As it did a week earlier, Southern Natural Gas implemented an OFO Type 6 for long imbalances starting Saturday until further notice. The pipeline cited “historically high storage inventory levels and projected high injection requirements” for the Oct. 4-5 weekend.
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Xcel Starts Quarterly Cost Adjustments in Colorado
Following state regulators’ request to switch from monthly adjustments, Xcel Energy’s Colorado utility said Thursday it is starting to adjust its retail rates on a quarterly basis to reflect changes in the wholesale cost of natural gas beginning with the fourth quarter. As a result, the utility is projecting that its monthly gas bills during the last quarter will be 7-9% lower than they were in the fourth quarter of 2008.
Transportation Notes
Citing its high levels of working gas storage, TGT said starting Saturday (Sept. 5) it would stop accepting nominations for short-term interruptible injections and parking service until further notice. Any quantities currently parked have until the end of the month to be withdrawn, the pipeline said, adding that in the event of operational conditions prohibiting the unparking of all such quantities, it will allow until the end of October the unparking of any carryover gas. Withdrawals will be permitted under the SNS rate schedule, TGT said, but SNS injections will be performed on a best-efforts basis.
Futures Erase Early Week Rally; Traders Discuss CFTC Action
After starting the week on Monday with a 37.8-cent rally, the September natural gas futures contract finished the week Friday with a continuation of Thursday’s selling spree. The front-month contract shaved another 6.9 cents off its value during Friday’s regular session to close at $3.674, up only 2.1 cents from the previous week’s close.
Transportation Notes
Citing “insufficient supplies of gas,” CIG notified customers that it anticipates suspending operations at the Natural Buttes Processing Plant starting June 1. The plant “was designed to provide gas conditioning services for a volume of gas that greatly exceeds the current throughput of the facility,” the pipeline said. It also reported receiving notice that effective June 1 a large percentage of current throughput at Natural Buttes will be diverted to the new Chipeta cryogenic processing plant and redelivered to CIG at the Anabuttes receipt point. CIG said it will attempt to continue operating the Natural Buttes plant but expects to suspend that activity “until such time as additional volumes are available for conditioning.” A restart of the plant is estimated to take approximately 24 to 48 hours depending on ambient temperatures, CIG said. While Natural Buttes operations are interrupted, all gas tendered to CIG at that receipt point will be required to meet the pipeline’s mainline gas quality requirements.
Transportation Notes
Panhandle Eastern said there will a pipe replacement outage lasting about 14 days starting Wednesday on the Houstonia 100 Line between gate valves 104 and 112W. During this period capacity through Houstonia will be limited to 1,250 MMcf/d, but the restriction is not expected to impact firm service.
Futures Fall Ahead of What Could Be a Second Storage Build
After starting its run as front-month contract with two days of negligible gains, May natural gas futures were pushed lower Wednesday, potentially in preparation for another bearish out-of-season natural gas storage build. The contract ended up dropping 8.1 cents from Tuesday’s close to finish Wednesday’s regular session at $3.695.
Warming Trends Cause Drops at Nearly All Points
Spring-like weather was starting to bust out in quite a few areas Friday and due to continue through the weekend. That was evident in the spot gas market as prices fell at nearly all points. The weekend loss of industrial demand was another bearish factor, while the previous day’s 4.5-cent gain by March futures obviously did little to support cash numbers.
Raymond James: Possible Switch to Gas-Fired Generation as Prices Drop
With domestic supplies growing, investors are starting to wonder how low natural gas prices may go, and the next fundamental support could occur when U.S. coal plants begin to scale back output and replace electricity with gas-fired generation, said Raymond James & Associates Inc. energy analysts.
Transportation Notes
With linepack starting to bump up against its maximum target levels and threatening to greatly exceed them over the weekend, Pacific Gas & Electric issued a systemwide Stage 2 high-inventory OFO for Friday on its California Gas Transmission system. Penalties of $1/Dth were set for positive daily imbalances exceeding a 6% tolerance. The giant dual utility had issued a systemwide low-inventory OFO Wednesday.