Draw

The Minerals Management Service’s (MMS) royalty relief incentive to drill for deep-gas deposits located in the shallow-water shelf area of the Gulf of Mexico drew a hoard of bidders in Central Gulf Lease Sale 185. The shallow waters of the Gulf (0-199 meters) received by far the most bids in the sale: 374 bids on 1.7 million acres/hectares for $237.8 million.

Despite expectations of continued softness following Tuesday’s all-around price plunges, most points found themselves in rally mode Wednesday. With a few scattered small drops thrown into the mix, the majority of the cash market ranged from flat to up nearly 40 cents, with gains in the teens being most common. Tennessee Zone 6 was a standout with an uptick of more than 80 cents.

Moody’s Investors Service downgraded American Electric Power Co.’s (AEP) senior unsecured rating to Baa2 from Baa1, affecting $13 billion of debt, and placed its Prime-2 rating for commercial paper under review for possible downgrade. AEP’s Baa2 long-term rating and the long term ratings of the company’s utility subsidiaries, except Indiana Michigan Power and Kentucky Power, remain under review for possible downgrade. However, Moody’s said that it doesn’t expect AEP’s debt ratings to fall below investment grade.

The goal won praise but the means failed to draw support when Arctic Resources Co. unveiled the most detailed version yet of its proposal for combined transportation of natural gas from Alaska and Canada’s Northwest Territories. Territorial Premier Stephen Kakfwi described the Arctic plan as mostly a distraction.

The goal won praise but the means failed to draw support when Arctic Resources Co. unveiled the most detailed version yet of its proposal for combined transportation of natural gas from Alaska and Canada’s Northwest Territories. Territorial Premier Stephen Kakfwi described the Arctic plan as mostly a distraction.

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to new week-and-a-half lows yesterday afternoon on the news from the American Gas Association that a meager 45 Bcf was withdrawn last week from underground storage facilities.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.

Attempting to draw a clear line in the sand with state regulators, PPL Corp. yesterday openly questioned the Montana Public Service Commission’s authority over the company’s power plants in the state, and PPL said it wouldn’t rule out the possibility of taking legal action in response to a PSC order issued Tuesday.

Amid a devastating combination of rising temperatures andfalling cash prices the natural gas futures market started the yearwith a crash Tuesday, as commercial and speculative traders alikeliquidated their long positions and added to their shorts. Theprice impact was felt immediately, with the February contractgapping a whopping 10 cents lower en route to a 15.3-cent loss tosettle at $2.176. Despite the sizeable move lower, estimated volumewas a relatively modest 62,491.

While El Paso’s new agreement covering 1.2 Bcf/d of its firmtransportation capacity is likely to draw intense public andregulatory scrutiny, it may not be able to overshadow the growingconcern over its capacity allocation procedures. Despite someconcerns that revisiting the issue could undermine the recentlyapproved major settlement, more existing shippers have come forwardclaiming huge losses due to El Paso’s overbooked pipeline.