New Storm Nicholas

As Tropical Storm Nicholas threatened flash-flooding and a storm surge for the Texas Gulf Coast on Sept. 13, Louisiana electric utilities progressed restoring power from Hurricane Ida, but more than 110,000 customers still lacked service as of mid-afternoon.

Power demand in the Electric Reliability Council of Texas was lighter than usual, but power prices on Sept. 13 stronger than any of the past give years on that date.

The National Weather Service in its 1 pm CT Sept. 13 public advisory said the southern and middle Texas coasts faced "flash flooding, dangerous storm surge and gusty winds" from Nicholas, which packed maximum sustained winds of 60 mph.

The storm was forecast to stay just offshore and "could be near hurricane strength when it reaches the northwest Gulf Coast," with tropical-storm-force winds extending as much as 115 miles from the center. The latest forecast shows the storm making landfall before 7 am Sept. 14 between Corpus Christi and Port Lavaca.

Lighter loads, stronger prices

As of about 3:15 pm CT, ERCOT's systemwide power demand had reached 56 GW, and the system was forecast to only reach 57.9 GW for the day, less than the previous five-year average of almost 59 GW on Sept. 13, ERCOT data shows.

However, this year's strong natural gas prices kept real-time and day-ahead on-peak locational marginal prices well above average for Sept. 13.

Extreme Weather Implications

Preliminary loss estimates from Hurricane Ida approach $25 billion, but should remain well below what the U.S. Gulf Coast saw in August 2005 when it was devastated by Hurricane Katrina.

Power Outages

Wireless carriers are busily working to restore cell service in areas hard hit by Hurricane Ida, but power outages and flooding remain a hurdle.

Over 1 million power customers are expected to be without power for weeks. About 12.7% of cell sites in the affected area remain out of service, with the greatest outages in Louisiana, the Federal Communications Commission reported Sept. 1. The figure was down from 17.1% a day earlier and 28.1% on Aug. 30.

In Louisiana, 28.5% of cell sites in the state's impacted areas remain out of service as of Sept. 1, down from 38.1% a day earlier. Counties with more than 50% of cell sites down include Lafourche, Plaquemines, St. Helena, St. James and Terrebonne. On Aug. 31, all of the 81 cell sites in Terrebonne County had been down.

Alabama and Mississippi are experiencing service disruptions of a lesser degree. On Sept. 1, Alabama had 5 cell sites down on its coast, while Mississippi had 31.

AT&T Inc. is the provider for 911 call centers in Louisiana. Emergency services in the state are currently transitioning to AT&T's ESInet Service, which aims to create more reliable, insightful emergency service calls, but outages on the network are making it impossible for many to get ahold of emergency personnel.

The Orleans Parish Communication District notified the public on Aug. 30 that it was experiencing technical difficulties due to outages at AT&T. They told citizens the best way to seek help would be approaching police officers and going directly to fire stations.

According to an Aug. 31 statement from the company, 90% of AT&T Inc.'s Louisiana network was operating normally as of 9 p.m. CT. The previous day, AT&T's Louisiana service was operating at 82% normal.

Damages

Damage assessments at Louisiana petrochemical facilities affected by Hurricane Ida continued Sept. 2, as most awaited restoration of power.

"Entergy is working their way up the river, and it's slow," a market source said of the region's major power provider's efforts to restore access to electricity in the Category 4 storm's wake.

Some facilities had power, such as Shell Chemicals' Geismar complex and Formosa Plastics USA's operations, 22 miles north in the state capitol of Baton Rouge, but most remained without electricity amid lengthy damage assessments. Some with power still lacked inflows of critical feedstocks, such as industrial gases, as third-party suppliers awaited power restoration.

Westlake Chemical on Sept. 2 declared force majeure on caustic soda throughout the company's system in the storm's aftermath, according to a customer letter seen by S&P Global Platts.

Westlake had already declared force majeure Sept. 1 on downstream vinyl chloride monomer and polyvinyl chloride, also citing impacts from the storm on its two complexes in Geismar and Plaquemine along the Mississippi River, according to a separate customer letter seen by Platts.

Caustic soda, a byproduct of chlorine production, is a key feedstock for alumina and pulp and paper industries. Chlorine is the first link in the production chain for PVC, a construction staple used to make pipes, window frames, vinyl siding and other products. VCM is the immediate precursor to PVC.

Energy Disruption

U.S. Energy Information Administration raised its spot natural gas price estimates for the rest of 2021, as flat production further hindered by Hurricane Ida combined with lower natural gas injections and robust exports to affect the agency's short-term outlook.

EIA in its September Short-Term Energy Outlook raised its forecast for Q3 Henry Hub natural gas spot prices by 29 cents to $4/MMBtu. The Q4 forecast rose even more sharply, by 54 cents from the previous month's estimates to $4/MMBtu.

"Hurricane Ida affected natural gas production at a time that the United States was already experiencing higher natural gas prices due to growth in exports, strong domestic natural gas consumption, and relatively flat natural gas production," said EIA Acting Administrator Steve Nalley, in a statement accompanying the report. "Lost production from the storm combined with these current market conditions has limited our ability to build up natural gas inventories, and we expect that will keep prices higher in the short term than we had previously thought."

The agency projected Henry Hub prices would average $3.63/MMBtu for full-year 2021 and $3.47/MMBtu in 2022 -- up 21 cents and 39 cents, respectively, from the previous month's estimates.

EIA expects natural gas and crude oil production, as well as refining, will gradually come back online through September, after Hurricane Ida led producers to close more than 90% of capacity in the Gulf of Mexico, it said.

On the NYMEX, Henry Hub futures prices on Sept. 8 jumped more than 30 cents, with the December and January contracts climbing to historic highs at over $5/MMBtu, as the market grows increasingly concerned over the sustained drop in offshore production and persistently low US inventory levels.

In highlighting higher August spot prices, EIA said the rise mostly reflected growth in LNG exports, rising consumption for sectors other than power, and relatively flat production.

"Forecast Henry Hub prices this winter reach a monthly average peak of $4.25/MMBtu in January and generally decline through 2022, averaging $3.47/MMBtu for the year amid rising US natural gas production and slowing growth in LNG exports," the outlook said.

Trade Interruptions

Weekly U.S. coal ship departures plummeted in the week ended Sept. 5 due to Hurricane Ida and its aftermath.

Twenty-nine coal ships carrying nearly 1.48 million dwt of coal departed the U.S., down 42.2% from 2.55 million dwt on 41 ships the previous week, Platts cFlow trade-flow analytics software showed Sept. 7.

The laden and part-laden ships departed the United States' major shipping zones – the Gulf, Atlantic and West Coasts – between Aug. 30 and Sept. 5, according to cFlow data. Gibraltar was set to receive the most U.S. coal shipments, at 2.74 million dwt. Japan followed with 1.32 million dwt, and Turkey was scheduled to receive the third-most US coal shipments.

Gulf Coast

With shipments delayed by Hurricane Ida, coal ship departures from the Gulf Coast dropped 64.7% week on week. Gulf Coast coal ship departures fell to a 10-week low of six carriers. At 119,041 dwt of coal, Turkey was the top destination for U.S. coal shipped from the Gulf Coast. Brazil followed with 63,474 dwt of Gulf Coast-shipped coal destined for its shores. Rounding out the top three was Guatemala, set to receive 37,685 dwt of coal from the U.S. Gulf Coast.

Atlantic Coast

Similarly affected by severe weather, Atlantic Coast coal shipments decreased 30% week on week to 14 ships. Destined to receive 274,385 dwt of U.S. coal, Gibraltar was the top destination for coal shipped from the Atlantic Coast. The United Kingdom followed, set to receive 114,890 dwt of US coal. The country importing the third-largest amount of U.S. Atlantic Coast coal was Sweden, scheduled to receive 84,000 dwt.

West Coast

While fewer coal ships departed from the Gulf and Atlantic regions, week-on-week West Coast coal ship departures increased by 125%. In the week ended Sept. 5, nine coal carriers departed the West Coast, up from four the week before and three in the year-ago week. Set to receive 1.32 million dwt of coal, Japan was the top destination for US coal shipped from the West Coast. Chile followed with 61,338 dwt of coal headed for its shores from the U.S. West Coast. Panama was scheduled to receive 46,500 dwt of US coal shipped from the West Coast.

Further Reading