Examines

Quite a few market observers were perplexed by the sudden sharp increase in natural gas futures prices Thursday after the EIA reported another relatively large weekly storage injection of 78 Bcf. The 16-cent increase in futures was even more surprising in light of the apparent discrepancy between EIA’s weekly estimated storage numbers and the actual storage numbers from EIA’s monthly data for earlier this year.

The Senate Energy and Natural Resources Committee expects the financial failure of Enron Corp. to figure into the debate over energy legislation, which could get underway in the Senate next month, if Majority Leader Tom Daschle (D-SD) keeps his earlier promise to make energy a priority in the new congressional session (See Daily GPI, Dec. 6, 2001). As a result, it has scheduled an oversight hearing for next Tuesday to delve into the Enron affair.

The prospect of a 67.5% increase in gas demand in the state of New York over the next five years has the New York State Energy Research and Development Authority (NYSERDA) and the New York Independent System Operator (NYISO) just a little concerned about a potential overload of the gas transportation system in the state.

The New York State Energy Research and Development Authority (NYSERDA) and the New York Independent System Operator (NYISO) are concerned about a potential overload of the gas transportation system in the state. The two organizations have commissioned a study examining the impact of increased gas demand from 22 proposed new gas or dual fuel power plants, which currently are applying for permits under the state’s siting process. The dual fuel plants also may put a strain on the delivery infrastructure for alternative fuels, the organizations noted.

Representatives of the oil and gas industry last week applauded the Bush administration’s effort to use gas royalties, in-kind or in-value, to bolster the Low Income Home Energy Assistance Program (LIHEAP). The House Resources Subcommittee on Energy and Mineral Resources held an oversight hearing last Tuesday to examine the possibility of expanding the Minerals Management Service’s existing royalty in-kind (RIK) pilot programs in Wyoming (oil) and the Gulf of Mexico (oil and natural gas) to meet the administration’s request.

Representatives of the oil and gas industry earlier this week applauded the Bush administration’s effort to use gas royalties, in-kind or in-value, to bolster the Low Income Home Energy Assistance Program (LIHEAP). The House Resources Subcommittee on Energy and Mineral Resources held an oversight hearing on Tuesday to examine the possibility of expanding the Minerals Management Service’s existing royalty in-kind (RIK) pilot programs in Wyoming (oil) and the Gulf of Mexico (oil and natural gas) to meet the administration’s request.

A Natural Gas Subcommittee of the Interior Department’s Outer Continental Shelf (OCS) Policy Committee is scheduled to submit recommendations this week for a pilot program that would allow limited drilling on the five top natural gas geologic plays currently in offshore moratoria areas. The proposed pilot is among a host of other measures designed to encourage the production of natural gas on the OCS, encourage energy alternatives to natural gas, and increase conservation measures. If approved it could be one of the first concrete steps in furthering the administration’s pledge to clear barriers to developing the full U.S. resource base.

In light of “gaming” of natural gas wholesale prices at the California-Arizona border and ongoing pipeline constraints, the head of the California Public Utilities Commission last Wednesday said she and her fellow regulators are looking to go farther than several current proposals for unbundling the intrastate transmission and storage services of Southern California Gas Co.

Gas reserves grew substantially in 2000 with a little help from declining production and a big turnaround in drilling, according to a new report by the American Gas Association. The AGA report shows that based on the behavior of 30 large reserve holders examined, total domestic gas reserve additions are expected to be 24 Tcf or greater for 2000. Because only 19.2 Tcf is estimated to have been produced, reserves for 2000 are expected to have grown from 164.7 Tcf to more than 170 Tcf — the highest level of reserves since 1987, AGA said. Additions to gas reserves exceeded domestic production by at least 26% in 2000.