Prices fell across the board again Friday, with some losses in the Midcontinent and West expanding to triple-digit levels. Seasonal shoulder-month weather in most areas (with its relative lack of weather-based load) and the usual weekend loss of industrial demand drove the continuing softness. The previous day’s 4.5-cent gain by October futures provided scant support for cash numbers.
Declines ranged from about a dime to about $1.85. El Paso’s two San Juan Basin pools took by far the biggest price hits. A high-inventory OFO by PG&E (see Transportation Notes) hinted that some oversupply issues were starting to surface in the West.
Expiring October futures duplicated Friday their 25.2-cent drop that marked the start of the three-day settlement period Wednesday (see related story).
Progress in restoring shut-in Gulf of Mexico production picked up a bit Friday after Thursday saw an outage reduction of only 47 MMcf/d. Going by reports from 62 companies, Minerals Management Service (MMS) said gas outages fell by 266 MMcf/d Friday to 3,909 MMcf/d, while the amount of off-line oil fell to 746,459 b/d. Evacuations of platforms and mobile drilling rigs dwindled to 145 and one, respectively, MMS said (see related story).
Tropical Storm Kyle formed overnight Thursday but was considered no threat to already-battered GOM infrastructure. Kyle was expected to pass to the east of Bermuda Saturday and approach the Canadian Maritimes provinces Monday. What the National Hurricane Center (NHC) called a “well defined” low-pressure system had moved into central South Carolina and dissipated quickly. Its rapid elimination allowed forecasts of high temperatures in the eastern states of the South rising from the mid 70s Friday to the low to mid 80s Saturday. NHC considered areas of “disturbed weather” in Mexico’s Bay of Campeche and about 1,000 miles west-southwest of the Cape Verde Island as unlikely to develop.
Much of the Northeast and Mid-Atlantic would experience a rainy weekend but mild to cool temperatures, The Weather Channel (TWC) said. A rather chilly weekend was due in the Midwest, which helped limit market-area price drops but was insufficient to spur serious heating load. A cold front is expected in the region early this week, according to TWC.
Hot weather was expected to continue in parts of the desert Southwest and inland California, but otherwise the West was expected to range from moderate to cool. Denver would be in the process of retreating slightly from a couple of days of highs in the mid 80s.
The recovery of some takeaway capacity that had been missing for more than three weeks did nothing to stop major Rockies price drops. Rockies Express (REX) was accepting Timely cycle nominations for Saturday’s gas day for deliveries to ANR in Brown County, KS. The interconnect was returning to service after being shut in since Sept. 3 for hydrostatic testing of a downstream line section. REX continued to say it expected to do the same for the Panhandle Eastern interconnect in Missouri, also shut in by the work, no later than Oct. 1. However, the pipeline said, the projected completion date “cannot be determined with unqualified certainty given factors that are difficult to predict, such as adverse weather, which can affect progress.”
REX reported Friday buying 5,000 Dth/d of October baseload at $3.50 from Williams Gas Marketing for system linepack.
Bidweek prices started flat from Thursday in South Texas, then went a little lower Friday, which might have been linked to futures weakness, a Gulf Coast producer said. He reported Texas Eastern-South Texas basis in the area of minus 52-56 cents Friday. Transco Station 65 basis was unchanged from Thursday at plus 4.5 cents, he said.
There’s no denying that it’s been pretty slow going in getting offshore production back on-line, the producer continued. Part of that is due to damage repairs being needed at some facilities, he said, and others may be ready to turn the gas on again but can’t because their onshore processing facility is still shut down.
A Midwestern marketer reported paying Michigan citygate basis of plus 4 cents for Consumers Energy and minus 2 cents for MichCon, remarking that Consumers deliveries are “typically” pricier than those to MichCon. It was good to see the screen coming “our” way on expiration day, she said. The Upper Midwest might see a little bit of heating load in the coming week with forecasts of overnight lows in the 40s.
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