We all lived it…but I came upon a graphic this weekend that I found interesting. It ranks this winter (December through February) for each state compared to its coldest winters in history. For example, I live in Oklahoma and this was the 12th coldest winter in Oklahoma history…even though to me, a native Iowan, it felt like a walk in the park.
Here are the rankings:
Predictably, the upper Midwest was in the ice box, with Ohio, Arkansas, Louisiana, Mississippi, Tennessee and Kentucky experiencing Top 20 all time coldest winters, too.
I was surprised to see North Carolina, Georgia and South Carolina’s rankings. It ‘felt’ colder than that from my vantage point.
Here is the underlying deal; we just have logistical challenges in this industry and they are not getting better as quickly as we need. Apex is susceptible to truck demand from the Northeast and has been inundated as such for much of the winter. Demopolis is susceptible to truck demand from Arkansas, Tennessee, Missouri, Illinois and Indiana; we saw that this winter. Out of market demand helped to create some of the Dixie challenges we experienced in January and February, in addition to one company cornering the Hattiesburg market.
In looking ahead to the 2014-2015 season, I see similar logistical challenges. I just got done speaking with one of our traders as we are trying to line up our supply deals and differentials for next year, right now. The numbers we are seeing this year are NOWHERE near what we saw last year. One year ago, we had companies willing to lock in summer and winter differentials at a Belvieu-plus level. Thus far, we haven’t seen one producer offering such deals in the winter…they will go up to November, but no farther.
That was to be expected when the Belvieu to Hattiesburg differential blew out over $1.00 for well over a month in the heart of winter and companies were delivering gas at Belvieu plus $.08 to $.12 depending on where you were on the pipeline. When some companies had to step back into the market and buy to honor some deals, they lost their shirts.
I strongly urge you to look at locking in pieces right now…some of you have done this and I feel confident these numbers are going to be good at several points between May 2014 and March 2015.