Earlier this month, Mark Papa, the CEO of EOG Resources Inc., offered a pessimistic assessment for the decline rate in U.S. natural gas production in 2002 (see Daily GPI, Sept. 6). He said then that production would fall between 5-6% over 2001. Tuesday, EOG lowered its expectations, predicting production will fall 7%.
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This week’s price rally, for which virtually no one could discern any reasonable justification, was over Wednesday everywhere except in California. Most points retreated anywhere from about a dime to a quarter, with greater losses in the Rockies but only small ones in the cooling Pacific Northwest.
A Calgary source had the appropriate assessment of Wednesday’sfirming swing market: “There’s not enough snow to ski yet, but theway these gas prices are moving you’d think we were in the middleof a blizzard.” Overall prices were moving higher for the firstsignificant gains of this week. Most increases Wednesday werebetween a nickel and a dime, but Northeast citygates led the pricepack by rising a dime or more. A jump of just over 8 cents by theNovember futures contract on its date of expiry along with theapproach of colder weather, especially in the eastern two-thirds ofthe nation, were cited as reasons for the upticks.
California regulators are scheduled to wrap up the formaldata-gathering phase of their assessment of the state’s natural gasmarkets with an oral argument March 23 in San Francisco. Using thisdata and the record from formal hearings conducted earlier thisyear, the California Public Utilities Commission will establish alist of the most promising options for injecting more competitioninto the state’s natural gas business, beginning next year. Thehalf-day hearing will divide 19 major parties into two discussionpanels: one focused on customer issues and the other oncompetitors. The three utilities will be represented on bothpanels.
Low oil prices prompted Texaco to cut about 1,000 out of 8,000upstream employee and contractor jobs worldwide as part of areorganization designed to increase emphasis on long-termproduction and reserve growth and streamline costs and improvecompetitiveness. Cost savings are projected to be $200 million peryear, and the reorganization is expected to be completed by the endof the first quarter of next year.