Wyoming natgas facility still ablaze after blast, supplies cut

by Reuters
Thursday, 24 April 2014 22:02 GMT

(Adds quotes from Williams, analyst; pricing)

NEW YORK, April 24 (Reuters) - A fire was still raging at Williams Companies Inc's natural gas processing plant in southwestern Wyoming on Thursday, a day after an explosion rocked the site, disrupting supplies in a hub in the Rockies.

Gathering pipelines that run to the facility remained shut, interrupting nearly 1 billion cubic feet per day of output, about a quarter of daily supply at the Opal, Wyoming gas hub, according to the company and the state pipeline authority.

That grouping of five pipelines, including two owned by Kinder Morgan , and several processing plants move about 4-5 bcf/day of natural gas at this time of year, mostly to Western states.

No injuries were reported and the cause of the fire is unknown.

With the length of the outage unknown, traders said the cash natural gas basis in the Western United States was stronger on Thursday. One trader said the impact will be minimal, barring a prolonged shutdown as demand subsides after the winter.

The Opal natural gas for May delivery was up 2.5 cents early Thursday, although no trades were reported on the IntercontinentalExchange (ICE).

Williams sent employees to the plant to "secure and evaluate its operations," it said in a statement on its website. They will estimate how long the plant will be shut, it said.

"There is residual fuel inside the plant and that's feeding the fire," said George Angerbauer, a Williams spokesman at the site. "In stages, we will isolate the fire closer to its source and we expect it to burn out."

Cash natural gas to be delivered to the Western United States on Friday rose with the exception of two delivery points, according to a daily ICE report.

"The market sees this as a relatively short-lived development," said Teri Viswanath with BNP Paribas in New York.

"It is really the timing of that event - had it occurred a month or two earlier, regional market prices likely would have blown out," she added.

The cash Opal Hub price on ICE for delivery on Friday did not trade on Thursday after rising 6 cents to $4.63 per million British thermal units a day earlier, while other hubs in the region rose from 3 cents to 21 cents on Thursday.

The blast is at least the second explosion at a Williams plant in four weeks. A fire and explosion damaged the company's liquefied natural gas facility in rural Washington state in late March.

Residents of nearby Opal, who were evacuated after the fire and explosion broke out at 2 p.m. MDT (2000 GMT) on Wednesday, were allowed to return home Thursday morning.

The latest outage comes at a time when natural gas stocks are at 11-year lows following high demand during an especially brutal winter. Analysts are concerned that the industry will not be able to restore depleted inventories by next winter.

Williams' Opal plant can produce about 2 percent of U.S. daily natural gas supply but has been running at less than full capacity, according to the company.

It processes natural gas from local wells by stripping out impurities before dry gas is injected into pipelines. Natural gas liquids are separately sent to different pipelines.

The other parts of the hub continued normal operations on Thursday.

"That specific source of supply from Williams is shut in. The other processing plants and all the other pipelines are unaffected and continuing to flow," said Brian Jeffries, executive director of the pipeline authority. (Reporting by Selam Gebrekidan and Scott Disavino in New York and Terry Wade and Eileen O'Grady in Houston; Editing by Lisa Von Ahn and Dan Grebler)

Our Standards: The Thomson Reuters Trust Principles.