Physical

Although the physical reworking of storage wells will go on through the winter, Southern California Gas Co. on Thursday began crediting some of its poorest retail customers with low-cost supplies being mined from its so-called “cushion” supplies used to maintain ideal pressures at two of its underground storage fields.

Natural gas prices skyrocketed in both the physical and futures markets Monday as it appeared that Tropical Storm Rita would be setting its sights on the heart of the Gulf of Mexico (GOM) production area later this week following a voyage between the lower end of Florida and Cuba. Producers and drilling contractors were reported to have begun evacuating offshore operations as early as Sunday (see related story).

After disrupting and shutting in Gulf of Mexico oil and natural gas production areas, Hurricane Katrina continues to make her impact felt in both physical destruction of property and technical hang-ups in energy markets. The delivery committee of the New York Mercantile Exchange Inc. (NYMEX) convened Monday morning to review deliveries in progress related to the NYMEX Division natural gas futures contract for August 2005.

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.

The end of winter is still a couple of weeks away on the calendar, and the season’s physical existence is still very much in evidence in the Northeast and Midwest and to some extent in northerly sections of the South. Strong heating load in much of the East had prices on the rise Tuesday at all points and the continuation of cold weather is expected to combine with major gains in energy futures Tuesday to extend cash market firmness Wednesday.

Subject to weather conditions, Tennessee will require that physical flow be suspended at 20 Ship Shoal and two South Pelto meters for about five to seven days starting Friday in order to allow repair of a leak near Ship Shoal 157 on Line 523M-100, the 26-inch line between Ship Shoal 198 and Station 523 at Cocodrie, LA. Production impacted by this outage is estimated at 81,000 Dth/d.

Due to pipeline replacement on the East Line, MRT is unable to accept nominations through Aug. 9 that result in physical receipts from the NGPL interconnect in Clinton County, IL for delivery to any on-system point.

At the outset, the only thing clear about California’s two-phase 2004 gas restructuring plan is that nothing is clear. There are endless questions among stakeholders. The major utilities are supposed to file their wish lists for the omnibus proceeding by the end of this month.

Citing weather conditions, Tennessee postponed the completion date of a 526A-600 Line outage to next Wednesday. Physical flows at six offshore meters have been suspended during the outage.