Damage

In a message to shippers Tuesday, Southern Natural President Jim Yardley highlighted the pipeline’s winter achievements following significant damage from last fall’s hurricanes. He said all firm transportation and storage service requests and nearly all interruptible requests were honored. A system-wide operational flow order (OFO) was required on only one gas day. And gas supply flowing through the offshore system in the Gulf of Mexico and the Toca, LA, compressor station, both of which were damaged heavily by Hurricane Katrina, is at or above pre-Katrina levels. Working storage inventory also is at historically high levels and likely will end the winter at levels well above last year, Yardley said. Meanwhile, repair work is expected to be completed at the end of April on remaining damaged laterals in the Gulf and on damaged compressor engines at Toca. Repairs to the Olga compressor station, southeast of New Orleans, have not been made.

Following the damage to Gulf Coast and Gulf of Mexico production and pipeline infrastructure from last year’s hurricanes, natural gas consumption for power generation and thermal output plummeted 9% to 492.4 Bcf in October compared to the same month in 2004, the Energy Information Administration reported Wednesday in its Electric Power Monthly publication. EIA said the bulk of the lost fuel was made up through a 43.1% increase in petroleum liquids consumption by generators. October 2005 net generation fell nearly 10% from September levels to 315 million MWh but was up 0.8% from October 2004 levels.

Temporary business interruptions, project delays and damage from weather-related events failed to deter U.S. energy master limited partnerships from having a strong year, according to a report issued Thursday by Standard & Poor’s Ratings Services (S&P).

In completing an assessment of Hurricane Rita-related damage to its 12-inch lateral from South Marsh Island Block 17/18 through Eugene Island Block 115, ANR said it identified a leak at Eugene Island Block 133. ANR declared a force majeure event in the area Friday and said until further notice, receipt locations on that line and any connected laterals will not be available for nominations. In an update Monday on repairs to offshore and onshore facilities in its Southeast Gathering Area (SEGA), ANR said effective immediately it was increasing capacity through its Grand Chenier, LA facilities to 250 MMcf/d for the SE 3 A (Grand Chen)-CFTP location until further notice. ANR also said it returned to service the following offshore pipelines and interconnects that have been inspected and approved: the 30-inch West Cameron 167 line to Grand Chenier (although at this time no liquids will be accepted at West Cameron 167); and the 16-inch Cameron Meadows line to Lake Arthur, but no interconnections have been cleared for flow on this line. ANR continues to accept nominations for receipt and delivery points located downstream of the Lake Arthur Compressor Station.

While CF Industries Holdings, Inc. suffered no damage to its Donaldsonville, LA nitrogen fertilizer complex during hurricanes Katrina and Rita, its business will be off in the fourth quarter due to the high cost of feedstock natural gas. And its greatest challenge could come in the spring if farmers decide to cut back on planting because of high fertilizer costs.

While CF Industries Holdings, Inc. suffered no damage to its Donaldsonville, LA nitrogen fertilizer complex during hurricanes Katrina and Rita, its business will be off in the fourth quarter due to the high cost of feedstock natural gas. And its greatest challenge could come in the spring if farmers decide to cut back on planting because of high fertilizer costs.

After being offline since Sept. 22 due to storm damage and flooding from Hurricane Rita, Sabine Pipe Line LLC said it has lifted the force majeure for various interconnects on its system (see Daily GPI, Sept. 27). As a result, the New York Mercantile Exchange (Nymex) said Tuesday it is lifting the force majeure condition for both September and October 2005 natural gas futures contract delivery obligations, effective for gas day Oct. 5 (see Daily GPI, Sept. 28).

The Commodity Futures Trading Commission (CFTC) on Tuesday warned the public to beware of claims that damage caused by Hurricane Katrina will bolster the profitability of trading in crude oil, unleaded gasoline, heating oil, natural gas or other commodity futures or options.

Fueled by uncertainty and concern about energy supply following the damage caused by Hurricane Katrina, energy trading volumes on the New York Mercantile Exchange (Nymex) continue to soar.