El Paso warned Saturday of potential high-linepack conditions on its system and said its Washington Ranch storage facility was at maximum injections. If the situation failed to improve, El Paso said, declaration of a Pack Strained Operating Condition (SOC) would be required. However, it canceled the SOC warning Monday, citing improved conditions.
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EIA Sees Return of Near-Normal Temps in 3rd Quarter, Lower Demand
The Energy Information Administration’s (EIA) Short-Term Energy Outlook for July pretty much mirrors its June outlook, with the agency projecting an annual increase of 4.3% in natural gas consumption and nearly flat production. It expects average spot prices in the third quarter to be slightly more moderate than those in the second quarter due in part to an anticipated return of near-normal weather.
EIA Sees Return of Near-Normal Temps in 3rd Quarter, Lower Demand
The Energy Information Administration’s (EIA) Short-Term Energy Outlook for July pretty much mirrors its June outlook, with the agency projecting an annual increase of 4.3% in natural gas consumption and nearly flat production. It expects average spot prices in the third quarter to be slightly more moderate than those in the second quarter due in part to an anticipated return of near-normal weather.
Natgas Futures Finally Settle North of $8, But Potential Storage Injection Looms
Despite some market expectations of a return to storage injections in the Energy Information Administration’s (EIA) weekly report Thursday for the week ended Nov. 10, natural gas futures traders on Wednesday once again broke above the psychological $8 level in the December contract. But unlike previous breaks, this one ended up holding as the prompt-month reached a high of $8.180 before settling at $8.120, up 14.3 cents on the day.
Industry Briefs
Boston-based Honeoye Storage said it is offering 160,000 dekatherms of firm storage space at its Rochester, NY, gas storage field for a term ending Dec. 15. Injections can begin immediately at a maximum daily rate of 8,000 Dth/d. The maximum withdrawal rate on the contract would be 4,000 Dth/d from Nov. 1 through Dec. 15. Honeoye will provide all the cushion gas required. The storage field is connected to Tennessee Gas Pipeline east of Rochester. Honeoye is owned by KeySpan, Consolidated Edison and three private developers. For details, go to www.honeoyestorage.com.
Transportation Notes
El Paso said Tuesday its linepack “has stabilized at a manageable level through a combination of takes that more closely match receipts and injections into storage. The threat of Strained Operating Conditions (SOC) has been significantly reduced.” On Sunday it had reported that in a combination of receipt quantities in excess of nominations and takes that were significantly below nominations, system linepack was “rising at rates that are not sustainable.” Since Friday linepack had increased nearly 500 MMcf/d and the Washington Ranch Storage facility was at maximum injection capacity, El Paso said Sunday.
Most Points Still Rising, But Softness Expected
Despite a lack of severe cold in most areas and mounting evidence that minuscule storage space remains for injections, most prices continued to advance Thursday. However, weakness in both the screen and physical fundamentals is expected to send the cash market lower Friday.
Transportation Notes
Northwest has scheduled installation of a filter/separator at its interconnect with Questar’s Clay Basin Storage Facility for April 27-28. Physical injections and withdrawals from or to Northwest will not be possible for those gas days, Questar said.
Lehman Brothers: Gas Price Floor of $5 ‘Still Exists’ Given Fuel Prices
With natural gas injections exceeding five-year averages by 1.2 Bcf/d over the past two months, “it’s no coincidence that prices have fallen sharply since then, but a gas price floor of $5 still exists given current competing fuel prices,” according to Lehman Brothers’ analyst Tom Driscoll.
Transportation Notes
Sonat followed up its suspension Friday of interruptible storage injections with an OFO Type 6 notice starting Saturday until further notice. “Since the current operational conditions are affected by receipts exceeding deliveries, the penalty will apply only to each shipper/pooler that has a net positive daily imbalance,” it said. There is no penalty for imbalances of 0-2% or less than 200 dekatherms; tiered penalties ranging from $1 to $15/Dth apply to larger imbalances. “As is our procedure everyday, we will be force balancing during the OFO,” the pipeline added. It also said the OFO was “highly likely” to be continued Sunday and Monday for long imbalances but unlikely to be applied to short imbalances.