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Houston Ship Channel spot gas rebounds as Hurricane Laura leaves Houston unscathed

Highlights

Hurricane Laura's path misses Houston

Pipelines issue storm-related force majeures

Southbound flows remain limited

Houston — Spot natural gas prices in the Houston metropolitan area saw a double-digit rebound the morning of Aug. 27, as Hurricane Laura bypassed the area without leaving major power outages or infrastructure damage.

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Houston Ship Channel gained 17.50 cents to settle at $2.48/MMBtu on Aug. 27 for Aug. 28 flows. Similarly, Katy Hub settled 13 cents higher at $2.485/MMBtu.

The upward spot gas pricing movement in the Houston area came after Hurricane Laura made landfall around 1 am CT on Aug. 27 as a Category 4 hurricane near Cameron, Louisiana. In the preceding days, models of the hurricane's path included the possibility of it veering west to impact Houston, although this possibility became increasingly unlikely the closer it got to landfall.

Without substantial hurricane-related damage to power infrastructure, S&P Global Platts Analytics data showed gas demand for power generation in Texas increasing around 400 MMcf on Aug. 28. The National Weather Service forecast Houston to see a high of 96 degrees Fahrenheit and a low of 81 F on Aug. 28.

Lower inflows into the region also boosted East Texas pricing. Inflows from the Northeast fell Aug. 27 around 580 MMcf, or 12%, to 4.32 Bcf.

The lower inflows were driven partly by a number of pipeline force majeures.

Natural Gas Pipe Line and ANR Pipeline declared force majeure on Aug. 25 and Aug. 26, respectively, citing the imminent storm track of Hurricane Laura and impacting southbound gas volumes.

NGPL's force majeure event at Compressor Station 343, located in Liberty County, Texas, will impact eastbound flows Aug. 26-30 as the compressor station will be completely unavailable, according to the pipeline's informational posting.

ANR's force majeure event will affect natural gas transactions in its Southeast Area (Zone 1) and Southeast Southern Area (Zone 2) resulting from disrupted operations due to Hurricane Laura, effective Aug. 26-31, according to the pipeline's electronic bulletin board. Southbound capacity through the Eunice Total will be reduced by 271 MMcf/d while Jena Southbound will be restricted by 278 MMcf/d during the outage.

The outages have increased availability of gas in the Upper Midwest, adding pressure on prices. Chicago city-gate shed 5 cents Aug. 27 to change hands at $2.28/MMBtu for flows Aug. 28.

Prices in the Midwest may weaken further as more weather-related maintenance activities may be declared in the aftermath of the hurricane.