Afternoon

After trading lower for the first half of the day Friday on the New York Mercantile Exchange, November natural gas futures rallied in the afternoon to settle at $7.241, up 10.9 cents on the day and a stunning $1.582 higher than the previous week’s close.

Questar declared an OFO late Thursday afternoon, saying that effective immediately until further notice, it is “requiring shippers and point operators to have production volumes match accepted nominations exactly, with zero tolerance allowed.” Due to a shut-in test at Clay Basin storage facility that began last Thursday and will run through Wednesday, Questar’s Clay Basin balancing account is not available. Questar said its system “is operating at close to capacity and the injection test [conducted last Wednesday] has placed added burden on operating conditions, resulting in minimal linepack being available for balancing.” See the bulletin board for more OFO information. Questar also said Friday that beginning Thursday (Oct. 19), all customers under the PAL1 rate schedule must withdraw all parked gas in their accounts at Clay Basin. It will contact each PAL1 customer individually about its required schedule of withdrawals.

While prompt-month natural gas staged a feeble rally Friday afternoon, the real news of the day was the 25-cent and greater losses across most winter contracts. October natural gas traded within a $4.810 to $5.070 range before settling the week at $4.982, up 9 cents on the day, but 69.3 cents lower than the previous Friday’s close.

El Paso implemented a systemwide Strained Operating Condition (SOC) for Wednesday’s gas day, setting the tolerance for negative daily imbalances at 10%. Linepack on Tuesday afternoon, when the SOC was announced, was running 100 MMcf lower than the day before, the pipeline said. Its Washington Ranch storage facility continued to experience maximum withdrawals. “Maximum deliverability from Washington Ranch continues to fall with declining inventory,” El Paso said, adding that since July 10, maximum withdrawal rates had dropped by more than 20%.

After trading lower than Thursday’s close for the entire morning Friday, August natural gas futures did a complete reversal in the afternoon. After recording a $5.880 low early in the day and a high of $6.150 late in the session, the prompt month ended up at $6.139, up 4.8 cents on the day, but 20.8 cents lower than the previous week’s close.

Late Thursday afternoon Northern Natural Gas canceled a force majeure that it had declared earlier that day after detecting a leak upstream of the Plains Turbine on the Hobbs 26 suction line (see Daily GPI, July 21). On Friday Northern declared a force majeure on the Matagorda Offshore Pipeline System (MOPS), which it operates. A leak was discovered upstream of the Matagorda Island 686 platform, Northern said. Effective Friday until further notice, 14 platforms south of Matagorda Island 686C were required to shut in and were allocated to zero.

Northern Natural Gas reported late Thursday afternoon experiencing a force majeure situation at its Bushton (KS) Compressor Station that triggered an emergency shutdown of the station. Until the station resumes operation, Northern is unable to deliver gas into the Bushton Processing Plant.

Although prompt-month natural gas was able to put in a high of $7.070 during the regular session Friday, ultimately, June futures dropped lower in the afternoon. The contract hit a low of $6.750 before settling at $6.775, down 13.1 cents on the day, but 22 cents higher for the week.

The Amerada Hess-operated Sea Robin Processing Plant resumed processing operations late Wednesday afternoon, Sea Robin Pipeline said. The South Louisiana plant had shut down unexpectedly last Saturday (see Daily GPI, April 20). The pipeline asked shippers to adjust gas flows and nominations as needed.