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UPDATE 4-Milder weather eases US Southwest natgas crunch
February 7, 2011 / 5:04 PM / in 7 years

UPDATE 4-Milder weather eases US Southwest natgas crunch

 * 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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