Williams Gas Explosion Cuts Pipe Flows as Town EvacuatedLynn Doan and Robert Tuttle
Williams Cos. halted natural gas supplies to interstate pipelines from its Opal plant in Wyoming, a major processing point and pricing hub for the fuel in the western U.S., after an explosion that triggered a town-wide evacuation. Prices rose in New York.
Natural gas gathering from surrounding areas stopped after the blast, which occurred at about 2 p.m. local time yesterday, Williams said in a statement. No injuries were reported and an investigation into the cause of the incident will start when it’s safe to return to the plant, which was recently processing about 1 billion cubic feet a day of gas, according to the company. Opal, with fewer than 100 residents, was evacuated as a precaution, a county official said.
The outage threatens to trap supplies from the Rocky Mountains at the Opal hub, where interstate pipelines operated by Williams, Questar Corp., Kern River Gas Transmission Co. and Colorado Interstate Gas Co. LLC collect fuel. A prolonged disruption may boost spot prices at other supply centers for the western U.S., including the Waha Hub in Texas.
“We might see a few-cents blip on gas at the Henry Hub” in Louisiana, the delivery point for futures traded on the New York Mercantile Exchange, said James Williams, president of WTRG Economics, an energy consultant in London, Arkansas. “Gas out of West Texas should also get a little bump for a while until this is resolved.”
Natural gas for May delivery rose 5.4 cents, or 1.1 percent, to $4.784 per million British thermal units at 8:11 a.m. on the Nymex. The contract advanced to $4.805 earlier today, the highest since since Feb. 26.
Spot prices at Opal rose 6.02 cents to $4.6288 per million Btu yesterday, before the blast, while Waha supplies gained 6.93 cents to $4.7079, data compiled by Bloomberg show.
“Cash prices rather than futures are more likely to react, but that will really depend on how long the plant will be out,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by e-mail today.
A fire was burning at the site of the blast as of 11 p.m. yesterday, Michele Swaner, a Williams spokeswoman, said by phone today. “Right now, we can’t provide any supply in our out of that facility,” she said.
Williams will make an assessment after the fire is out, George Angerbauer, a company spokesman, said by phone today.
The explosion affected cryogenic processing unit TXP-3, one of five at the facility, which has a maximum capacity of 1.5 billion cubic feet a day, the company said in the statement. Opal was evacuated in case the fire at the complex spread and created a smoke plume, Stephen Malik, a Lincoln County spokesman based in Afton, Wyoming, said by telephone yesterday.
Kern River notified shippers yesterday that Williams had cut volumes and would reduce flows to zero. The line operator extended its nomination deadline to allow its customers time to find replacement supplies.
The Opal hub is linked to pipelines servicing the Rocky Mountains-Western gas transportation corridor, which supplies western states including California and Nevada, according to a document posted on the U.S. Energy Department’s Energy Information Administration website.
“The plant has a capacity of 2 percent of total U.S. gas output,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. He described the Henry Hub price reaction as “muted.”
Highway 30, the main road through Opal, was shut between the towns of Kemmerer and Granger, and a railway that services the town was temporarily shut, the Lincoln County Sheriff’s Office said in a release dated yesterday and posted on its website. The chance of further explosions “is very minimal,” according to the statement.