Boosts

Southern California Gas (SoCalGas) has bolstered its intrastate pipeline system with four expansions this year, adding 375 MMcf/d. The 11% increase in capacity was done to better prepare for extreme demand conditions, such as those of 2000-2001. Unfortunately, however, gas demand is expected to drop by 500 MMcf/d this year and by another 250 MMcf/d in 2003.

In what the company listed as a “significant” increase to its total natural gas and oil production, Magnum Hunter Resources Inc. said last week that it has participated in three new oil and gas discoveries and commenced production from six additional lease blocks, all located on the Outer Continental Shelf (OCS) of the Gulf of Mexico. The company said initial gross production rates from the six blocks aggregates approximately 97 MMcfe/d, or approximately 22 MMcfe/d net to Magnum Hunter.

El Paso Corp.’s Tennessee Gas Pipeline last week asked the Federal Energy Regulatory Commission for the go-ahead to move forward with its South Texas Expansion Project, which would connect the pipeline’s existing South Texas system in Hidalgo County, TX, to a new natural gas line being constructed in northern Mexico.

El Paso Corp.’s Tennessee Gas Pipeline has asked the Federal Energy Regulatory Commission for the go-ahead to move forward with its South Texas Expansion Project, which would connect the pipeline’s existing South Texas system in Hidalgo County, TX, to a new natural gas line being constructed in northern Mexico.

Kerr-McGee Corp. increased its capital budget for exploration and production development projects by 15%, or $120 million, to $900 million, to concentrate more on identified projects in the Denver-Julesburg Basin and the Gulf Coast.

In a textbook example of why traders eschew short positions heading into a holiday weekend, natural gas futures erupted higher Tuesday, as a combination of fund and local buying drove the market up 9% to match recent highs. After gapping higher at the open, the March contract wasted precious little time yesterday as it moved above its 40-day moving average in the first 10 minutes of trading. Buyers did not once look back, boosting the prompt month to its highest close since Jan. 2, up 19.1 cents at $2.397. At 111,562, heavy estimated volume served to punctuate the price move.

In sympathy with a late rally experienced by the rest of the energy complex, natural gas futures surged higher into the close Monday, as speculative fund and local traders covered shorts and propelled the market to its fourth-straight gain. After gapping lower at the opening bell, the momentum quickly turned in bulls’ favor as buyers stepped up and pressured the March contract through key technical levels at $2.16 and $2.21. Sellers backed away once the market had pierced $2.21, leaving buyers little choice but to bid up the market higher. The March contract finished at $2.286, up 9.5 cents or 4.3% for the session.

While many producers are cutting spending plans this year because of sharply lower domestic oil and gas prices, Marathon Oil Corp. said it would raise its capital investment and exploration spending by 3% to $1.8 billion for 2002 and would double spending on acquisitions.

Mostly flat numbers made it three days in a row Monday as the dominant market characteristic. Whereas small declines outweighed the small upticks on Friday, there was more of a tendency toward slightly higher pricing yesterday.