Better

Production rates in the deepwater Gulf of Mexico (GOM) are beginning to climb at an astonishing pace, and with better technology now available, oil and gas discoveries will continue to escalate, according to Chris Oynes, regional director of the GOM for the Minerals Management Service (MMS). Speaking at the Offshore Technology Conference in Houston last week, Oynes said production has tripled since 1997, with natural gas up 550% and oil up 500%. Today, deepwater production is growing more than 400 MMcf/d and 100 million bbl/d every year.

Seeking to improve market transparency and provide a better means to detect and discourage discriminatory practices, FERC last Wednesday said that it would replace a number of reporting filings currently made by the power industry with a quarterly electronic report, which the Commission believes will equalize reporting requirements for both traditional public utilities and power marketers and make information more easily available to the public.

Prices were still moving higher Friday, but at roughly half the pace of Thursday’s uprising. Overall, Friday’s increases ranged from about 8 to 20 cents. Gulf Coast numbers generally rose on either side of a dime, with moderately larger gains in the teens prevailing in other market areas. Most of the upticks above 15 cents were in the West.

Alaska Republican Sen. Frank Murkowski vowed to amend the Senate energy bill before the end of winter to better ensure that his fellow Alaskans get a fair shake in any gas pipeline deal that comes out of the legislation. Murkowski said he wanted to include a ban to prevent producers from pursuing an “over-the-top” pipeline route, which would bypass most of the state by crossing the Beaufort Sea and then heading down the Mackenzie River in the Northwest Territories to connect with the pipeline grid in Alberta.

Alaska Republican Sen. Frank Murkowski vowed to amend the Senate energy bill before the end of winter to better ensure that his fellow Alaskans get a fair shake in any gas pipeline deal that comes out of the legislation. Murkowski said he wanted to include a ban to prevent producers from pursuing an “over-the-top” pipeline route, which would bypass most of the state by crossing the Beaufort Sea and then heading down the Mackenzie River in the Northwest Territories to connect with the pipeline grid in Alberta.

El Paso Corp. reported slightly improved fourth quarter earnings last week. Higher transportation rates and lower costs on El Paso Natural Gas, as well as higher production and a favorable hedging program in the production unit, helped earnings improve to 72 cents per share for the quarter (after special charges including Coastal merger-related costs and asset impairments) compared to 65 cents per share in 4Q2000. Earnings before special items were 79 cents per share, a penny above Wall Street estimates. Net income was $375 million compared to $335 million in 4Q2000 ($408 million compared to $403 million excluding special items).

El Paso Corp. shares rose 6% by mid-day today in response to slightly improved fourth quarter earnings. Higher transportation rates and lower costs on El Paso Natural Gas, as well as higher production and a favorable hedging program in the production unit, helped earnings improve to 72 cents per share for the quarter (after special charges including Coastal merger-related costs and asset impairments) compared to 65 cents per share in 4Q2000. Earnings before special items were 79 cents per share, a penny above Wall Street estimates. Net income was $375 million compared to $335 million in 4Q2000 ($408 million compared to $403 million excluding special items).

Rescinding gains notched early in the session, natural gas futures plumbed to new week-and-a-half lows yesterday afternoon on the news from the American Gas Association that a meager 45 Bcf was withdrawn last week from underground storage facilities. The January contract settled at $2.616, down 4.1 cents for the session and more than a dime beneath its $2.73 high on the day. The out months sustained a more severe selling punch, led by the February contract which moved to within striking distance of the prompt month by shuffling 6.2 cents lower to close at $2.65.

FERC last week voted out a final rule that imposes a monthly (price and volume) reporting requirement on natural gas transporters and sellers to California until September 2002 in an attempt to bring gas prices there in line with other major markets around the country.