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EarthSat's Summer Forecast Calls for Cool East, Warm West, Plenty of Hurricanes

As the mild winter continues to wind down, the natural gas industry -- in looking for the next gas price indicators -- will soon change focus to the summer cooling season and the Atlantic hurricane season.

In updating its summer 2006 outlook, MDA EarthSat Energy Weather said its temperature forecast continues to favor seasonal to cooler than normal conditions for the eastern half of the U.S. and warmer than normal across the West.

"Our current summer outlook hinges on the expectation of a fading La Nina event," said Matt Rogers, deputy director and Meteorologist for MDA EarthSat. "This would favor a seasonal to cool summer in the Central to Eastern U.S., a stark change from last year.

"However, if the La Nina surprises us and stays as strong or stronger than its current condition, we will need to warm these areas for the upcoming summer. He noted that the amount of spring precipitation over current drought areas (mid-continent into Texas) will continue to be watched, adding that low soil moisture conditions tend to enhance high temperatures, at times.

With regard to the tropical forecast, Rogers noted, "We are expecting a very active tropical season with strong threat potential both for the Gulf and the Eastern Seaboard." He added that La Nina conditions often times enhance tropical activity in a given season, noting that the sea surface temperatures in parts of the Gulf of Mexico are already warmer than last year at this time.

The natural gas industry has adopted the idea of "Once bitten, twice shy" in response to the 2005 Atlantic Hurricane season, which set records for activity and destruction. According to the latest Minerals Management Service statistics (as of March 8), shut-in gas production in the Gulf of Mexico due to Hurricanes Katrina and Rita still stand at 1.403 Bcf/d, which is equivalent to 14.03% of the daily gas production in the Gulf. Since Aug. 26, 2005, a total of 672.694 Bcf has been lost due to the shut-ins, which is equivalent to 18.43% of the 3.65 Tcf of yearly production from the Gulf.

"The hurricane season is coming and it is expected to be another active one," said Ed Kennedy, a broker with Commercial Brokerage Corp. in Miami. "If we see a hot summer and another active hurricane season, you know what is going to happen to natural gas prices. There is no question they will go higher in a hurry."

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