu. Many cash points were down 10-20 cents with smaller declines in the Northeast and even some increases in the West.

Gulf of Mexico producers were struggling to cope with yet another day of force majeure reporting. Despite the optimism regarding Emily’s route, 12 companies reported evacuations from 30 platforms and 12 rigs, the Minerals Management Service (MMS) reported.

MMS said 58.65 MMcf/d of gas production and 12,851 bbl/d of oil production was shut in because of the hurricane as of 11:30 CDT on Monday. Those numbers probably will climb on Tuesday. Emily is expected to make landfall early Wednesday morning, the National Hurricane Center (NHC) said.

The NHC said Emily is expected to restrengthen after weakening over Mexico’s Yucatan Peninsula and should regain major hurricane status before landfall. Tropical storm force winds are expected to extend out across most of the central and western Gulf of Mexico.

Shell said on Monday about 21,000 bbl/d of its oil output and 60 MMcf/d of its natural gas output in the Gulf of Mexico were shut in due to Emily. It shut wells at Habanero and Oregano subsea fields late Sunday.

“We will have more hassles with production this week. Supposedly landfall is going to happen Wednesday morning so it may be Thursday or even Friday before we are out of the woods,” said a Gulf producer. “It’s a big headache, but it won’t be nearly as bad as Dennis.

“We’re evacuating some offshore Texas properties and also some offshore Louisiana off the High Island Offshore pipeline system,” he said. “We are probably going to shut in some production later today. It won’t be to the extent that we lost production with Dennis but we’ll still lose some. If we have any force majeure events, we’ll probably exercise those today for tomorrow’s flow day but as of right now there have not been any cuts that I know of.”

Kerr-McGee said it shut in 60,000 boe/d of production in the western Gulf. The company’s Nansen, Boomvang and Gunnison spars have been evacuated and shut-in. BP said it evacuated a “small number” of workers from shelf platforms in the far western Gulf of Mexico and pulled non-essential workers from some deepwater platforms in the central Gulf.

Meanwhile, a team of workers from BP, SMIT International, the US Coast Guard and the MMS made significant progress leveling the Thunder Horse platform in Mississippi Canyon Block 778 about 150 miles southeast of New Orleans. The platform was found listing 20 degrees last week after being battered by Hurricane Dennis. But on Sunday, crews were able to raise the platform deck an additional 46 feet.

“The platform is stable, the trim is normal, freeboard is normal and displacement is normal,” BP reported. “BP and its lead contractor SMIT continue activities to make the platform sea-worthy and storm-safe as a precaution against changes in weather conditions resulting from the progress of Hurricane Emily into the western Gulf of Mexico.” Although Thunder Horse was not producing any gas, it is expected to be a major source of supply later this year.

While, producers were scrambling to avoid the hurricane, power generators seemed to be frantically buying up gas to meet high power loads on Monday.

“We’ve seen some pretty aggressive power generation buying today,” said a New England marketer. “We saw some pretty decent heat move into the New England region on Sunday. It brought with it not only high temperatures but some pretty thick humidity so we were looking at heat index values close to the triple digits along much of the eastern seaboard.

“We had power-gen demand not only for Sunday and Monday, but for a few extra days this week. Definitely another blast of summer is hitting the key delivered markets, and we’ve seen gas prices respond accordingly. Despite a softer fixed price market, we’ve seen a stronger basis market regionally,” he said, citing basis of between 70 and 80 cents at New England points, up about 30 cents from last week.

For example Algonquin Citygates, Dracut, Iroquois Zone 2 and Transco Zone 6 were all down only a few cents in contrast to the much larger 15- and 20- cent drops along the Gulf Coast. Henry cash was off about a quarter and Houston Ship Channel lost more than 30 cents.

A number of pricing points in the West showed increases of a nickle or more mainly because of the heat and cooling load. Temperatures continued to soar into the triple digits in many locations. “There are a lot of people that want our gas out there today,” said a Canadian producer. “It’s a strong market. Power generators are buying large quantities right now and they are up bright and early in the morning; it’s crazy.

“It’s quarter to seven my time [6:45 a.m. PDT] and they are already trading Huntington gas. Holy smokes! I’m hardly even awake yet. All the big generators from the Pacific Northwest are all out there first thing in the morning. I bet they are happy to see the Nymex come off a little today.”

He said there was unusually good value on the British Columbia transportation corridor south to Huntington from Station 2. “With California being as hot as it is and the heat in the Southwest, Opal is strong, Malin is strong; it just makes flowing gas down there from Sumas quite valuable to the Northwest Pipeline transportation holders.”

He said Opal was trading at $6.82 in the morning, which made about a 30-cent spread from Sumas. Station 2 was about US$6.29 (C$7.26). “The transport is C30.5 cents plus fuel so we’re covering all our variable costs and almost half the firm toll, which is a pretty good value in the summer,” he said.

“The McMahon [processing] plant [near Taylor, BC] is up and running full. It was on turn-around until this past weekend and everything came back on smoothly this weekend so we’re back to full production in British Columbia.” McMahon is one of the processing plants that feeds into Station 2. About 400 MMcf/d had been shut in because of plant maintenance.

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