Bleak

Robust growth in Lower 48 natural gas reserves and an increasing focus on reducing emissions are painting a bleak outlook for coal-fired power plants. Coal skeptics say the fuel can’t be “clean,” at least not economically, and that gas is the future. While a study released last week said a wholesale switching to gas for power is not doable, gas interests claimed a steady migration is completely realistic and already under way.

Robust growth in Lower 48 natural gas reserves and an increasing focus on reducing emissions are painting a bleak outlook for coal-fired power plants. Coal skeptics say the fuel can’t be “clean,” at least not economically, and that gas is the future. But others say gas is unable to claim the huge segment of the generation stack that some of the cleaner fuel’s advocates claim is its right.

Abundant gas supplies make for a “bleak picture” for gas producers in the near term, Bentek Energy LLC CEO Porter Bennett said last week. While prices will stay in a $3.50-5.50 range for a while, this will ultimately spur demand, particularly among power generators, he posited, and that will be the cure for low prices. But until then — two or three years from now — things will continue to be interesting.

Abundant gas supplies make for a “bleak picture” for gas producers in the near term, Bentek Energy LLC CEO Porter Bennett said Tuesday. While prices will stay in a $3.50-5.50 range for a while, this will ultimately spur demand, particularly among power generators, he posited, and that will be the cure for low prices. But until then — two or three years from now — things will continue to be interesting.

Perhaps pondering its Thursday expiration, the September natural gas futures contract traded in a muted range on Tuesday as fundamentals remained bleak and technical support remained rigid. The prompt-month contract closed out the regular session at $2.882, down 4.1 cents from Monday’s finish.

As investors are being blitzed with reports of bleak economic news and widespread stock sell-offs on Wall Street, Raymond James & Associates Thursday offered an encouraging word to energy companies: energy stocks are “at or very near the bottom point.”

While power outages were still viewed as an inevitability thissummer in California, a comprehensive legislative, regulatory andcommercial solution to mounting energy debts was less certain lastweek as reports surfaced that creditors might force bankruptcy onthe state’s two ailing utilities.

The price picture looked pretty bleak for bullish types earlierthis week, but they were taking heart Wednesday from a cashrebound, further strength in futures and signs that winter weatherlikely will return for a new siege, just as the groundhog predictedlast Friday. Most eastern gains tended to be in the teens, but mostwestern points rose by 20 cents or more, with the PG&E citygate(up almost $1.50) as the leader of the pack.

Taking into account strong gas futures prices despite thewarmest winter on record, a bleak supply picture and projections ofa very hot summer, PaineWebber reported an increase in its year2000 projection of composite spot gas prices from $2.40/MMBtu to$2.50/MMBtu. The firm’s report, issued yesterday, also indicatedthat the time is right to invest in diversified energy companies.