Declining

Declining natural gas prices in the last three months of 2006 took a big bite out of Chevron Corp.’s net income, the San Ramon, CA-based major said Friday. Chevron recorded a 9% boost to its U.S. gas output in 4Q2006, but nearly all of it was gas recovered following restorations to Gulf of Mexico (GOM) infrastructure damaged by hurricanes Katrina and Rita in 2005.

Faced with rising distribution costs and declining throughput on its gas distribution system in Arkansas, CenterPoint Energy Inc. has proposed two alternative mechanisms to state regulators that would allow it to recover more of its fixed costs through fixed charges to customers, partially decoupling revenue from volumetric charges.

Citing declining consumption on its system and weather-driven demand variability, Washington Gas Light Co. filed with the District of Columbia Public Service Commission (PSC) to increase rates, implement a mechanism to decouple revenue from system throughput and requested performance-based ratemaking status.

Citing declining consumption on its system and weather-driven demand variability, Washington Gas Light Co. filed with the District of Columbia Public Service Commission (PSC) to increase rates, implement a mechanism to decouple revenue from system throughput and requested performance-based ratemaking status.

According to the American Gas Association (AGA), predictions of a declining natural gas reserve base are premature. However, the industry is working harder to replace reserves. And most notably, onshore unconventional resources are being relied upon more heavily, and that is having consequences for gas production.

Several flat points and a couple of declining ones notwithstanding, prices were able to mount a rally in a large majority of the cash market Thursday. An influx of colder temperatures with occasional snowfalls into northern market areas spurred the general firmness, aided almost imperceptibly by a small futures increase of just under 2 cents the day before.

Despite declining well numbers in many offshore regions around the world, drilling services will continue to attract a “flood” of cash, with deepwater expenditures — especially in West Africa and the Gulf of Mexico — nearly doubling in the next five years, according to Douglas-Westwood Ltd.’s latest worldwide offshore drilling forecast.

Relatively mild weather, weak weekend demand, declining storage space and slowly returning Gulf production pressured prices much lower on Friday with quite a few points down more than a dollar and the majority off more than 60 cents from levels on Thursday.

Falling futures prices, mild temperatures, declining demand and the slow return of shut-in Gulf production sent cash prices sharply lower on Wednesday. Some points were down more than 70 cents from Tuesday’s levels and most were down 50 cents or more.