Nymex (Energy Markets) declares force majeure (Halt In Trading)

[UpInArms]

http://www.marketwatch.com/news/story.asp?guid=%7B2F2C8737%2DB1ED%2D469E%2DAFBB%2D06B6452A0A49%7D&siteid=mktw

NEW YORK (MarketWatch) - Deliveries of natural gas for August have been halted for an indeterminate amount of time under a force majeure declaration by the New York Mercantile Exchange Monday.

Force majeure, which take effect in times of natural disasters, came into play before Hurricane Katrina began to roar through Louisiana, suspending contractual obligations and regular business operations. In preparation for the storm, Sabine Pipeline, which operates the Henry Hub facility in Louisiana, on Sunday closed delivery in and out of the site until further notice.

Henry Hub is the pricing point for natural gas futures contracts traded on the Nymex. It connects with nine interstate and four intrastate pipelines.

The September contracts for natural gas expire Monday, and Dow Jones reported that delivery had been scheduled for Thursday. Nymex did not immediately return calls seeking comment.

On the Nymex, September natural gas leaped 17.8%, or $1.738, to $11.53 per million British thermal units. October natural gas, which becomes the front month contract at Monday's close, rose 16.8%, or $1.644, to $11.45. See Futures Movers.

"A shutdown to Henry Hub is a crisis situation for the markets," said Agbeli Ameko, managing partner at First Enercast Financial. "Thus, as futures expire, there will be no facility for gas delivery. This is an unpreceedented situation that has never happened in the history of the NYMEX futures contracts."

...more...

[UpInArms]

1. Apache: 336 structures in Gulf of Mexico shut due to Katrina

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38593.5096124884-840967706&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (MarketWatch) -- Apache Corp. (APA) said Monday that it has shut 336 of its 386 structures in the Gulf of Mexico due to Hurricane Katrina. The Houston-based oil and gas company declined to speculate on damage or a timetable for restoring production. Apache said it currently has shut-in gross operated volumes of 70,000 barrels of oil and 565 million cubic feet of gas per day in the Gulf and onshore Louisiana. The company said it expects to begin repopulating structures in the Gulf west of Lafayette, La., later today, outside the main path of the storm.

[UpInArms]

10. update: Katrina prompts Gulf evacuation of 711 rigs, platforms: MMS

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38593.6451703935-840972819&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (MarketWatch) -- Hurricane Katrina forced the evacuation of 711 oil and natural-gas rigs and platforms in the Gulf of Mexico, according to the latest update from the Minerals Management Service. About 91.7% of daily oil production in the region, or 1.38 million barrels per day, and 83% of daily natural-gas output, or 8.3 billion cubic feet, have been shut in, the MMS said.

[theivoryqueen]

2. What does this mean?

in terms of the economy, and specifically gas prices? Will they be able to hold out indefinately in order to extort their customers into paying gouging level prices?

[UpInArms]

3. imho,. it means there is a major crisis

brewing between the reality of not having the ability to deliver the necessary commodities.

[54anickel]

4. Ewww, gonna be a cold & expensive winter

He pointed out that while natural gas storage is now in excess of the 5-year average of around 200 billion cubic feet, it will most likely decline completely by the end of the injection season. First Enercast had previously predicted the surplus at 94 billion cubic feet at the end of the injection season.

"Katrina is on track to reduce this surplus to a similar deficit heading into the winter season," he said.

What does he mean by similar deficit 94 or 200 billion CF? :shrug: Either way, he's stating there's going to be a shortage.


http://www.library.yale.edu/~llicense/forcegen.shtml
The Force Majeure excuses a party from liability if some unforseen event beyond the control of that party prevents it from performing its obligations under the contract.

[bee]

5. indeed.

we here in the north are screwed.

[54anickel]

6. Canadian (nat) Gas Soars as Hurricane Shuts Gulf of Mexico Production

http://www.bloomberg.com/apps/news?pid=10000082&sid=aABUGPU3VnKU&refer=canada

Aug. 29 (Bloomberg) -- Canadian natural-gas prices soared after Hurricane Katrina struck the Gulf of Mexico, the biggest energy-producing region of the U.S.

Hurricane-related shutdowns in the Gulf began Aug. 27. The U.S. Minerals Management Service will release its first report of production cuts at 1 p.m. New York time today.

``The impact on prices is really dependent on the track of the storm and how it affects production platforms and gathering lines in the Gulf,'' said Frank Verrastro, director of the energy program at the Center for Strategic and International Studies. ``If the impacts are anything like Hurricane Ivan last year, then prices will clearly spike up.''

Gas for same-day delivery at EnCana Corp.'s AECO C hub in Alberta, the nation's largest trading point, jumped 73 cents, or 7.7 percent, to C$10.50 per gigajoule ($9.21 per million British thermal units) at 9:36 a.m. Calgary time on Natural Gas Exchange Inc.'s NGX electronic energy market.

[CabalPowered]

7. If extensive dredging is needed..

this could be a big problem. Any word on the LOOP?

[hatrack]

8. Closed since Saturday, but I've seen nothing on damage yet

Bunch of rigs are apparently not responding and/or have fallen out of the automatic communications net.

Don't know whether that means that the antennae and comm systems are out or if the rigs have failed, though.

[puerco-bellies]

9. Trading resumed shortly after.

I sold out of my Nat Gas 1030, and 1010 calls for 65 to 70% net profit this morning. Not bad for having those positions for only a couple of weeks. The December contracts are "only" up about .88 cents around the close. I think that the NG market will sell off sharply tomorrow, provided that serious infrastructure damage is not present.