NGI The Weekly Gas Market Report / NGI All News Access

3Q2012 Marketer Sales Flat, Despite Gains by BP, ConocoPhillips

Increased sales by BP plc and ConocoPhillips, along with a surge by J. Aron & Co., weren't enough to overcome third quarter doldrums among companies selling natural gas, according to NGI's 3Q2012 Top North American Gas Marketers Ranking.

Twenty-seven leading gas marketers reported combined sales transactions of 134.11 Bcf/d for 3Q2012, an increase of less than 1% (0.38 Bcf/d) from 133.73 Bcf/d in 3Q2011. The NGI survey is of sales transactions, not production, and transactions may include a company's own gas and that of others.

Company 3Q2012 3Q2011 Change
1. BP 23.10 22.00 5%
2. ConocoPhillips 16.18 15.31 6%
3. Shell Energy NA 12.60 13.10 -4%
4. Macquarie Energy* 9.84 9.77 1%
5. EDF Trading NA 7.61 7.67 -1%
6. Tenaska 6.60 5.80 14%
7. JP Morgan 6.09 6.84 -11%
8. Chevron 5.65 6.34 -11%
9. Sequent 5.30 4.90 8%
10. J. Aron & Co.*** 4.48 3.11 44%
11. Louis Dreyfus 4.33 4.22 3%
12. ExxonMobil ** 4.05 4.29 -6%
13. Chesapeake** 3.28 2.76 19%
14. Encana** 2.91 3.37 -14%
15. Citigroup 2.90 4.60 -37%
16. Devon** 2.55 2.61 -2%
17. Anadarko 2.50 2.27 10%
18. Hess 1.90 1.80 6%
19. Southwestern Energy Co 1.86 1.67 11%
20. ONEOK 1.76 2.03 -13%
21. Gavilon 1.50 1.42 6%
22. Apache** 1.47 1.48 -1%
23. CenterPoint Energy 1.40 1.37 2%
24. Canadian Natural 1.19 1.25 -5%
25. Gazprom 1.09 1.87 -42%
25. BOA Merrill Lynch 1.09 0.85 28%
27. Atmos 0.88 1.03 -15%
  Total 134.11 133.73 0%

Source: Quarterly financial reports with the Securities and Exchange Commission, or if necessary, statements signed by company officials and provided to NGI. Some previous-year data has been updated by the companies since it was originally reported.

Companies providing data directly to NGI include Bank of America Merrill Lynch, BP, Chevron, Citigroup, ConocoPhillips, EDF Trading NA, Gavilon, Gazprom, J. Aron & Co., JP Morgan, Louis Dreyfus, Macquarie Energy, Shell Energy and Tenaska. *Macquarie Energy data reflects Macquarie Energy LLC's transactions in the United States and Macquarie Energy Canada's transactions in Canada. **The gas volume figures for Apache, Chesapeake, Devon, Encana and ExxonMobil represent the amount of North American gas produced in the quarter. Those companies may be marketing more third-party gas for sale. ***J. Aron & Co. is the commodity trading subsidiary of Goldman Sachs.

Perennial survey leader BP reported 23.10 Bcf/d in 3Q2012, a 5% (1.10 Bcf/d) increase from 22.00 Bcf/d in 3Q2011. That was a bit of good news for the beleaguered energy giant, which recently agreed to pay more than $4.5 billion in fines to the federal government to settle criminal claims related to the Macondo well blowout in April 2010, (see NGI, Nov. 19). The U.S. Environmental Protection Agency said Nov. 28 it has temporarily suspended BP from new contracts with the federal government (see NGI, Dec. 3). Once the top natural gas producer in North America, BP now will be training its sights on oil, according to CEO Bob Dudley (see related story).

ConocoPhillips, the second-ranked company in NGI's survey, extended its run of quarterly increases, reporting 16.18 Bcf/d in 3Q2012, up 6% from 15.31 Bcf/d in 3Q2011, following a major reorganization. ConocoPhillips left the ranks of the Big Oil integrated producers and became the leading pure-play explorer in North America earlier this year when Phillips 66, the refining and marketing arm, was spun off (see NGI, April 23). ConocoPhillips' streak of quarterly increases dates back to NGI's 2Q2010 survey, when the company reported 14.60 Bcf/d, up 3% from 14.20 Bcf/d in 2Q2009.

Shell Energy NA, the third-ranked company in the survey, reported a 4% decrease with 12.60 Bcf/d in 3Q2012, compared with 13.10 Bcf/d in 3Q2011. Shell recently sold its 50% working interest in the Holstein Field in the GOM to Plains Exploration & Production Co. for $560 million (see NGI, Dec. 3). Unranked Plains also recently completed acquisitions of deepwater GOM oil and gas properties owned by BP, and is a candidate for takeover by Freeport McMorRan Copper and Gold Inc. (see related story).

Other top-10 companies posting increases compared with 3Q2011 were Macquarie Energy (9.84 Bcf/d, up 1% from 9.77 Bcf/d), Tenaska (6.60 Bcf/d, up 14% from 5.80 Bcf/d) and Sequent (5.30 Bcf/d, up 8% from 4.90 Bcf/d. A 44% increase -- 4.48 Bcf/d in 3Q2012 compared with 3.11 Bcf/d in 3Q2011 -- catapulted J. Aron & Co., the commodity trading subsidiary of Goldman Sachs, into the survey's top 10. Goldman Sachs bought J. Aron from Calgary-based Nexen Inc. two years ago (see NGI, May 17, 2010).

While prices have strengthened some in recent weeks as the market continues to adjust to the flood of natural gas coming out of the nation's shale plays, the natural gas market remains "out of balance," according to Maryland-based energy consultant Ben Schlesinger.

"We're still in a weak market position; we're in the mid-$3 range," Schlesinger told NGI. With prices remaining relatively low, more natural gas will be used by the chemical and power generation industries, in the transportation sector and as an export commodity, but much of that increased demand will take time to kick in. "The immediate market fixes are pipeline exports to Canada and Mexico, and coal replacement."

The biggest stumbling block to opening the liquefied natural gas (LNG) export market, according to Schlesinger, is the U.S. permitting process. "There are interested buyers...you have a favorable gap between the price of American natural gas into Asian markets versus what the Asians are paying now. And the same is true for some of the Europeans."

But price isn't the only consideration for international buyers. "I think buyers are interested in American natural gas supplies because they are interested in diversifying supplies...They can't wind up in a situation where they're entirely dependent on a small number of suppliers," Schlesinger said. Widening their supply base is important enough to overcome some price differences, he said. "We have only one challenge to LNG exports...and that's to get the Department of Energy [DOE] to license exports from a number of facilities."

A DOE-commissioned macroeconomic analysis of the impact of LNG exports issued Wednesday could clear the way for those licenses to be issued, Schlesinger said. The long-awaited independent study concluded that exporting liquefied domestic natural gas to world markets would generate a net benefit to the U.S. economy (see related story).

"I think it's very likely to result in export applications being approved, at least to an extent. I don't know that they'll approve every single project before them, but it would very much surprise me if they failed to approve any."

Highlights of NGI's 3Q2012 Top North American Gas Marketers Ranking include a 3% increase for Louis Dreyfus. (4.33 Bcf/d, compared with 4.22 Bcf/d in 3Q2011), a 19% increase for Chesapeake Energy Corp. (3.28 Bcf/d, compared with 2.76 Bcf/d in 3Q2011), a 10% increase for Anadarko Petroleum Corp. (2.50 Bcf/d, compared with 2.27 Bcf/d in 3Q2011), a 6% increase for Hess (1.90 Bcf/d, compared with 1.80 Bcf/d in 3Q2011) and an 11% increase for Southwestern Energy Co. (1.86 Bcf/d, compared with 1.67 Bcf/d in 3Q2011).

The 3Q2012 survey also saw a 6% increase for Gavilon (1.50 Bcf/d, compared with 1.42 Bcf/d in 3Q2011), a 2% increase for CenterPoint Energy (1.40 Bcf/d, compared with 1.37 Bcf/d in 3Q2011) and a 28% increase for BOA Merrill Lynch (1.09 Bcf/d, compared with 0.85 Bcf/d in 3Q2011).

The survey ranks marketers on sales transactions only. BP, ConocoPhillips, Shell and Macquarie were also the top four companies in NGI's analysis of 2011 Form 552 filings with the Federal Energy Regulatory Commission, which detailed total combined natural gas purchase and sales volumes (see NGI, June 4). The total yearly combined volume last year was the highest recorded since the Commission began releasing the data in 2009.

The U.S. Energy Information Administration recently said total U.S. marketed natural gas production remains at historically high levels but flattened during the first seven months of 2012, primarily in response to lower gas prices (see NGI, Oct. 8).

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