Houston — Hurricane Florence, which made landfall near Wrightsville Beach, North Carolina, Friday morning, put a damper on natural gas demand in the Carolinas and parts of the US Southeast.
The storm, which knocked out power to more than 700,000 customers in North and South Carolina as of Friday afternoon, was slowly making its way across the states, where it was expected to continue to generate strong winds and up to 40 inches of rain in some areas, according to AccuWeather.
Gas prices on the Eastern Seaboard were depressed as the storm caused power outages and lower temperatures, which both served to tamp down demand for gas.
Emergency management officials from North Carolina and South Carolina Friday afternoon both reported no significant impact from the storm to major natural gas or electric generating facilities in their respective states. As of about 3 pm Eastern Time Friday, North Carolina was reporting about 650,000 customers had lost power while South Carolina reported only about 67,000 customers had lost power.
PIPELINE NOTICES
Two interstate pipeline systems posted notices Friday, relating to the demand declines caused by Florence.
Transcontinental Gas Pipeline has declared an operational flow order for Zones 4-6 with a minimum of $50/Dt/d penalty.
Columbia Gas Transmission declared a "critical day" for storage injections through Monday's gas day with $5/Dt penalties paid for injection volumes in excess of 110% of companies' maximum daily injection quantity.
PRICES
At Transco Zone 5 delivered, prices were down about 10 cents to $2.83/MMBtu, reflecting the sharp decline in demand in North Carolina related to the power outages as the storm made landfall.
On Friday, demand for gas in North Carolina was estimated by S&P Global Platts Analytics at 1.275 Bcf/d, a drop of 452 MMcf/d from Thursday. The drop in prices at Transco Zone 5 then rippled up the pipeline, depressing points along the way. Significant decreases were seen at Zones 4 and 3, sending the locations to 30-day lows, with the former trading at $2.78/MMBtu, down 9 cents, and the latter down 8 cents to $2.775/MMBtu
Further away Zone 2 shed 8.5 cents to $2.77/MMBtu and Zone 1 dropped 5 cents to $2.795/MMBtu.
SUPPLY AND DEMAND
On Friday afternoon, Florence retained its status as one of the strongest storms to hit North and South Carolina, meaning natural gas demand remained very much at risk for large declines throughout Friday and into the weekend. Hurricane Florence's initial blows to demand could already be seen Thursday evening, based on evening cycle nominations for gas day 14, with total sample demand across North Carolina and South Carolina falling to 1.8 Bcf/d, a day-on-day decrease of 470 MMcf/d and a decrease of 530 MMcf/d from the prior 30-day average, according to Platts Analytics.
Falling temperatures are predicted to remain a large driver for initial declines this week as power plant deliveries made up over 60% of declines for Friday compared with the previous 30 days. Transco's Duke Energy Carolinas power plant in North Carolina experienced the strongest decline day-on-day, falling 335 MMcf/d, while its local distribution company's facility, Piedmont Natural Gas, also fell 147 MMcf/d. However, given that these are evening-cycle nominations, later nomination cycles could experience downward revisions, according to Platts Analytics.
