UPDATE 4-Milder weather eases US Southwest natgas crunch

Mon Feb 7, 2011 3:22pm EST

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 * Supply and distribution issues seen returning to norm
 * Milder weather easing situation as demand slackens
 * Power producers see operations back to normal
 * U.S. gas prices, futures and cash, fall on Monday
 (Adds detail on potential for more cold)
 By Edward McAllister and Jeanine Prezioso
 NEW YORK, Feb 7 (Reuters) - Supply and distribution of
natural gas in the U.S. Southwest was returning to normal on
Monday after cold weather froze wells and disrupted pipeline
flows for much of last week.
 Frigid temperatures in the gas-producing Southwest affected
supply equal to 5 percent of U.S. consumption last week,
shutting power plants and causing rolling blackouts. Milder
weather and weaker demand has eased the situation, gas shippers
said on Monday.
 Kinder Morgan Pipeline Group, which operates gas pipelines
in Texas, said operations were back to normal on Monday after a
compressor outage on Friday, and that supply to its pipelines
was stable. [ID:nN07216730]
 A spokesman for gas distributor ONEOK Inc (OKE.N), whose
gas gathering and processing assets in the U.S. Midcontinent
were disrupted by the cold weather on Friday, said things were
"pretty much" back to normal on Monday.
 Energy Transfer Partner's Transwestern gas pipeline, which
runs through Arizona, New Mexico and Texas, was back on track
after experiencing reduced flows on Friday, a company
spokeswoman said.
 Gas prices for next-day delivery in Texas fell on the
promise of milder weather on Monday. Prices at El Paso Permian,
fell nearly 70 cents to about $4.20 per million British thermal
units after dropping $2.30 on Friday as the threat of supply
constraints passed. Permian prices had gained $3 dollars on
cold weather last week.
 U.S. gas futures NGc1, pressured over the past year by
increases in domestic shale gas production, fell 20 cents --
nearly 5 percent -- to $4.10 per mmBtu on Monday.
 Some issues remained as gas supplies resumed. El Paso Corp
EP.N, which declared a force majeure on some of its gas
supply late Thursday, was asking suppliers to decrease
deliveries into the system on Monday as resumed flows strained
its pipelines. [ID:nN07215349]
 "We have more gas on the pipeline system than actual
demand," an El Paso spokesman said.
 El Paso operates a major natural gas pipeline system in
Texas.
 On Friday, most gas distribution companies experiencing
problems on their lines said that things were expected to
return to normal over the weekend. [ID:nN04167770]
 Power producers in Texas and New Mexico, which had
expressed concern about gas curtailments on Wednesday and
Thursday, also said that supply was back to normal on Monday.
 AEP Texas (AEP.N), which was still asking customers to
conserve energy on Friday, said that ordinary operations had
resumed over the weekend.
 MORE COLD TO COME
 A return to colder temperatures in the coming days has
pipeline operators on the alert should similar supply issues
arise this week.
 While temperatures in Texas may not hit the lows seen last
week, companies were making sure they had access to sufficient
gas to meet customer demand.
 "We are preparing for another cold front later in the week
to make sure they find other sources of gas to keep the supply
up," an Energy Transfer Partner spokeswoman said of its
Transwestern pipeline.
 El Paso said more cold weather could interrupt operations
on its Colorado Interstate Gas Co pipeline system through
Tuesday if customers fail to maintain adequate supplies.
[ID:nN07230108]
 (Additional reporting by Joe Silha and Scott Disavino; Editing
by Marguerita Choy and Sofina Mirza-Reid)


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