Colder

EnCana Corp.’s management team said last week the turn to colder weather in the past month is a sign that some of the company’s natural gas-directed drilling soon will be back on track.

Despite new bouts of colder weather approaching in some areas and pipelines reintroducing OFO-like actions or pleading for shippers to stay in balance, prices softened Monday at a large majority of points. Strong increases at New England citygates (handily topped by Iroquois Zone 2’s $2.75 gain) and smaller ones at a couple of other scattered points ran against the grain of overall declines ranging from about a nickel to 40 cents.

Citing anticipated colder temperatures, Tennessee said a systemwide OFO Action Alert will take effect until further notice at the start of Monday’s gas day for all Balancing Parties. “These Balancing Party contracts are required to maintain an actual daily flow rate not exceeding 2% or 500 Dth, whichever is greater, of scheduled quantities,” Tennessee said. It will assess penalties of 21.98 cents/Dth for underdeliveries at receipt points or overtakes at delivery points that exceed the tolerance. The pipeline warned that if the OFO Action Alert is not sufficient to maintain operational integrity, it may issue a Critical Day or OFO Balancing Alert.

Saying colder weather had moved into Florida Friday morning and its linepack was lower, Florida Gas Transmission issued an Overage Alert Day for market-area customers with 15% tolerance for negative daily imbalances. However, the pipeline said it was not interrupting previously scheduled ITS-1 service in the market area for Friday’s gas day.

Kern River noted that temperatures continue to be forecast as much colder than normal in all of its supply and market areas for the Jan. 11-15 period. “In the event physical supply is impacted due to the cold weather and receipt point operators are unable to delivery their scheduled quantity, Kern River will likely request that the receipt point operator reduce their confirmation to match their physical deliveries to Kern River,” the pipeline said Wednesday. “If a shipper’s nominations are reduced by a receipt point operator, that shipper should be prepared to find alternate supply. In the event a shipper is unable to find alternate supply, that shipper’s affected market will be expected to take physical delivery equal to their scheduled quantity.”

With colder temps already descending on the Midwest and East and forecasts calling for real seasonal cold to impact the East late next week, natural gas futures traders on Wednesday continued to venture higher towards the psychological $7 level. The February natural gas contract put in a high of $6.800 before settling at $6.755, up 12.4 cents on the day and 57.1 cents higher already for the week.

Citing a forecast of much colder temperatures in the Pacific Northwest in the next several weeks, Northwest said it will “ensure the preservation of its Jackson Prairie [storage] balancing account” by declaring a Stage II (8% tolerance) Overrun Entitlement for Receiving Parties on the Wenatchee Lateral and a Stage III Overrun Entitlement (13% tolerance ) for all other Receiving Parties located north of the Kemmerer (WY) Compressor Station. The entitlements become effective Tuesday until further notice. Northwest said it will continue to cut alternate gas as necessary to preserve primary firm service or to move balancing gas from Questar’s Clay Basin storage facility to Jackson Prairie where appropriate, and it encouraged customers “to secure adequate supplies from Canadian supply sources, particularly Sumas, during cold periods in order to avoid entitlements and OFOs.”

The surplus of gas in storage this winter will serve as a significant safety net for gas markets if there are colder-than-normal temperatures. However, without the surplus, gas rationing might be required in the Northeast during a cold snap, according to FERC Commissioner Suedeen Kelly.

The surplus of gas in storage this winter will serve as a significant safety net for gas markets if there are colder-than-normal temperatures. Without the surplus, gas rationing might be required in the Northeast during a cold snap, according to FERC Commissioner Suedeen Kelly.