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Natural Gas Factbox: Full market recovery seen weeks away

Houston (Platts)--31 Aug 2017 300 pm EDT/1900 GMT


US Gulf of Mexico offshore natural gas output rebounded Thursday, while exports to Mexico struggled to return to normal and some midstream operators continued to report disruptions almost a week after Harvey struck Houston, according to a Thursday afternoon report by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets.

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Domestic gas demand recovered slightly, but remained down about 2.5 Bcf/d from the month-to-date average prior to the storm and is still down 4.1 Bcf/d from August 2016 levels.

Analysts expect it to take weeks for the market to fully recover, after the storm dumped upwards of 50 inches of rain on Houston over the past week. Meanwhile, Hurricane Irma is taking shape northeast of Venezuela, according to the US National Weather Service.

Click the image to view a larger size.

Hurricane Harvey all infrastructure map


PRODUCTION


* Offshore Gulf natural gas production remained on the upswing, rising to 3 Bcf/d from 2.7 Bcf/d Wednesday and a low of 2.4 Bcf/d on Saturday, according to Platts Analytics' data. Offshore Gulf production remains down about 0.4 Bcf/d from the month-to-date average prior to Harvey. Total US production is back up to 73 Bcf/d from the low of 71.95 Bcf/d on Saturday, and remains only slightly (34 MMcf/d) below from the month-to-date average prior to the storm.


DEMAND


* US natural gas exports to Mexico remain down about 1 Bcf/d (22%) from the month-to-date average prior to the storm. Exports on Thursday averaged 3.4 Bcf/d compared to a month-to-date average of 4.3 Bcf/d and a maximum of 4.5 Bcf/d on August 2, according to Platts Analytics' data. Exports to Mexico hit a summer low of 2.9 Bcf/d on Saturday when Harvey disrupted supply availability and pipeline transportation in South Texas.

* US gas demand recovered slightly, but remained down about 2.5 Bcf/d from the month-to-date average prior to the storm and is still down 4.1 Bcf/d from August 2016 levels. Gas demand from power generation is down about 3.3 Bcf/d from the month-to-date average prior to the storm to about 31.1 Bcf/d, compared to 31 Bcf/d on Wednesday and 27.9 Bcf/d on Saturday.

* Power burn in Texas, however, remains very weak and is down 2.1 Bcf/d (37%) from the month-to-date average prior to Harvey. Southeast region power burn is down 1.3 Bcf/d (12%) from the month-to-date average prior to the storm.


PRODUCERS


* Apache said it has experienced "some minor direct impacts" from the storm, including production shut-ins of less than 2,000 boe/d in its Gulf of Mexico and Lower 48 regions. Apache does not have operations in the southern portion of the Eagle Ford play where industry has experienced production curtailments.


MIDSTREAM


* Enterprise Partners said it is evaluating the potential curtailment of NGL fractionation and storage services at its Mont Belvieu complex in Texas. The impacts from Hurricane Harvey include, but are not limited to, the limitation of critical services provided by third parties, such as nitrogen supplies, flooding, and access to facilities. Those impacts are exacerbated by disruptions to energy demand caused by Harvey's effects on refineries and petrochemical facilities on the US Gulf Coast and the closure of all ports on the Texas Gulf Coast, which limit access to export markets, the company said. This has caused brine containment issues and a reduction of fractionation capacity at Mont Belvieu Gulf South Pipeline issued a notice stating that the Enterprise Burns Point gas processing plant in Louisiana is in the process of returning to service. The plant has a processing capacity of 160 MMcf/d. Gulf South said the following locations will be able to return to operations once the processing plant is back online: Point Chevreuil, E.I. Block 32 platform, Belle Isle and Rabbit Island Production.

* Weak demand in part caused by Harvey and limited storage injection capabilities have led Southern Natural to issue an OFO Type 6 for long imbalances on Southern's contiguous pipeline system effective for the start of the gas day, Saturday, September 2, until further notice.

* Tennessee Gas Pipeline still has a force majeure in place in South Texas at Station 9, and has issued a number of operational flow orders (Critical Day 1) because of weak demand in the Northeast, including OFOs for under-deliveries and over-takes for all areas south of Station 25 and multiple areas in Zones 1-4.

* Natural Gas Pipeline Company of America still has a force majeure in place on Segment 25 on its Louisiana Line. Williams said Thursday there remained about 280 MMcf/d of offshore gas supply shut in for the seventh consecutive day by Gulf producers feeding its Transcontinental Gas Pipe Line system. A spokesman said the company has not been given a timeline as to when that volume will be available.


STORAGE


* TresPalacios Gas Storage is still under a force majeure and remains shut. The company issued a notice Thursday reiterating that floodwaters had started to recede and personnel have gained limited access to the facility, but the earliest expected return to service is still Friday.


GAS DISTRIBUTION


* The impact on local gas utility service is somewhat unknown at this point and otherwise limited by demand destruction due to so many residential users essentially being offline, according to a major distributor trade group. "Even under all of that water, the gas distribution system in the Houston area continues to operate as designed and continues to serve all customers who can physically take service," American Gas Association spokesman Jake Rubin told Platts early Thursday.

* Rubin also noted the US Department of Transportation has notified the Texas Railroad Commission and the Louisiana Department of Natural Resources that it was waiving certain operator qualifications to "expedite the engagement of pipeline personal to assist with the response and recovery effort."


REGULATORY


* The US Securities and Exchange Commission said Wednesday it is "closely monitoring" the impact of Harvey on investors and capital markets, and will consider granting relief from some deadlines and regulatory requirements for those affected by the storm.
MEXICO

* Mexico's National Control Centre for Natural Gas ended its critical alert for its National Integrated Natural Gas Network. The control centre, or CENAGAS, said Wednesday afternoon normal operations were restored on its network, known as SISTRANGAS in Spanish.

--Staff reports, newsdesk@spglobal.com
--Edited by Kevin Saville, kevin.saville@spglobal.com

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