Evacuating

Hurricane Ike continued to march toward the Texas coast Thursday and areas east and southeast of Houston were evacuating after forecasters said landfall was likely Friday night or early Saturday around Freeport, TX. The storm kept most prices rising in the Gulf Coast and Northeast, but markets in the Midcontinent/Midwest and West were mostly softer (see related story).

Offshore oil and natural gas operators in the Gulf of Mexico (GOM) that had been reboarding platforms and rigs to restore production following Hurricane Gustav now are evacuating employees ahead of Hurricane Ike, which is expected to emerge in the southeastern GOM by Tuesday night. Several forecasts put the storm on track to strike the upper Texas coast by this weekend.

Texas Eastern said it has or will be evacuating facilities in its South Texas and West Louisiana zones, meaning multiple compressor stations in the zones will be shut down and capacity will be reduced. Tetco is restricting receipts at certain locations in order to protect the integrity of its system and is force balancing receipt points and TABS pools to reflect actual flows. Due to limited manpower, the pipeline will be suspending the hourly batch nomination validations and reverting back to the four NAESB timelines for purposes of nomination, scheduling and confirming. The pipeline said it has capacity available in zones downstream of South Texas and East Texas for shippers to source alternative supplies. However, zones M1 and M2 have been restricted to capacity through the Sarahsville compressor station. Nomination increases for receipts between Vidor and Sarahsville for delivery outside that area will not be accepted.

While some Gulf of Mexico producers were evacuating rigs and shutting in oil and natural gas production in preparation for Tropical Storm Arlene, natural gas futures traders seemed unshaken Friday as July natural gas settled at $6.932, down 11.3 cents on the day, but 5.2 cents up for the week.