Experienced

Coming off of Monday’s venture lower, June natural gas futures on Tuesday experienced a little bit of a short-covering rally as traders continued to search for relevant fundamental news. The prompt month stayed within a range from $6.130 to $6.320 before settling at $6.252, up 12.9 cents on the day.

Southern Natural Gas said Tuesday it had completed repairs for the unscheduled outage experienced over the weekend on its north mainline system in Alabama near the Calhoun Power delivery point (see Daily GPI, April 11). Nominations to Calhoun Power are being accepted again.

Tennessee Gas had a systemwide operational flow order balancing alert in place on Friday. The pipeline said it experienced significant supply losses as a result of Hurricane Rita, totaling 900,000 Dth on the 800 line and 500 line, not including the 650,000 Dth that has remained shut in as a result of Hurricane Katrina. Inlet valves at the Grand Chenier Plant, Johnson Bayou Plant and Sabine Plant on the 800 line remain shut in. Tennessee also has sustained production losses of 400,000 Dth on the 100 line due to Hurricane Rita. In addition, due to evacuations, Station 25 in Cleveland, TX and Station 32 in Jasper, TX are unavailable. However, with the reduced throughput on the 100, this should not impact current scheduled quantities, the company said.

After trading within a range of more than $1, October natural gas futures on Wednesday afternoon might have experienced a key reversal on expectations that damage to Gulf production operations may not be as bad as originally assumed. The prompt month settled at $11.472, down 18.7 cents for the day.

Saying it has experienced declining linepack as a result of customer takes that exceeded their scheduled receipt volumes, particularly on its southern system, El Paso declared a Strained Operating Condition (SOC) with an imbalance threshold of 4% Tuesday. The Washington Ranch Storage facility has been operating at maximum withdrawal capacity recently and linepack continues to drop, the pipeline said. It added that the SOC applies to the smallest possible area of its system and includes the following parties with takes on the South Mainline: Arizona Public Service, Salt River Project, Duke Energy Arlington Valley and El Paso Electric (not affiliated with the pipeline). In an earlier posting Tuesday warning of the SOC possibility, El Paso urged shippers to match their demand requirements with current supplies and to schedule payback of existing imbalances to the pipeline, if possible. It also said shippers can obtain supplies at Waha where capacity is operationally available, and that limited amounts of capacity may be available at the Keystone pool and from San Juan Basin.

Citing a high rate of unconfirmed transactions at Uinta Lateral delivery points, CIG said it has recently experienced a critical oversupply situation on that portion of its system, resulting in higher than appropriate mainline pressures that “have created problems receiving scheduled quantities of gas from the attached production areas.” In response, CIG declared a Strained Operating Condition for the Uinta and Parachute laterals that took effect Friday until further notice. See the bulletin board for SOC conditions.

Dominion experienced a rupture Saturday on a 20-inch supply line to one of its storage facilities in Harrison County, WV. The blast occurred in a remote area and didn’t cause a fire or injuries, a spokesman said. The line was isolated shortly afterwards, and because it wasn’t a residential line, no one lost service, he said. The pipeline was continuing an investigation into the cause of the incident Monday.

As expected, natural gas cash market prices rallied back from losses experienced ahead of the holiday weekend as a number of NGI’s daily price indices registered double-digit advances. The troika of discontinued pipeline OFOs, early strength at the Nymex and a modestly bullish weather outlook were factors leading to the price increases, although traders also were quick to question the size of the advances. July futures finished the session at $6.379, up about a penny on the day.

Pacific Gas & Electric did not extend its most recent high-inventory OFO beyond Tuesday.