Arrival

While a good portion of the energy interests in the Gulf of Mexico (GOM) were evacuated ahead of the arrival of Tropical Depression 10, it appears the industry and the Gulf Coast dodged a bullet this time as the storm was hugging the Florida Panhandle shoreline too tightly to strengthen.

While a good portion of the energy interests in the Gulf of Mexico (GOM) were evacuated ahead of the arrival of Tropical Depression 10, it appears the industry and the Gulf Coast dodged a bullet this time as the storm was hugging the Florida Panhandle shoreline too tightly to strengthen.

A surge of power generation demand in the Southeast and in other areas to some extent, prompted by the arrival of more summer-like conditions, along with Friday’s 22.9-cent rally by June futures helped the cash market to realize double-digit price gains across the board Monday. The return of industrial load from its customary weekend hiatus also contributed to market firmness.

The re-connection of western supply basins to eastern markets by the massive Rockies Express (REX) and other pipeline projects and the “somewhat delayed” arrival of more liquefied natural gas (LNG) imports suggests higher Henry Hub prices and “reasonable” western region locational basis, both of which will continue to facilitate development of domestic resources, according to Wood Mackenzie.

Disregarding the arrival of Arctic air in favor of focusing on the weakness in the cash market and near-record natural gas storage levels, traders on Thursday pushed November natural gas futures 36.8 cents lower to close at $5.782. Action on Thursday marked the contract’s second consecutive 30+ cent loss.

Most points saw little change Thursday in moving up or down a dime or less from flat. The arrival of early fall-like weather in northern market areas and the screen’s prior-day 13.3-cent drop brought a quick end to Wednesday’s all-points rally. However, the formation of Tropical Depression Five in the eastern Caribbean Sea and its likely journey straight into the Gulf of Mexico stand a good chance of raising prices Friday.

July gas futures Tuesday retreated back down to the levels reached prior to the arrival of Tropical Storm Alberto, slipping 6.1 cents to $6.163 in a quiet day of trading. The near-month contract opened the regular trading session higher at $6.27 and reached a daily high of $6.310 in the morning before sliding back down and ending the day near its daily low of $6.140.

Due in part to the arrival of new storm activity in the Atlantic Basin, September natural gas on Monday was off to the races, notching a high of $9.84 two separate times just before 1 p.m. EDT. However, the prompt month was unable to match its $9.91 high from two weeks ago and trailed off later in the afternoon.

The expected arrival of more liquefied natural gas in the Gulf Coast region and improving market conditions have prompted the launch of another Gulf Coast gas storage project. Port Barre Gas Storage (PBGS) is planning to develop a high deliverability salt dome storage field in St. Landry Parish, LA, to provide service in the Gulf Coast market. The 10.5 Bcf facility is expected to be developed in three phases with the first 3.5 Bcf of working capacity available in the fourth quarter of 2006.