Underground

The Federal Energy Regulatory Commission issued a certificate to a Kentucky-based storage developer to construct and operate a 13 Bcf underground natural gas storage facility in Hopkins County, KY. Orbit Gas Storage Inc. of Henderson, KY, proposes to convert the depleted White Plains Gas Field to gas storage and build an approximately 22-mile pipeline header, compressor station and associated facilities (see NGI, June 9, 2008). The Kentucky Energy Hub Project would have an estimated 5 Bcf of working capacity and 8 Bcf of cushion gas, the company said. It further noted that the project would have the capability to deliver and inject gas at a rate of approximately 100 MMcf/d and would interconnect with ANR Pipeline near Rabbit Ridge, KY [CP08-409]. The Commission approved Orbit’s request to charge market-based rates for firm and interruptible storage services in interstate commerce.

Natural gas futures traders took Thursday morning’s “bullish” report that 186 Bcf was removed from underground storage last week mostly in stride in morning trade, but the March contract — in its first prompt-month regular session action — made an afternoon push higher to close at $4.576, up 15.6 cents from Wednesday.

Portland, OR-based Northwest Natural Gas Co.’s proposed independent underground gas storage project in northern California in conjunction with local utility Pacific Gas and Electric Co. (PG&E) as a minority (25%) partner carries increased risk for the utility, according to Standard & Poor’s Ratings Services (S&P), which on Friday changed Northwest’s outlook to “negative” from a previous “stable” designation.

Portland, OR-based Northwest Natural Gas Co.’s proposed independent underground gas storage project in Northern California in conjunction with local utility Pacific Gas and Electric Co. (PG&E) as a minority (25%) partner carries increased risk for the utility, according to Standard & Poor’s Ratings Services (S&P), which on Friday changed Northwest’s outlook to “negative” from a previous “stable” designation.

FERC Friday issued a favorable environmental assessment (EA) of a Kentucky-based storage developer’s proposal to construct and operate a 5 Bcf underground natural gas storage facility in Hopkins County, KY.

Despite the near-record level of natural gas in underground storage, December natural gas futures maintained Friday’s momentum to push higher on Monday as the contract gained 5.5 cents to close at $6.838. The move was especially peculiar because crude futures — which have been recently aligned with natural gas — saw the December contract drop $3.90 on the day to close at $63.91/bbl.

Even with much of the Gulf of Mexico’s natural gas production shut in, storage operators were able to inject a whopping 87 Bcf into underground storage for the week ended Sept. 26, which turned the keys back over to natural gas bears for the time being. Following the Thursday morning report from the Energy Information Administration (EIA), November natural gas futures dropped nearly 30 cents before finishing out the session at $7.481, down 24.7 cents from Wednesday’s close.

Even with the Gulf of Mexico shut-in from hurricanes Gustav and Ike, the natural gas industry was still able to inject a healthy 67 Bcf into underground storage for the week ended Sept. 12, according to the Energy Information Administration (EIA). The injection was large enough to bring October natural gas futures back well below $8 in Thursday trade.

Despite receiving what was seen by many as a bearish 88 Bcf injection report into underground natural gas storage for the week ended Aug. 15, September natural gas futures jumped higher Thursday as crude futures skyrocketed and uncertainty about Tropical Storm Fay’s path increased. The front-month natural gas contract ended up closing at $8.252, up 17.5 cents from Wednesday’s finish.