It might not set records like the one in New England during mid-January, but another major winter storm spreading into most market areas was generating flat to as much as about 95 cents higher prices at most non-Northeast locations Tuesday. The previous day’s futures gain of 9.7 cents gave a little extra support to cash.
Nearly all of the losses from about a nickel to a little more than $1.15 occurred at Northeast points, where high temperatures were staying above freezing for the most part.
There was some discussion of whether wellhead freeze-offs were a factor in the mostly strong market. Although he was unaware of any actually already in existence, a Midcontinent producer said, “We will definitely have them [freeze-offs].” Noting expected snow levels of 11 inches in Oklahoma City and 15-20 inches in Tulsa, he said an Oklahoma-based weather service had recorded its lowest wind chill ever of minus 36 degrees in the Panhandle town of Boise City. He pointed out that OGT had traded briefly Tuesday morning at $6.25 — one of the top quotes of the day on IntercontinentalExchange (ICE).
Despite CIG shooting up another 36 cents or so on ICE and having a Strained Operating Condition in effect, CIG volumes on ICE actually shrank from 113,900 MMBtu Monday to 103,500 MMBtu Tuesday. The big price increase greatly stretched CIG’s basis premium over a flat Henry Hub to just shy of 40 cents.
So far so good, said El Paso Corp. spokesman Richard Wheatley in reporting that crews were monitoring CIG, its pipe most susceptible to wellhead freeze-offs, but not finding any yet, even with subzero lows common in the Rockies.
Northern Natural Gas is maintaining a System Overrun Limitation (SOL) for all market-area zones through Wednesday (late Tuesday afternoon it extended the SOL another day into Thursday), and Tuesday said due to inclement weather in the Midcontinent and Permian Basin production areas, it was “experiencing significant underperformance in receipt gas from various interconnects.” However, pipe spokesman Mike Loeffler said Northern is not itself attached to very many wellheads but was getting some “weather-related” performance reductions at several plant tailgates.
Although a Midwest utility buyer also couldn’t say whether the cuts on some of its nominations on Northern could be attributed to wellhead freezes, she said there “must be something going on.” Meanwhile, the gas staff was selling as much gas on behalf of the company as it could for now, she said, because more moderate conditions were expected to return by the weekend.
The buyer noted that in the past it was somewhat unusual for Northern Natural-demarc to command such a substantive premium as the one of about a dime it held over Ventura Tuesday. She suspected that it was at least partially due to the new Bison Pipeline adding extra Rockies supplies into Northern Border, making gas more readily available at Ventura than it used to be.
Bentek Energy analyst Rocco Canonica said first-of-the-month nominations “are always questionable” and subject to significant revisions in the Intraday 2 cycle. He added that several offshore pipes had posted zeros for volume that morning, so it was very hard to say how much of the 2.5 Bcf/d drop in production Bentek had recorded could be attributed to freeze-offs.
Canonica thought there were some cold weather impacts in the Midcontinent and Rockies, estimating “possibly” 1 Bcf/d across the U.S. or maybe more. Some of the problem identifying the number also could be attributed to the intrastate pipes and LDCs “that soak up quite a bit of gas during cold periods, making it seem as if there are freeze-offs. We’ll have a better idea tomorrow [Wednesday],” he said.
Strategic Economic & Energy Research’s Ron Denhardt said his final estimate of the storage withdrawal for the week ending Jan. 28 is 187 Bcf. The 184 Bcf projection by Stephen Smith of Stephen Smith Energy Associates is up from an original estimate of 178 Bcf, he said.
Citi Futures Perspective analyst Tim Evans made a considerably larger prediction of 202 Bcf for the upcoming report, to be followed by pulls of 193 Bcf, 213 Bcf and 163 Bcf in the weeks ending Feb. 4, Feb. 11 and Feb. 18, respectively.
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