A gain of nearly a dime at Transco Station 30 and a flat Florida citygate were the only exceptions to prices continuing to fall Friday. The decline of industrial load that accompanies a weekend was added to the established list of bearish market influences — moderate to cool weather in almost every area, a prior-day screen drop, increasingly negative storage issues and a benign (so far) hurricane season for Gulf of Mexico production.

Losses that ranged from about a nickel to more than 70 cents tended to be largest in the Rockies and smallest in Louisiana and at Midwest and Northeast citygates. Only Tennessee-South Texas fell by less than double digits.

Excess linepack and/or storage issues were of concern to several Gulf Coast pipes. Besides Tennessee ordering interruptible storage customers to empty their accounts by Oct. 20 and Columbia Gulf requiring holders of positive imbalances to eliminate them “as soon as possible” (see Transportation Notes), Texas Eastern and Southern Natural Gas posted notices warning of potential OFOs because of high storage inventories and shippers increasing long imbalances, respectively. “Projections would indicate storage being filled well in advance of the winter withdrawal period,” Texas Eastern said.

Slight warming trends were forecast for the weekend in the South and along the West Coast, but they weren’t expected to appreciably increase power generation demand for gas. Temperatures in the interior West, Midwest and Northeast would continue to remain below average.

PG&E kept its high-linepack OFO in effect through at least Saturday and upped the penalty ante for positive daily imbalances (see Transportation Notes). However, SoCalGas lifted a one-day OFO Saturday. A West Coast source said SoCalGas had some space open up in storage, possibly due to the 700 MMcf/d reduction of border delivery capacity into its system that began Wednesday (see Daily GPI, Sept. 21). The source also said he had been told that several power plants are down in the utility’s service territory.

Texas has been one of the few states where air conditioning load has remained fairly strong, but that was about to change. A Dallas-area trader said area highs were supposed to reach the mid to upper 90s Friday, but would drop into the mid 80s over the weekend. “Rain will cool things off,” she said. And the Houston forecast called for highs around 90 Friday and Saturday to retreat to the mid 80s also.

“October is probably going to be ugly for prices,” the trader went on. She said she understood that “the same ones that forecasted an active hurricane season” are now predicting an El Nino-related warm winter, “and I’m hoping they’re as wrong as they were on hurricane season.”

The trader said she was seeing indications of mixed index-tied deals for October on an online trading service. NGPL-TexOk was going for index plus a penny, she said, while ANR Southeast and Southern Natural Gas got traded at index minus 0.75 cent and 1 cent, respectively. Several other Gulf Coast pipes were split between index-flat and index minus half a penny, she said. Only very small October volumes have traded so far, she added.

A marketer said Chicago basis started at minus 9 cents Friday but strengthened a little to minus 7 cents later.

The market may start paying more attention to tropical activity again in the near future. A tropical wave in the eastern Atlantic is the prime candidate to become the ninth named storm (Isaac) of the 2006 Atlantic hurricane season, according to Weather 2000. “The longer it takes to be classified (if it does get classified), the farther west and south it will remain, immune to the currents that pushed Florence, Gordon and Helene off to the north,” the consulting firm said.

Baker Hughes reported that 1,450 drilling rigs were exploring for gas in the U.S. during the week ending Sept. 22 (https://intelligencepress.com/features/bakerhughes/). That was 28 rigs higher than a week earlier, Baker Hughes said, and up 1% and 17% from a month ago and the previous year, respectively.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.