Cycle

For the first time in many years, the current land rig up-cycle has not led to an exponential increase in land dayrates, offering substantial upside in stock prices for all U.S. land drillers for the foreseeable future, according to the Raymond James Energy Group’s latest Stat of the Week.

Southern California Gas declared an OFO for the Evening Cycle of Wednesday.

If natural gas prices remain in the “up cycle” for the next 12 months, free cash flow will not only help XTO Energy Inc. reduce its debt, but it also will fund the Fort Worth producer’s aggressive acquisition plan, Moody’s Investors Service analysts said Friday.

Transwestern allocated its San Juan Lateral capacity for Tuesday’s Cycle 3 nominations from 800,000 MMBtu/d to about 600,000 MMBtu/d. Bloomfield Station’s Unit #4 and the Gallup Electric Compressor Station were not available for Tuesday’s gas day, the pipeline said. Teams are evaluating and working on the stations’ problems. Transwestern expected to schedule 800,000 MMBtu/d for Wednesday. The Blanco-Thoreau segment of the lateral was scheduled to remain limited to 800,000 MMBtu/d through April 14 before returning to full 860,000 MMBtu/d capacity on April 15 (see Daily GPI, March 28).

Independent oil and gas exploration and production companies (E&Ps) still face increasing challenges to reinvest “substantial” capital every year as they seek new reserves to replace current production, according to Moody’s Investors Service. However, analysts because technical and geological risks remain high in mature basins and the deepwater, analysts expect more consolidation, especially among independents.

Falcon Gas Storage Co. Inc. will hold an open season in April for a new high-deliverability, multi-cycle (HDMC) natural gas storage hub to be located in the southeastern United States. The MoBay Storage Hub in Mobile County, AL, scheduled to be in service by the fourth quarter of 2004, would offer 20 Bcf of working gas capacity along with 450 MMcf/d of injection and withdrawal capability.

Falcon Gas Storage Co. Inc. will hold an open season in April for a new high-deliverability, multi-cycle (HDMC) natural gas storage hub to be located in the southeastern United States. The MoBay Storage Hub in Mobile County, AL, scheduled to be in service by the fourth quarter of 2004, would offer 20 Bcf of working gas capacity along with 450 MMcf/d of injection and withdrawal capability.

The expected 41% increase in gas-fired combined cycle generation this year (more than 50,000 MW of incremental capacity) will have a significant impact on natural gas transportation and delivery (see Daily GPI, March 5). As a result, three industry associations have signed an agreement to work closely to ensure that the reliability of residential and commercial gas utility service isn’t compromised.

If the Pacific Northwest gets most of the 28,000 MW of natural gas-fired combined-cycle power plants now planned for the region, its natural gas demand will shoot up to 2.5 times current levels, according to an engineer and gas analyst from the region who spoke last week at a two-day industry conference in Seattle.