Colder

A rupture on El Paso Corp.’s Wyoming Interstate Co. (WIC) pipeline system about 10 miles south-southwest of Cheyenne, WY, on Saturday cut about 770 MMcf/d of gas production flowing to the Cheyenne Hub, backing up gas in the region and disrupting a large number of western and Midcontinent market locations.

Forecasted weather for the next few days indicates colder than normal temperatures in the Front Range of Colorado, CIG said. With the Fort Morgan Storage Field in Morgan County, CO, shut in due to a well leak (see Daily GPI, Oct. 25), the pipeline has its storage withdrawal capability reduced by about 51%. Storage customers have 49% of their ADWQ (Average Daily Withdrawal Quantity) available until further notice and should adjust flowing supplies to ensure that withdrawals remain at or below their revised contractual limits, CIG said. Additionally, CIG will not be able to approve payback nominations from the pipeline. A spokesman said Thursday the number of area families evacuated due to the leak had risen to 13, and some (but not all yet) were being allowed to return to their homes on a case-by-case basis. There is no projection for when repairs to the well will be completed and service restored at the Fort Morgan field, he said.

Following a couple of back-and-forth trading sessions, prompt-month natural gas futures on Wednesday exploded 8.5% higher as colder than normal temperatures took hold in a number of regions around the country. After topping out at $7.750 on the day, November futures — which expire Friday — settled at $7.693, up 60.2 cents on the day.

Spurred higher by somewhat colder temperatures and a spooked crude futures market, February natural gas started Tuesday above $9 and continued higher from there. The prompt month peaked at $9.290 just before settling at $9.168, up 37.7 cents from Friday’s close.

Because of the lingering supply disruptions in the Gulf of Mexico and the late onset of colder-than-normal winter weather, Raymond James analysts this week hiked their 1Q2006 price estimate to $12.50/Mcf from $8.25, and their 2Q2006 forecast to $9.75 from $9. However, Houston-based Gerdes Group is forecasting a year-over-year moderation, with 2006 1Q prices averaging $8.26/MMBtu.

On one side, Gulf of Mexico shut-ins are returning faster than expected, and imports of Canadian gas have increased; on the other the colder weather has arrived and LNG is going to Europe instead of the United States. These are the factors in play and behind the current high natural gas prices, FERC staff told the commissioners in a natural gas market update at Thursday’s regular meeting.

CenterPoint issued a System-Wide Alert Wednesday, citing a forecast for colder than normal conditions moving into its service area. Due to the need to maintain adequate linepack and preserve storage flexibility to meet FT obligations, CenterPoint is requiring customers, “particularly power plants or other large industrial loads whose swings can cause operational difficulties” for the pipeline’s system “or discrete segments thereof,” to take deliveries as evenly as possible throughout the day. In no case should takes exceed a shipper’s hourly entitlements by more than 10% in any hour; excessive hourly takes could result in a customer-specific OFO being issued, the pipeline said.

The spate of colder weather in the Midwest and Northeast that had generated upticks at nearly all points in the previous two days began to lose its price-boosting ability Thursday. Only the Northeast, where high temperatures are predicted to stay at the freezing level or below Friday and into the weekend, continued to see substantially higher prices Thursday. Except for small gains at a couple of scattered non-Northeast points, the rest of the market was flat to just a tad softer.

Citing colder weather in northern Florida and low linepack, Florida Gas Transmission issued an Overage Alert Day notice for its market area Tuesday. The notice carried 25% tolerance for negative daily imbalances.