Aside

Putting aside for awhile the fact that there is 1.1 Tcf more gas in storage than at the same time last year, gas futures traders instead apparently focused on the large 190 Bcf withdrawal from storage last week that the American Gas Association reported on Wednesday. February futures prices were up in the high $2.20s during almost the entire regular trading session on Thursday before taking a sharp dive back into the high teens after 2 p.m. February ended the day down 4.3 cents at $2.185 just above its low of $2.18 and well below its high of $2.30.

Despite record natural gas drilling begun in 2000 and boosted through mid-year, U.S. production may actually show a year-over-year decline by the time fourth quarter reports are released, according to energy analysts following quarterly reports by exploration and production (E&P) companies. However, in Canada, September natural gas production is up and will be up at the end of the year, putting more pressure on prices and E&P values both in the Lower 48 and Canada as pipeline capacity fills up.

Despite record natural gas drilling begun in 2000 and boosted through mid-year, U.S. production may actually show a year-over-year decline by the time fourth quarter reports are released, according to energy analysts following quarterly reports by exploration and production (E&P) companies. However, in Canada, September natural gas production is up and will be up at the end of the year, putting more pressure on prices and E&P values both in the Lower 48 and Canada as pipeline capacity fills up.

Tossing aside criticism that California’s new-found reliance onlong-term power contracts may over time cost consumers billions ofdollars extra for electricity, the state’s chief negotiatorThursday defended his work, arguing no one can predict where powerprices will be five and 10 years from now.

Working to set aside enough reserves to cover potential lossesfrom power trading in California, Houston-based Reliant Energy Inc.reported fourth quarter results Friday that fell short of WallStreet expectations. The utility posted a loss of $298.6 million,or $1.04 a diluted share. In fourth quarter 1999, it also lost,posting earnings of $72.7 million or 26 cents a share.

Seeking to set aside what it called an “inappropriate” multi-billion verdict in which a jury awarded the State of Alabama $87 million in compensatory damages and $3.4 billion in punitive damages over unpaid royalty fees, ExxonMobil Corp. has filed an appeal with the Circuit Court of Montgomery County, AL. The case, decided last month, centered on charges that the energy giant (then Exxon, before its merger with Mobil) had underpaid up to $87.7 million in royalties on the Mobile Bay natural gas project in the Gulf of Mexico (see NGI, Dec. 25, 2000). The jury said it set the damages by tripling ExxonMobil’s annual production from 13 natural gas wells located on the Alabama coast in the disputed time. The long-standing contract dispute originally questioned whether an additional $40 million in royalties was due the state and exactly how the royalties should be calculated. To date, ExxonMobil said it has paid Alabama $1 billion in royalties and bonus payments under the lease agreement. “ExxonMobil believes that if this verdict goes unchallenged, other legitimate businesses in the state of Alabama – businesses that, like ExxonMobil, help expand the tax base, add to the economy and create new jobs – will also be potential targets,” the company said in a written statement. “Any company engaged in an open and reasonable contract dispute in the state will not be able to have reasonable disagreements with regulators without running the risk of being accused of fraud and being subjected to possible punitive damages.”

Seeking to set aside what it called an “inappropriate”multi-billion verdict in which a jury awarded the State of Alabama$87 million in compensatory damages and $3.4 billion in punitivedamages over unpaid royalty fees, ExxonMobil Corp. filed an appealyesterday with the Circuit Court of Montgomery County, AL.

President Clinton’s announcement Friday of a ban on new roads,logging and other activities on more than one-fourth of allfederally owned lands will put quite a dent in the futureexploration and production of natural gas in the United States, gasproducers indicated.

President Clinton’s announcement Friday of a ban on new roads,logging and other activities on more than one-fourth of allfederally owned lands will put quite a dent in the futureexploration and production of natural gas in the United States, gasproducers indicated.