Fear

Analysts say fear of gas shortages this winter is misguided, but there are some concerns about managing natural gas deliveries in light of the extensive damage caused by Hurricane Katrina on El Paso Corp.’s eastern pipelines, several Gulf Coast gas processing plants and production facilities.

Supply needs and confidence in engineering trumped public fear and environmental loathing in a landmark regulatory decision to let Alberta producers keep a major drilling target, “sour” gas laced with lethal hydrogen-sulphide.

In concert with a fear-driven rally in the nearby crude oil pit, Nymex natural gas futures catapulted 37 cents higher Monday to $6.231, dragging most of the subservient natural gas cash market with it. Cash prices were up 5-20 cents on average across the board with some of the larger increases in the West where a spring heat wave was driving up demand.

The Independent Petroleum Association of America (IPAA) and three other industry groups have expressed concern that the increase in construction of offshore liquefied natural gas (LNG) facilities may lead to a withdrawal of available offshore leases from future federal government sales, as well as impact existing oil and natural gas leases.

The Independent Petroleum Association of America (IPAA) and three other industry groups have expressed concern that the increase in construction of offshore liquefied natural gas (LNG) facilities may lead to a withdrawal of available offshore leases from future federal government sales, as well as impact existing oil and natural gas leases.

Analysts at Credit Suisse First Boston are looking for a return to positive valuations on merchant energy company stocks because of the current pricing environment and customer demand for risk management and energy services. CSFB analyst Philip Sales said Oneok (OKE) in particular should maintain consistent earnings from merchant energy operations.

Analysts at Credit Suisse First Boston are looking for a return to positive valuations on merchant energy company stocks because of the current pricing environment and customer demand for risk management and energy services. CSFB analyst Philip Sales said Oneok (OKE) in particular should maintain consistent earnings from merchant energy operations.

Ending a seven-session price advance, natural gas futures dropped lower at the opening bell Monday as traders alleviated overbought conditions and cashed in on a portion of recent gains. After that initial wave of weakness, however, the market steadied itself, giving buyers the opportunity to chip away at the deficit for the remainder of the day.

There is enough natural gas for the industry to make it through the winter, but the fear of a shortage is what’s driving gas prices higher, according to Paul Wilkinson, vice president of policy analysis for American Gas Association (AGA).