Taking a cue from Thursday’s Access trade sell-off, the futuresmarket continued lower Friday as traders fully discounted thecurrent trio of storms by aggressively exiting their longpositions. By 2:40 p.m., the September contract had fallen justshort of filling in the chart gap down to $2.805. However, $2.83was all that the sellers could muster and prices rallied in thelast 30 minutes of trading. The September contract settled at$2.912, down 3.6 cents for the day but up more than 8 cents fromits earlier low.
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Production Deficit Driving Spot Prices
Analysts are escalating their spot gas price forecasts, but it’snot the oft-cited storage fill that’s driving them.
Go Back to Drawing Board on OCS NOPR, FERC Told
Neither the interstate pipelines nor gas producers wereparticularly enamored of FERC’s latest attempt to create a morebalanced, lighter-handed system for regulating gas pipelines on theOuter Continental Shelf (OCS). They both agree the Commission fellshort of its goal in the July proposed rulemaking.
Calpine’s Buying Binge Engulfs CGCA
Acquisitive Calpine Corp. stuck to its strategy last Friday,saying it agreed to buy 80% of the Minneapolis, MN-basedCogeneration Corp. of America (CGCA) for $145 million. The proposedacquisition will increase Calpine’s gas-fired energy production to2,476 net MW of capacity, representing a 20% jump in production.Calpine expects to complete the deal in January.
New Entry in Northwest Territories Sweeps
Development is accelerating on Canada’s newest gas frontier as athird production project steps forward to tap discoveries in thesouthern Northwest Territories.
Industry Briefs
Crystal Gas Storage Inc. of Shreveport, LA, is reviewing itsoptions, including the possible sale of the company. Theindependent gas storage company hired Goldman, Sachs & Co. toassist with the strategic review and said no transactions arepending. The company said there would be no more announcementsunless and until a deal comes about or the effort is scrapped.Crystal Gas Storage owns and operates, through wholly ownedsubsidiaries, two storage facilities near Hattiesburg, MS, andholds various interests in gas properties, primarily in Arkansasand Louisiana.
People
PP&L Inc. named John Cotter vice president-energy marketing& trading. Cotter, who has more than 20 years of experience inthe marketing and trading of electricity, gas and oil, has servedas senior vice president-marketing for PP&L EnergyPlus,PP&L Inc.’s electricity sales subsidiary. He replaces MichaelT. Steffes, who last week resigned from PP&L, Inc. to pursueother interests. Cotter has been serving in the PP&L EnergyPlussenior vice president position since October.
Transportation Notes
ANR notified interruptible storage customers under the DDS andMBS rate schedules that they will be limited to zero net injectionsduring the Sept. 1-Oct. 31 period. Injections will be allowed intoDDS/MBS accounts only if the customer withdraws an equal or greateramount of gas prior to Nov. 1.
Independents Dominate Lackluster Lease Sale
If the results of last week’s Gulf of Mexico lease sale are any indication, the federal government is now feeling the effects of weak commodity prices and industry consolidation.
Calpine Flexes Its M&A Muscles; Buys Cogeneration Corp., Sheridan
Calpine Corp. jumped into the center of the energy industryM&A activity last week, as it made bids to purchase Houston,TX-based Sheridan Energy and acquire 80% of Cogeneration Corp. ofAmerica (CGCA). Both mergers are expected to be completed by theend of the year.