It failed to shock anyone when June-ending prices fell fairly hard at nearly all points. Virtually all traders did Thursday deals for flow through Saturday, eliminating the hassles of split nomination periods over a June/July bridging weekend.
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Rising Storage, Mild Temps, PG&E OFO Crush Prices
Expectations of another massive weekly storage injection figure — confirmed by AGA at 117 Bcf for the week ending June 1 — combined with milder weather and high line pack, put significant downward pressure on cash and futures prices yesterday. Most eastern points were down 20-30 cents, while California prices into PG&E at Topock dipped below $3 in response to a high inventory operational flow order. SoCal-Topock prices dropped more than a dollar.
Edison-State Pact Far from a Done Deal
The trappings of a major press conference made it appear like a long-sought ending, but it was really just the beginning late Monday afternoon when California’s governor and Southern California Edison’s CEO announced a breakthrough after six weeks of talks. The “memorandum of understanding” (MOU) for the sale of Edison’s transmission system and power production to the state is contingent on state regulators and legislators swiftly completing some equally significant steps.
As Expected, Futures Slump into Weekend
Ending its streak of up-days at four, natural gas futures sunk lower Friday, as lagging cash market prices prompted traders to take profits ahead of the weekend. After stalling at $5.48 for the second day in a row, the May contract spiraled lower to close at $5.388, a 3.4-cent loss for the day.
CA Power Saga: New Chapters, But No Ending
California’s ever-changing electricity saga ended the firstquarter of 2001 as it started the year – a work in progress. Itsscope widened again last week with regulators, legislators and thecourts working overtime to keep up. Supplies remained tight withthree Stage Two power alerts called during the week.
Tengasco Completes Intrastate TN Pipeline
Tengasco has completed a 60-mile intrastate pipeline from itsgas-rich 50,000-acre Swan Creek gas and oil field beginning inHancock County and ending in Kingsport, TN. Geological studiesindicate that the Swan Creek field may be one of the largestnatural gas and oil discoveries in the Appalachian region of theUnited States.
Industry Briefs
Salomon Smith Barney (SSB) said its latest storage forecast hasthe winter heating season ending with 650-700 MMcf/d of gas instorage. The American Gas Association reported that there was 786Bcf of working gas left as of March 2 and storage levels were 375Bcf lower than one year earlier. Temperatures are projected to beabout 5% colder-than-normal this week and normal to slightly belownormal, on average, during the rest of March, SSB noted. “Thus,conservatively assuming 4-5 Bcf/d of lost demand due to fuelswitching and other factors and normal to 5% colder-than-normaltemperatures during the last three weeks of March, than storagelevels should exit winter at roughly 650-700 Bcf compared to 1,000Bcf last year.” SSB added that demand is starting to return to themarket as gas prices have dropped considerably. “[M]ost of theidled North American ammonia plants have now restarted given thesignificant increase in ammonia producer’s margin, or the spreadbetween ammonia prices and the implicit natural gas costs. SalomonSmith Barney said it believes its $5/Mcf composite spot priceforecast for 2001 “could prove to be conservative based on ourassumptions regarding production growth and U.S. economic growth.The bottom line is that, incorporating numerous other variables, ifdomestic production grows 3% this year and GDP growth is 1.25%,then storage levels are likely to approach or slightly exceed thenearly 2,800 Bcf levels attained at the beginning of November lastyear. If domestic production growth is much less than 3.0% thisyear, as several E&P companies are claiming will be the case(although interestingly not for themselves), then we would verylikely confront an even tighter supply/demand balance for naturalgas throughout this year compared with 2000.”
CMS Plans to Expand LNG Terminal Deliverability
Ending a record year for LNG imports, CMS Trunkline LNG Co.announced plans for a possible deliverability expansion at its LNGimport terminal in Lake Charles, LA. The company is conducting anopen season to offer firm, long-term LNG terminal services startingin January 2002.
CMS Plans to Expand LNG Import Terminal
Ending a record year for LNG imports, CMS Trunkline LNG Co.announced plans for a possible expansion of its LNG import terminalin Lake Charles, LA. The company is conducting an open season tooffer firm, long-term LNG terminal services starting in January2002.
Delays No Longer: Vector, Alliance in Operation
Ending concerns that related pipelines might not start serviceon the same day, both the Alliance and Vector pipelines opened forbusiness on Friday.