PG&E Corp. is dropping out of the proposed Ruby natural gas interstate pipeline from the Rockies to the West Coast because of escalating costs associated with the project proposed by El Paso Corp. PG&E’s utility, Pacific Gas and Electric Co. (PG&E), will continue to work closely with El Paso and track competing proposals for a new Rockies pipeline to the West.
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After dropping at all points for the weekend, cash prices were united in movement direction again Monday, but this time the direction was upward. The gains apparently were driven mostly by the previous Friday’s 21.6-cent advance by June futures and a smidgen of cooling load starting to resurface in the South, because forecasts of Tuesday weather were generally mild in most areas.
A day after dropping 28.2 cents, natural gas futures staged a rally on Friday, with traders pushing the June contract to a high of $10.785 before it finished the session at $10.777, up 21.6 cents from Thursday, but 32.4 cents lower than the contract’s close a week earlier. The May contract expired April 28 at $11.280.
With an arctic air mass spreading its thermometer level-dropping impact into the Northeast and most of the South, prices were flat to about 80 cents higher at most points Wednesday. However, only the Northeast saw major increases; elsewhere, gains were limited to about a quarter and were mostly in single digits.
Multi-dollar drops at Northeast citygates were conspicuous amid continuing declines at most points Friday. Heating load was dropping due to moderating weather trends in several regions; storage use continued to supplant spot gas buying and the weekend loss of industrial load was a factor.
The market remained unable to find enough heating load to keep prices from dropping further at most points Thursday. Anecdotal evidence from one buyer suggested that increased use of storage to supplant new purchases of spot gas by utilities and end-users is part of the reason that prices have been weak for the most part over the past two days in the face of very cold weather returning to many regions. Futures weakness from the day before continued to be a drag on cash numbers.
December natural gas futures closed at $7.624 on Wednesday, dropping another 23.9 cents to bring the contract’s four-day decline to $1.013. The contract settled near the low end of its $7.570 to $7.855 range for the day, which could lead to further weakness on Thursday.
The July natural gas futures contract continued its descent Tuesday, dropping 17.1 cents to close at $7.519. While the day’s activity brought the week’s combined losses to 39.9 cents, some market participants were quick to note that the trading range of the last few months is still intact, adding that scaled-down buying is already evident.
Canadian natural gas production will shrink by as much as 500 MMcf/d this year and keep on dropping next year, the National Energy Board (NEB) said in a downward revision of supply forecasts.