Power, gas demand weakens in face of Hurricane Francine but prices stay strong

Hurricane Francine weakened Southeast Gulf Coast energy demand Sept. 11, but prices remained strong, and LNG production continued as area utilities prepared to restore electric service as soon as possible after the Category 2 storm's expected landfall brings storm surges up to 10 feet, heavy rains and potential tornadoes.

As of 4 pm CT Sept. 11, the National Hurricane Center said the storm's center was about 40 miles south-southwest of Morgan City, Louisiana, and 100 miles west-southwest of New Orleans with landfall expected in "the next few hours." Shortly before the update, Francine had had maximum sustained winds of 100 mph which raised it to Category 2 storm status, which applies to storms with maximum sustained winds of 96 mph to 110 mph.

"Hurricane conditions are spreading into the hurricane warning area, with tropical storm conditions already ongoing," the hurricane center said. "Hurricane conditions are possible in the hurricane watch area this evening and tonight."

Power, gas demand down

In the Midcontinent Independent System Operator's South Region, which includes almost all Louisiana plus most of western Mississippi, MISO forecast load to peak at barely 21 GW on Sept. 11, down 4.1 GW, or 16.2%, from Sept. 4's 25.1 GW. MISO forecast loads to peak at less than 21.2 GW Sept. 12 and barely 23 GW Sept. 13.

The US Energy Information Administration forecast the Southern Company balancing area, which includes Alabama, most of Georgia and eastern Mississippi, to peak at less than 31.9 GW on Sept. 11, the latest forecast date available, down 1.9 GW or about 5.5% from Sept. 4's 33.7 GW.

S&P Global Commodity Insights said MISO's gas power burn would total less than 3.8 Bcf on Sept. 11, down about 3.8% from Sept. 4's 3.9 Bcf.

Gas-fired power demand across the US Southeast was down about 140 MMcf/d Sept. 11. With the arrival of cooler weather behind the storm, the regional population-weighted temperature will average more than 3 degrees Fahrenheit below average through the upcoming weekend, pushing regional power demand to its lowest since late May, CustomWeather data shows.

Sept. 12-15, Southeast power burn is projected to average about 10.7 Bcf/d – down about 1 Bcf/d compared with the prior-week average, according to Commodity Insights' short-term demand forecast. The potential for power outages resulting from storm damage implies at least some additional downside risk for power demand.

Power utilities prepared

New Orleans-based Entergy utilities serve most of the area targeted by Francine in Louisiana and western Mississippi.

"Based on historical restoration times, customers in the direct path of a Category 1 hurricane can experience outages for up to seven days, up to 10 days for a Category 2 and up to two weeks for a Category 3," Entergy said in a Sept. 11 news release. "Once our workers can access the affected areas, we can begin restoring service to customers by closing circuit breakers, rerouting power and other means. But we must wait until sustained winds are less than 30 mph to use our bucket trucks."

Entergy said it has augmented its normal workforce with about 5,300 restoration workers. In a Category 1 storm, about 70% of customers are restored within two or three days, while that percentage extends to a range four to seven days for Category 2 storms, Entergy said.

Pineville, Louisiana-based Cleco serves much of the rest of Louisiana, and Clint Robichaux, Cleco director of distribution operations and reliability, said his company "is prepared to safely and efficiently respond to power outages ... as soon as conditions are safe."

"The company's focus will be on responding to unsafe electrical situations and restoring power to critical infrastructure, such as hospitals and water systems, and then restoring power to the greatest number of customers until power is restored to all," Robichaux said.

Power prices up

Despite weakening energy demand, wholesale power and gas prices have remained strong. MISO Louisiana Hub day-ahead on-peak locational marginal prices for Sept. 11 delivery averaged $27.30/MWh, up $2.88, or 11.8%, from Sept. 4's real-time on-peak LMP of $24.42/MWh.

Platts-assessed Into GTC day-ahead on-peak bilateral power for Sept. 11 delivery was $30.50/MWh, up $5.25, or 20.8%, from Sept. 4's $25.25/MWh. Platts is part of Commodity Insights.

Into Southern day-ahead on-peak power for Sept. 11 delivery was $28.67/MWh, up $5.17, or 22%, from Sept. 4's $23.50/MWh.

Intercontinental Exchange on Sept. 11 had no trading on these three power pricing locations for Sept. 12 delivery.

But Henry Hub trading on Sept. 11 priced spot gas at $2.14/MMBtu for Sept. 12 delivery, up from Sept. 11's $2.125/MMBtu and Sept. 4's $1.985/MMBtu.

Transco Zone 4 spot gas, important for GTC and Soco power, averaged $2.37/MMBtu for Sept. 12 delivery, down from Sept. 11's $2.49/MMBtu but up from Sept. 4's $2.145/MMBtu.

LNG feedgas dips

Operators of the three US LNG export terminals in Cameron Parish, Louisiana, closest to Francine's forecast path continued Sept. 11 to monitor the storm which tracked farther east than earlier forecasts.

Total feedgas demand for the three LNG export plants -- Cheniere's Sabine Pass LNG, the Sempra-led Cameron LNG and Venture Global's Calcasieu Pass LNG -- was about 6.8 Bcf/d on Sept. 11, compared to an average of about 8.1 Bcf/d in the first ten days of the month, according to Commodity Insights data, based on nominations for the morning cycle subject to revision.

Scheduled feedgas deliveries declined Sept. 11 to the Cameron LNG plant in Hackberry, Louisiana and to the Calcasieu Pass facility farther south.

The Sempra-led Cameron was scheduled to receive about 920 MMcf/d of feedgas Sept. 11, down from more than 1.8 Bcf/d the previous day. Flows to Calcasieu Pass were down to 1.2 Bcf/d on Sept. 11, compared to about 1.4 Bcf/d a day earlier.

Farther west near Texas, deliveries to Sabine Pass were scheduled to increase to more than 4.6 Bcf/d, up about 100 MMcf/d from the previous day. Cheniere said LNG production at the facility remained uninterrupted.

Venture Global said it was securing its Plaquemines site nearing startup on the Mississippi River south of New Orleans, closer to the storm's latest projected path. Small deliveries of natural gas for commissioning activities halted on Sept. 10 after six days of consistent flows.

A Venture Global-owned tanker waiting south of the facility since late August, the Venture Gator, left the Mississippi River for the US Gulf, where it was underway Sept. 11, S&P Global Commodities at Sea data showed. Another tanker, the Qogir, remained moored at the terminal Sept. 11, after US federal energy regulators on Sept. 6 granted Venture Global permission to unload a cargo from the ship to cool down the Louisiana facility as part of the commissioning work.