Grows

With a second merchant underground storage field set to open in the northern half of the state later this year and an existing one in the north proposing a sizable expansion, the push for at least one, if not two, new storage fields in Southern California has heated up this summer, according to industry observers.

Prices were falling almost across the board Tuesday in both late-June swing deals and in bidweek trading. The screen was an obvious negative influence, but of greater impact was a growing feeling that prospects are dim for the market to pull out of its tailspin anytime soon.

Denver-based Barrett Resources Corp. has raised its estimate of proved reserves by more than 50%, which may pressure Royal Dutch/Shell to raise its offer of $55 a share in its hostile takeover attempt. Barrett said a review by independent reservoir engineers raised the company’s oil and gas reserves to 2.1 Tcfe, of which 96% is natural gas. Its previous estimate was 1.37 Tcfe.

Anadarko Petroleum Corp. is doubling up its Rocky Mountain exploration and production presence this year, announcing it would budget more than $131 million toward an aggressive strategy to find and develop new natural gas and coalbed methane sources. The Houston-based company also plans to grow its Canadian natural gas business, announcing plans to invest $380 million in drilling and development.

Participants report there is definitely light at the end of thewinding tunnel that has encapsulated California’s troubledelectricity market, but the question Wednesday was whether it wasthe result of a temporary power surge or light from the opening ofbroader, longer term solutions that include fixing the market,persistent supply shortages, beleaguered generators andcash-starved utilities.

The Colorado Oil and Gas Commission says the state will issuemore than 1,400 permits for oil and gas drilling before the end ofthis year. In Wyoming, coal bed methane production has never beenmore active. The Rockies haven’t seen this much exploration sinceLewis and Clark were here. Today, the interest is underground, ascompanies map strategies to tap energy reserves.

Fundamentals began playing a larger role in a rebounding weekendmarket Friday as several sources expressed relief that thepreviously frenetic screen was beginning to calm down.

California’s $45 million state-administered group natural gaspurchasing program for major state facilities is growing andflourishing, while a newer electricity buying program, althoughestablished, is not operating because of insufficient potentialsavings, according to the prime administrator for both programs inthe California General Services Department (GSD), who spoke at anindustry meeting last week outside Los Angeles.

Occidental Petroleum Corp. has purchased from Chevron deepexploration rights on 19,834 acres of land adjacent to its ElkHills holdings. Called the Buena Vista field, the Kern County, CA,property is seen by Oxy and some other producers as having hugepotential oil and gas reserves. Terms of the transaction were notdisclosed.