Newspaper article THE JOURNAL RECORD

Hurricane Spurs Surge in Natural Gas Prices

Newspaper article THE JOURNAL RECORD

Hurricane Spurs Surge in Natural Gas Prices

Article excerpt

By Ronda Fears

Journal Record Staff Reporter

Hurricane Andrew was blamed for a 10-cent jump in average September natural gas spot prices from August that was revealed in a survey Monday by the Natural Gas Clearinghouse in Houston.

The average $1.89 per million British thermal unit for September was the highest since September 1985. That was also the average price at four receipt points in Oklahoma, up 20 cents from August.

Futures prices also responded to the storm, skyrocketing 17 cents Friday to $2.11 per million British thermal units for the October contract, producing an astronomical 31.5-cent gain for the week on the New York Mercantile Exchange.

On Monday, the October contract for natural gas closed at $2.111/5 per million British thermal units, down 3/10 of a cent from Friday's close.

The Natural Gas Clearinghouse survey covers mostly Gulf Coast receipt points in Louisiana and Texas, but also includes four points in Oklahoma and one in Wyoming. The Clearinghouse has tracked prices in the spot market since its inception in March 1985.

"The increase in September prices is attributable primarily to the shut-in of gas production caused by Hurricane Andrew," said Clearinghouse Vice President Kenneth E. Randolph.

An estimated 60 percent of offshore gas production in the Gulf of Mexico was halted when Andrew struck the gulf last Tuesday, according to the Interstate Oil and Gas Compact Commission based in Oklahoma City. It was down for two days, partially resuming late Thursday. Offshore platform operators speculated that 90 percent of production would be resumed by Sunday, the rest in a week or longer.

It is not yet discernible how the shutwn in the gulf will affect U.S. gas supplies, but the perceived effect of a shortage, albeit temporary, in the marketplace is reflected by the uptick in prices.

In Oklahoma, the Clearinghouse survey showed an average $1.89 per million British thermal units, up 12 percent from $1.71 in August. It was a 60-cent gain, or 46 percent increase, from $1.30 in September 1991.

Surveywide, the average September spot price of $1.89 per million British thermal units was 41 percent higher than $1.34 in September 1991 and 6 percent greater than $1.79 in August.

Not since 1985 have gas prices been so high. For September 1985, spot gas prices averaged $2.25 per million British thermal units, according to the Clearinghouse.

Oklahoma regulators have paved the way for Sooner gas producers to crank up output to try to offset losses due to the shut-in gulf gas. Last week, proration limits on gas production in Oklahoma were raised for two weeks. Thereafter, the higher production limit may be extended, if needed, the Oklahoma Corporation Commission said. Oklahoma is ranked second among gas producing states, behind Texas, when federal offshore gas is excluded from Louisiana. …

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