storage

Adding to losses suffered following the release of fresh storage data Wednesday, natural gas futures continued lower Thursday as traders managed to look past the Enron debacle to focus on the wealth of fundamental and technical factors — all of which point to lower prices. Following in the footsteps of the December contract, January shuffled lower in an organized manner Thursday to close with a 17.1-cent loss at $2.561.

With two hurricanes moving away from the Gulf of Mexico and influences from weather and storage still as negative as they were prior to the weekend, it was natural for most prices to be softening Monday. The exceptions to declining numbers were chiefly in the rebounding West and at Northeast citygates.

Stemming the selling pressure set in motion by Wednesday’s storage report, the natural gas futures market rebounded mid-morning Thursday as traders contemplated a supply-demand balance that may be tighter than previously thought. In a rare twist, the 12-month strip gained more (9.5 cents) than either the winter strip (9 cents) or the prompt month (6.8 cents). November closed at $2.486, just off its daily high at $2.51.

As posted earlier (see Daily GPI, Oct. 16), Sonat has determined that the three compressors used for injection and compressed withdrawal at the Muldon (MS) Storage Facility cannot be operated in their current condition. Repairs are under way on two units, and one is currently expected to return to service by Thanksgiving. A second unit is expected to be back on-line during the upcoming winter. However, personnel have determined that the third unit cannot be repaired and thus are evaluating replacement options. Sonat expects that replacement parts for the third unit will be installed and it will be available for service in April 2002. The Daily Injection Quantity for each CSS customer will remain at 36% of normal until further notice, but will increase by about 21 percentage points for each unit that is placed back in service. The Daily Withdrawal Quantity will remain at 100% until further notice. “However, if compressed withdrawal is required prior to all three compressor units being placed back in service, some reduction in DWQ is possible,” Sonat said, although that likely would not occur until late winter.

National Fuel is holding an open season for up to 1 Bcf winter firm storage and transportation services (Nov. 1-Feb. 28). The service includes maximum injection of 10,000-30,000 Dth/d and a maximum withdrawal of 33,333 Dth/d. Receipt and delivery points include Columbia (Independence), Dominion (Ellisburg), Tennessee (Rose Lake), TransCanada (Niagara), Transco (Leidy) and Transco (Wharton). Bid sheets are available at National Fuel’s web site or by calling (716) 857-7740. For details call Jim Zernentsch (716) 857-7509.

Reporting that its Washington Ranch Storage Field was experiencing maximum withdrawals, El Paso declared an Unauthorized Overpull Penalty situation Tuesday. It urged shippers to review their supply/demand balances and the performance of their suppliers to insure that sufficient gas is delivered to El Paso to cover the gas being taken off-system. The pipeline said it will limit scheduled volumes at underperforming interconnects.

Reporting that its Washington Ranch Storage Field was experiencing maximum withdrawals, El Paso declared an Unauthorized Overpull Penalty situation Tuesday. It urged shippers to review their supply/demand balances and the performance of their suppliers to ensure that sufficient gas is delivered to El Paso to cover the gas being taken off-system. The pipeline said it will limit scheduled volumes at underperforming interconnects.

An administrative law judge at the Oklahoma Corporation Commission last week found Oneok and two of its subsidiaries, Oklahoma Energy Marketing and Trading and Oneok Gas Storage, in contempt for their refusal to provide documentation of their gas sales. The judge recommended to the commission that the companies be fined $2,000 per day retroactive to May 8 and lasting until they comply with the commission order.

Northwest plans to allocate interruptible injections into the Jackson Prairie storage facility as needed over the holiday weekend, saying expected warm weather in the Pacific Northwest could cause injection nominations to exceed Jackson Prairie capacity. Northwest anticipates that the facility’s total capacity may be needed to meet SGS-2F requests and the pipeline’s own balancing requirements.