Companies participating in NGI's quarterly North American natural gas marketer survey reported nearly the same results in 4Q2011 as in the year-ago period, and a 1% decline in full-year 2011, compared with 2010.

Warm winter weather helped lower natural gas prices, flatten sales in 4Q2011 and led to a 1% decline in 2011, according to NGI's 4Q2011 Top North American Gas Marketers Ranking and NGI's Full-Year 2011 Top North American Gas Marketers Ranking.

Total sales transactions among NGI's surveyed companies were nearly unchanged in 4Q2011, compared with 4Q2010. Twenty-six of the leading companies participating in NGI's survey had total sales transactions of 135.29 Bcf/d in 4Q2011, compared with 135.86 Bcf/d that they transacted in 4Q2010. And there was a 2.00 Bcf/d (1%) decline in the total sales transactions for the 12-month period, according to the survey. Three of the top five marketers for both the quarter and the year posted a decline in sales.

Even so, 2011 saw an increase in domestic gas production of 4.3 Bcf/d, or 7.5%, over 2010, marking the largest year-over-year production jump in the last 25 years, according to Bentek Energy LLC (see Daily GPI, March 15). Production growth has stalled or declined in the last six months everywhere except in the Marcellus Shale as producers scale back dry gas activity due to low prices, Bentek said.

Surveyed sales volumes are always higher than production since the survey includes sales by several companies of the same package of gas. The fact that sales volumes declined while production increased could be ascribed to lower prices dampening trading and spawning fewer multiple trades. It also could be that more production went into storage to be sold later.

Company 4Q2011 4Q2010 Change
1. BP 23.90 25.10 -5%
2. ConocoPhillips 16.10 14.70 10%
3. Shell Energy NA 13.80 15.10 -9%
4. Macquarie Energy* 10.82 11.46 -6%
5. EDF Trading NA 7.22 7.23 0%
6. Louis Dreyfus 7.20 6.89 4%
7. Chevron 6.42 6.67 -4%
8. JP Morgan 6.21 6.39 -3%
9. Tenaska 6.00 6.70 -10%
10. Sequent 5.44 4.98 9%
11. ExxonMobil ** 4.41 4.43 0%
12. J. Aron & Co.*** 3.56 n/a n/a
13. Encana** 3.46 3.23 7%
14. Citigroup 3.40 2.24 52%
15. Chesapeake** 2.96 2.56 16%
16. Devon** 2.66 2.53 5%
17. Anadarko 2.33 2.14 9%
18. ONEOK 2.24 2.46 -9%
19. Hess 2.01 2.37 -15%
20. Southwestern Energy Co 1.75 1.51 16%
21. CenterPoint Energy 1.64 1.57 4%
22. Apache** 1.49 1.43 4%
23. Gavilon 1.41 n/a n/a
24. Enserco 1.40 1.58 -11%
25. Canadian Natural 1.28 1.25 2%
26. BOA Merrill Lynch 1.13 1.45 -22%
27. Gazprom 1.04 1.23 -15%
28. Atmos 0.99 1.03 -4%
  Total 138.85 n/a n/a

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.

BP plc continued to hold the top spot in the survey, despite reporting decreases in both quarterly and annual physical sales of natural gas. The energy giant reported physical sales of 23.90 Bcf/d in 4Q2011, a 5% decline from 25.10 Bcf/d in 4Q2010, and it reported average sales of 23.00 Bcf/d for 2011, a 12% decline from 26.10 Bcf/d in 2010.

BP still faces legal hurdles related to the Macondo well blowout in the deepwater Gulf of Mexico two years ago, but it jumped a big one earlier this month when it clinched a hard-fought settlement with the Plaintiff's Steering Committee, which acts on behalf of individuals and businesses in multi-district litigation proceedings pending in New Orleans (see Daily GPI, March 6a).

Despite those declines, BP remains out of reach for ConocoPhillips, the second-ranked company in NGI's quarterly survey, which reported 16.10 Bcf/d in 4Q2011, a 10% increase from 14.70 Bcf/d in 4Q2010. ConocoPhillips was also the second-ranked company in NGI's Full-Year 2011 survey, reporting an average 15.45 Bcf/d, a 5% increase from 14.65 Bcf/d in 2010. In January ConocoPhillips said it was shutting in about 100 MMcf/d in North America and didn't anticipate spending heavily on new natural gas drilling this year (see Daily GPI, Jan. 26).

Shell Energy didn't fare as well, reporting 13.80 Bcf/d in 4Q2011, a 9% decline from 15.10 Bcf/d in 4Q2010, and 13.20 Bcf/d for 2011, a 15% decline from 15.60 Bcf/d in 2010. Parent company Royal Dutch Shell plc recently said it is working on ways to leverage its abundant gas resources in North America and has plans progressing for liquefied natural gas (LNG) exports, gas-to-liquids and gas-to-chemicals facilities, as well as LNG for transport (see Daily GPI, Feb. 3). U.S. gas prices continue to weigh on the company's decisions, according to CEO Peter Voser.

Stubbornly low prices are behind a growing number of decisions in the industry and, according to Houston Energy Partners co-manager John Olson and other analysts, there is no quick fix in sight.

"The industry seems to be stuck in a 'value trap,' to use a Wall Street phrase, where a lot of producers have to sell their gas for whatever reason -- maybe just to pay their note at the bank -- while some others are selling their gas because they're hedged at $4 or $5 or $6, and the misery index is accordingly high," Olson told NGI.

Anemic natural gas prices may not bottom out until later this year, Olson said. "Here we are at about $2.25/Mcf, with the expectation of it going even lower. But to make money in this business on an all-in cost basis, you need about $7/Mcf on average...just to get that $7/Mcf you have to look out to 2025. We're going through the capitulation stages right now. People are saying 'we're selling our gas, we'll get whatever we can for it.'"

Chesapeake Energy Corp., which reported 2.96 Bcf/d in 4Q2011, a 16% increase from 2.56 Bcf/d in 4Q2010, bowed to low prices last month, upping its curtailments to about 1 Bcf/d of gross operated gas output, or about 1.5% of U.S. Lower 48 gas production, primarily in the Haynesville and Barnett shale plays (see Daily GPI, Feb. 22). Chesapeake originally curtailed 0.5 Bcf/d in January (see Daily GPI, Jan. 24).

"That's not terribly surprising under the circumstances," Olson said. "It's not a terribly pretty story near term, but the expectation is that gas will hit rock bottom by September and then start crawling back."

What will pick up the slack in the slumping natural gas market? Don't expect the transportation sector to soak up much of that surplus any time soon, Olson said.

While there has been plenty of recent news about automakers unveiling new natural gas vehicles (NGV) (see Daily GPI, March 8a; March 8b; March 6b), the Senate last week failed to support an amendment to jump-start the adoption of NGVs and support infrastructure for large trucking fleets (see Daily GPI, March 14).

NGVs becoming a significant sector of the nation's transportation fleet remains "a long ways away still because of the lack of infrastructure," Olson said. "Natural gas as a transportation fuel is a wonderful idea, no ifs, ands or buts about it, especially if you can improve the technology...what you need is big, heavy storage for compressed natural gas, and that works in buses and trucks very well, but for cars I'm not sure. Down the road it would make a lot of sense."

Highlights of NGI's 4Q2011 Top North American Gas Marketers Ranking include a 4% increase for Louis Dreyfus (7.20 Bcf/d, compared with 6.89 Bcf/d in 4Q2010), enough to bump the Stamford, CT-based to No. 6 in the survey from No. 12 in 3Q2011. The 4Q2011 survey also saw a 9% increase for Sequent (5.44 Bcf/d, compared with 4.98 Bcf/d in 4Q2010); a 52% increase for Citigroup (3.40 Bcf/d, compared with 2.24 Bcf/d in 4Q2010); a 5% increase for Devon Energy Corp. (2.66 Bcf/d, compared with 2.53 Bcf/d in 4Q2010); a 9% increase for Anadarko Petroleum Corp. (2.33 Bcf/d, compared with 2.14 Bcf/d in 4Q2010); and a 16% increase for Southwestern Energy Co. (1.75 Bcf/d, compared with 1.51 Bcf/d in 4Q2010).

Joining the NGI survey are Hess Corp., which reported 2.01 Bcf/d in 4Q2011 and 2.17 Bcf/d in 2011, and Omaha, NE-based Gavilon, which reported 1.41 Bcf/d in 4Q2011 and 1.29 Bcf/d for 2011.

Black Hills Corp. earlier this month closed the sale of energy marketing unit Enserco Energy Inc. to Houston-based Twin Eagle Resource Management LLC for $160-170 million (see Daily GPI, March 5). Enserco sold 1.40 Bcf/d in 4Q2011, an 11% decline from 1.58 Bcf/d in 4Q2010, Black Hills officials said during a conference call with investors last month (see Daily GPI, Feb. 7). In 2011 Enserco sold 1.52 Bcf/d, a 4% decline from 1.59 Bcf/d in 2010.

Company Full Year 2011 Full Year 2010 Change
1. BP 23.00 26.10 -12%
2. ConocoPhillips 15.45 14.65 5%
3. Shell Energy NA 13.20 15.60 -15%
4. Macquarie Energy * 10.23 11.46 -11%
5. EDF Trading NA 7.22 6.50 11%
6. JP Morgan 6.68 4.88 37%
7. Chevron 6.35 6.77 -6%
8. Tenaska 6.25 6.30 -1%
9. Louis Dreyfus 5.58 7.60 -27%
10. Sequent 5.21 4.57 14%
11. ExxonMobil ** 4.33 3.16 37%
12. Citigroup 3.57 2.12 68%
13. J. Aron & Co. 3.42 n/a n/a
14. Encana ** 3.33 3.18 5%
15. Chesapeake ** 2.75 2.53 9%
16. Devon ** 2.61 2.55 2%
17. Anadarko 2.33 2.27 3%
18. ONEOK 2.32 2.52 -8%
19. Hess 2.17 2.02 7%
20. Southwestern Energy Co. 1.68 1.36 24%
21. CenterPoint Energy 1.53 1.50 2%
22. Enserco 1.52 1.59 -4%
22. Gazprom 1.52 n/a n/a
24. Apache ** 1.50 1.13 33%
25. Gavilon 1.29 n/a n/a
26. Canadian Natural 1.26 1.24 2%
27. Atmos 1.05 0.96 9%
28. BOA Merrill Lynch 1.01 1.57 -36%
  Total 138.36 n/a n/a

Source: Quarterly financial reports with the Securities and Exchange Commission, or if necessary, statements signed by company officials and provided to NGI.

Companies providing data directly to NGI include Bank of America Merrill Lynch, BP, Citigroup, Chevron, ConocoPhillips, EDF Trading NA, Gavilon, Gazprom, J. Aron & Co., JP Morgan, Louis Dreyfus, Macquarie Energy, Shell Energy and Tenaska. *Macquarie Cook Energy data reflects Macquarie Cook Energy LLC's transactions in the United States and Macquarie Cook 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.

In NGI's Full-Year 2011 Top North American Gas Marketers Ranking, highlights include an 11% increase for EDF Trading NA (7.22 Bcf/d, compared with 6.50 Bcf/d in 2010); a 37% increase for JP Morgan (6.68 Bcf/d, compared with 4.88 Bcf/d in 2010); a 37% increase for ExxonMobil Corp. (4.33 Bcf/d, compared with 3.16 Bcf/d in 2010); and a 68% increase for Citigroup (3.57 Bcf/d, compared with 2.12 Bcf/d in 2010).

The survey ranks marketers on sales transactions only. In a separate analysis of federal filings of gas sales, purchases and production last year, NGI found that BP was the only one of the top five U.S. producers of natural gas that also showed up among the top five gas marketers in 2010 (see Daily GPI, July 14, 2011). BP led the marketers in combined sales and purchase volumes, followed by Shell, ConocoPhillips, Macquarie and JP Morgan, according to the in-depth NGI report, based on 2010 Form 552 filings with the Federal Energy Regulatory Commission.

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