Basin

Except for generally flat to mildly lower numbers in San Juan Basin and the Rockies, the overall cash market maintained its downward direction for the fifth straight trading day Wednesday. However, the pace of descent got slower as most non-Rockies/San Juan declines ranged from a little more than a dime in the Northeast to nearly 80 cents at the PG&E citygate. A majority of points were seeing losses in the general vicinity of half a dollar.

With thousands of coalbed methane (CBM) wells covering the Powder River Basin in Wyoming and hundreds of drilling permits still to be reviewed, the Wyoming Department of Environmental Quality (DEQ) has been working overtime and short staffed to review the huge backlog of permits, and contend with complex out-of-date regulations at the same time.

Spikes of 40-50 cents or so Friday at San Juan Basin/Rockies points were in sharp contrast to losses of about 15 cents to more than 30 cents in the rest of the market.

With an expectation that the Western Sedimentary Basin of Canada will continue as a key focus for natural gas exploration and development, Calgary-based EnCana Corp. announced Thursday it will construct a 40 Bcf natural gas storage facility in southeastern Alberta. The Countess development, once completed, is expected to increase EnCana’s Western Canadian gas storage by almost 40%, totaling approximately 135 Bcf.

Cash prices were mixed on Thursday with most points up or down a few cents but many sources had bearish expectations for Friday because of the 9-cent drop in November futures on Nymex and an apparently bearish storage report.

Unocal Keystone Gas Storage LLC, located in the Permian Basin supply area near the Waha Hub, was granted a conditional blanket certificate by FERC on Wednesday to offer firm and interruptible natural gas storage services interstate by Jan. 1, 2003, and also was given approval to offer market-based rates for interstate storage services. The certificate, noted FERC, will benefit customers by offering more storage and system-balancing options [CP02-317-000].

El Paso’s San Juan Basin capacity is reduced by 100 MMcf/d through Friday due to the installation of pigging facilities on Line 1200 between Gallup and Window Rock Stations. The work also cuts North Mainline capacity by 135 MMcf/d.

El Paso began emergency maintenance Wednesday on Line 1201 downstream of Valve City Station, reducing San Juan Basin capacity by 100 MMcf/d through Friday. Capacity of the North Mainline will also be reduced by 60 MMcf/d during the same period. El Paso extended the duration for unscheduled repairs of Bondad Station’s 2A turbine, causing a Bondad capacity cut of 100 MMcf/d, through Aug. 8. The pipeline previously had expected to complete the work Aug. 2 (see Daily GPI, Aug. 1).

The Gulf of Mexico is expected to remain one of the most prolific natural gas supply regions over the next two decades, with production levels projected to rise by nearly 30% to 6.4 Tcf in 2010, and by more than 40% to 7.2 Tcf in 2020, according to an INGAA Foundation-commissioned study that was forwarded to Senate Energy Committee Chairman Jeff Bingaman (D-NM) last week.