Hard

The energy industry won a hard-fought victory Saturday when the Senate overwhelmingly approved legislation to open up parts of the natural gas-rich eastern Gulf of Mexico to oil and gas leasing. The vote came only hours after the House passed the measure Friday by 367-45 (see Daily GPI, Dec. 11).

Reacting quickly and pointedly on an issue that is bipartisan in his state, California Gov. Arnold Schwarzenegger late Tuesday came down hard in opposition to the U.S. Senate’s passage of the Domenici-Martinez-Landrieu bill on coastal oil/gas drilling (SB 3711). Schwarzenegger has made his opposition to coastal drilling a linchpin of his reelection campaign.

In a startling departure from its hard-line stance, Kerr-McGee Corp. on Friday said it postponed its lawsuit against the Interior Department over royalty relief for deepwater oil and natural gas leases to participate in mediation of the dispute with the agency.

With natural gas inventories at record levels, there may come a time this summer when available storage space is hard to find and gas producers are forced to shut in supplies, according to Steve Harvey of FERC’s Office of Enforcement.

Buffeted once again by a screen plunge the day before and still finding weather-related demand hard to come by, the cash market continued to see prices fall in most cases Friday. However, flat to nearly a dime higher numbers at the Southern California border and a few Midcontinent/Midwest points averted a clean sweep of softness.

After what it has characterized as a successful, targeted use of automatic meter reading (AMR) technology in remote, hard-to-access areas, Las Vegas, NV-based Southwest Gas Corp. late last month announced it intends to totally automate more than 1.7 million natural gas meters in the three principal metropolitan areas it serves in Nevada and Arizona. Southwest expects to complete the installation in 2009.

Trading within a slim 10-cent range for the session, June natural gas appeared to be having a hard time choosing a direction on Monday. After rebounding off support in the $6.595 to $6.60 area a number of times during the session, the prompt month resolved to explore higher instead. Following a late session push that coincided with a strong move in petroleum futures, June natural gas finished Monday at $6.674, up 5.3 cents.

Traders were hard-pressed to come up with any substantive explanation for why cash prices staged modest rallies at most points Wednesday. There was no prior-day screen strength at which to point, and other than a warming trend in the South (destined to be brief) and colder temperatures in Western Canada and the northwestern quadrant of the U.S., the weather outlook failed to provide any rationale for higher quotes.

In urging FERC to take a good, hard look at the proposed merger of Exelon Corp. and Public Service Enterprise Group (PSEG), the New Jersey Board of Public Utilities (NJBPU) is worried that “significant market power” in the PJM area resulting from the combination could undercut the viability of an annual basic generation service (BGS) auction held in New Jersey [EC05-43-000].