Natural gas forward prices firmed up at the front of the curve, with some of the biggest moves in Texas upstream and downstream of a massive new pipeline in the early stages of startup, NGI’s Forward Look data show.
Fixed prices for October delivery at the benchmark Henry Hub added 0.8 cents during the Aug. 29 to Sept. 4 trading period at $2.149/MMBtu. That was in line with an overall trend higher with October fixed price forwards up by an average 2.9 cents. Most locations finished in positive territory week/week at the front of the curve.
The trading period kicked off with an announcement from LNG Canada that it would introduce feed gas received from TC Energy Corp.’s Coastal GasLink (CGL) pipeline to the facility in Kitimat, British Columbia, for the first time as it works toward startup. A spokesperson for the liquefied natural gas terminal told NGI on Tuesday that low-level flaring had also started.
The Shell plc-led project will have the capacity to take 2 Bcf/d of feed gas, around 10% of the country’s output. First cargoes are slated to start by mid-2025. Even though the facility has begun to take feed gas from CGL, those flows have not yet shown up in TC’s daily gas summary report for the Willow Valley interconnect.
“Commercial in-service will be declared when LNG Canada provides notice to CGL of same,” a TC spokesperson told NGI.
With significant LNG export volumes still about a year away, hubs in western Canada were among the dozen decliners in fixed price trades for October delivery during the week. NOVA/AECO C shed 3.4 cents week/week at 71.1 cents, Forward Look data showed.
That weakness also dotted hubs south of the border in the West.
In California, SoCal Citygate led all decliners for October, down 9.4 cents to $1.999. In the Rockies, Opal finished down 5.7 cents at $1.665 for October.
The California Independent System Operator issued a heat bulletin ahead of scorching weather during the first week of September.
Temperatures in California were forecasted to be six to 12 degrees warmer than normal Wednesday and Thursday (Sept. 4-5) with the hottest days across the West during the latter part of the week, the grid operator said.
Darkest Before Dawn
Also at the start of the trading period, Permian Basin benchmark Waha cash prices sank to an all-time low of negative $6.410/MMBtu on Thursday (Aug. 29). West Texas has been beset with oversupply, which grew more acute from the delayed startup of the 2.5 Bcf/d Matterhorn Express Pipeline.
Days later, however, speculation mounted that Matterhorn had started initial flows, and Waha prices steadily rose in the first half of the week.
“Matterhorn is online, moving little bits of gas and coming online in a real way over the next month or two,” Permian Resources Corp. Co-CEO Will Hickey said Tuesday.
By Thursday, average Waha cash prices reached positive territory for the first time since late July, up 26.0 cents day/day to 16.0 cents.
Matterhorn is designed to move Permian supply from West Texas to the Katy hub near Houston. October forwards for Katy added 4.4 cents week/week to finish at $1.654. Nearby, NGPL TexOk led all fixed prices higher, up 8.9 cents at $1.724 for October.
Upstream from them, El Paso Permian finished up 8.8 cents at 19.1 cents for October. Meanwhile, Waha did not join in on the gains for forwards. The hub shed 0.2 cents to finish at 18.1 cents for October.
Management for one of the pipeline’s backers, EnLink Midstream LLC, said on a 2Q2024 earnings call that pipeline flows would start to be more significant after September. EnLink CFO Benjamin Lamb said that they would “begin seeing some contribution to the financials in the fourth quarter.”
“I think it’s going to fill very quickly,” Lamb said.
Hurricanes On Hold
The most active part of the Atlantic hurricane season has so far been a dud, providing a clear path for Gulf Coast LNG exports. However, the number of tropical waves multiplied during the week and forecasters warned the pause in named storms could end later in September.
Accuweather said the Labor Day holiday was the rare one that lacked a named storm in the Atlantic. High levels of wind shear were preventing storms from developing, the forecaster said.
Colorado State University (CSU) researchers said they expect a relatively mild first half of September for tropical activity. But conditions “look to get more conducive for tropical cyclone activity towards the middle of September.” They reiterated expectations for above-average activity over the balance of September and October.
The National Hurricane Center on Friday was monitoring four tropical disturbances in the Atlantic Ocean for tropical cyclone development this week or early next. Two showed a 20% chance of developing into a powerful storm.
In basis trade, pricing firmed for the hurricane-susceptible Southeast region. Transco Zone 5 October basis added 4.5 cents week/week to end at minus-13.1 cents. Florida Gas Zone 3 added 0.5 cent to plus-19.4 cents for October delivery, Forward Look data show.
