Lack

The complete lack of demand and flood of supply on the market last week left many considering a return to historical price levels, particularly in the Rockies on Friday where prices dropped to near $1. The $5-$6 dollar crash in prices at the Southern California border into SoCalGas last week including a $2 tumble on Friday and the recent declines in western power prices were enough to prompt California Governor Gray Davis to declare the “war” on energy prices officially “won.”

The complete lack of demand and flood of supply on the market late last week left many considering the possibility of a return to historical price levels, particularly in the Rockies where prices Friday dropped to near $1. The $5-$6 dollar crash in prices at the Southern California border into SoCalGas and the recent declines in western power prices were enough to prompt California Governor Gray Davis to declare the “war” on energy prices officially “won.”

Citing “lack of supply from CMS Energy” (Panhandle Eastern) at the Gas City (IN) Compressor Station interconnect on the Lebanon Lateral, Texas Eastern said it restricted scheduled volumes there for Wednesday’s gas day. Should conditions at the meter remain unchanged, the restrictions will remain in place today, Texas Eastern said. However, a Panhandle Eastern spokesman said the shortfall resulted from customers in the frigid Upper Midwest taking extra supplies from the pipeline and causing a pressure drop at Gas City. The pressure was back to normal by Wednesday afternoon and the shortfall resolved, he said.

While the East looked around and, seeing nearly all appreciable weather load fading fast, decided to sit tight or retreat a bit price-wise Wednesday, most western points were soaring in a frenzy of buying. California and Rockies pipes saw spikes that often hit triple digits. Only flatness in the Pacific Northwest and at a couple of Permian Basin points, along with a downturn for intra-Alberta numbers, belied the overall western strength.

The problem is not natural gas pipeline capacity going ‘to’California, rather it is a lack of pipelines ‘within’ the state,particularly to power generation plants, that is aggravatingproblems in the state electric power market, according to KevinPetak, director of Energy and Environmental Analysis Inc. (EEA).

Cash traders found it impossible to ignore that there wasvirtually no weather-related load left for the weekend, andprobably felt that Wednesday’s and Thursday’s price reactions tostorage news and to a super-surge in energy futures related toMiddle East violence had been at least a little overhyped. Thusthey sent prices lower by double digits Friday at virtually everypoint.

A crash-and-burn Nymex session in both the natural gas and crudeoil pits depressed both September and October cash prices Thursday.Only western swing quotes managed to avoid declines that weregenerally around a dime or greater.

Westcoast Energy has shelved the proposed Orca Natural GasPipeline project because of a lack of market interest in thePacific Northwest. The proposed 140-mile pipeline from Sumas, WA,to points along the coast, was expected to be in service in 2004.

Westcoast Energy has shelved the proposed Orca Natural GasPipeline project because of a lack of market interest in thePacific Northwest. The proposed 140-mile pipeline from Sumas, WA,to points along the coast, was expected to be in service in 2004.