Anticipated

Monday’s huge surge of cash bullishness came to a near-standstill Tuesday, and several NGI sources indicated they expect a gradual price slide to begin Wednesday. Other than moderate increases in the Northeast, Rockies/Pacific Northwest and California and stronger gains in Western Canada, most points were flat to less than a nickel higher Tuesday (a few scattered small declines also were part of the mix).

In a much-anticipated initial decision Monday, Chief Administrative Law Judge Curtis Wagner found that El Paso Natural Gas withheld “extremely large amounts of capacity” from shippers on its system to drive up prices for natural gas delivered to the southern California border during the critical November 2000-March 2001 period. He called this “a clear exercise of market power.”

In a much-anticipated initial decision last Monday, FERC Chief Administrative Law Judge Curtis Wagner found that El Paso Natural Gas withheld “extremely large amounts of capacity” from shippers on its system to drive up prices for natural gas delivered to the southern California border during the critical November 2000-March 2001 period. He called this “a clear exercise of market power.”

After experiencing three-straight weeks of lower-than-anticipated storage injections, the bears finally got a break Thursday when the Energy Information Administration (EIA) surprised traders with the news that 59 Bcf had been injected into underground storage facilities for the week ending Aug. 23. Natural gas futures took the news squarely on the chin in early trading as the October contract dropped as much as 22.8 cents in morning action to notch a daily low at $3.175. However, bargain buyers stepped in to lift the new prompt month to a close of $3.25, representing a 15.3 cent drop on the day.

As many traders had anticipated, Wednesday afternoon’s dime-plus uptick in natural gas futures translated into strong cash gains at most points Thursday. However, prices again deteriorated greatly in the capacity-constrained San Juan Basin, which was joined in its softness by Rockies pipes as supplies backed up there, largely unable to get to California and east-of-California markets via El Paso.

As sources had anticipated, Wednesday’s stall in this week’s bull market led to softer prices Thursday. A majority of losses were in the vicinity of a dime, but others ranged from only 1-2 cents down at a couple of Gulf Coast points to a drop of more than 30 cents at Transco’s Zone 6-NYC.

With its upstream production doing better than anticipated, Calgary-based Petro-Canada plans to increase its capital spending program for western Canada, the Mackenzie Delta and along the East Coast, where it has assets in White Rose and drilling prospects along the Scotian Shelf. Second quarter earnings were down from a year earlier, mostly on lower oil and gas prices, but its production more than doubled for the period, fueled by an international acquisition as well as its Terra Nova asset.

There will be no shutdown of the Hobart Ranch Processing Plant in Hemphill County, TX as anticipated in a February bulletin board posting, Williams Gas Pipeline-Central said Friday. Duke Energy Field Services has sold the plant to Enbridge Pipelines (Texas Gathering) Inc., which is currently processing gas at Hobart Ranch, the pipeline added. Thus the physical interconnect on Central remains available for nominations.

With its upstream production doing better than anticipated, Calgary-based Petro-Canada plans to increase its capital spending program for western Canada, the Mackenzie Delta and along the East Coast, where it has assets in White Rose and drilling prospects along the Scotian Shelf. Second quarter earnings were down from a year earlier, mostly on lower oil and gas prices, but its production more than doubled for the period, fueled by an international acquisition as well as its Terra Nova asset.