Demand

The upward pressure on energy and other commodity prices worldwide has been because of the “sluggish response of production to rising demand, particularly for energy and metals and minerals,” according to a United Nations report issued Thursday. However, the influx over the last three years of a large number of speculators with no interest in the commodity itself “may have distorted” near term and futures prices.

In a summer in which demand response has become a new mantra for the power industry, Sempra Energy’s San Diego Gas and Electric Co. announced Monday it has begun installing what it is calling its “first wave” of advanced electric meters in a field test that will go on for a number of months. The high-tech meters enable two-way communications between the utility and customers in their homes or businesses.

High demand combined with takes in excess of receipts has resulted in a loss of 140 MMcf in system linepack over the last 24 hours, El Paso said Tuesday, and its Washington Ranch storage facility was experiencing maximum withdrawals. “Scheduled pigging of the Havasu Crossover is under way, affecting access to San Juan Basin supply to the South System. The EOC [east of California] takeaway is running approximately 100 MMcf/d higher than at this time yesterday [Monday],” the pipeline said.. There is available capacity on the South System from Waha and through Guadalupe, it added. Maintenance on the San Juan Crossover and further pigging of the Havasu Crossover are scheduled for later this week, requiring that sufficient system linepack be maintained, El Paso said. A Strained Operating Condition may be declared unless the situation improves, it warned.

High demand combined with takes significantly in excess of receipts resulted in a loss of nearly 200 MMcf in system linepack over the previous 24 hours, El Paso said Tuesday. With the Washington Ranch storage facility currently at maximum withdrawals, further reductions in linepack at such rates cannot be sustained, the pipeline added. Since July 10, Washington Ranch has been in net withdrawal for all but one day, resulting in a total drawdown of more than 1.5 Bcf, it said. If customers fail to improve balancing their takes and receipts, El Paso said, it will issue a notice of Strained Operating Condition.

Most points moved lower again Monday as weather-based demand remained somewhat light in the key northern market areas of the Midwest and Northeast and the screen continued to give off negative vibes. However, a few instances of flat to a little more than a nickel higher numbers in the scorching West averted across the board softening.

A day after cautioning that it might need to declare an Underage Alert Day Tuesday due to high linepack and soft market-area demand (see Daily GPI, June 20), conditions apparently had changed enough that Florida Gas Transmission issued an Overage Alert Day instead, citing forecasts of 90-degree weather in Florida. The OAD carried 25% tolerance for negative daily imbalances.

Echoing remarks by energy analysts, Devon Energy Corp. CEO J. Larry Nichols last week said weak demand should continue to push down natural gas prices through the summer. About 60% of the Oklahoma City-based independent’s production is natural gas.

Echoing remarks by energy analysts, Devon Energy Corp. CEO J. Larry Nichols said Wednesday that weak demand should continue to push down natural gas prices through the summer. The Oklahoma City-based independent has about 60% of its production tied to gas.

Cash prices fell by double-digit amounts at all points Wednesday as cooling demand across the southern U.S. proved unable to withstand the loss of prior-day screen support and mounting bearishness about storage.