Havoc

Shale gas production is projected to increase to the point where it becomes the dominant domestic gas supply over the next two decades, but it brings with it the “greatest source of uncertainty” facing North American gas markets, according to the Deloitte Center for Energy Solutions.

Despite the havoc wreaked by the twin Gulf of Mexico hurricanes and the upheaval in the credit markets, third-quarter oil and natural gas production oupaced year-ago levels and second-quarter activity, the American Petroleum Institute (API) reported Friday.

With a severe ice storm continuing to wreak havoc on power systems in the central U.S. and frigid temperatures remaining in the Wednesday forecast in Canada and from the Rockies and Midcontinent through the Midwest and Northeast, prices continued to rise at a large majority of points Tuesday.

In many places they often say if you don’t like the weather, wait and it will change. From hurricanes to too-warm winters, weather has wreaked havoc on the gas industry in the last couple of years and it continues to dominate gas markets this season.

In many places they often say if you don’t like the weather, wait and it will change. From hurricanes to too-warm winters, weather has wreaked havoc on the gas industry in the last couple of years and it continues to dominate gas markets this season.

The aftermath of last summer’s devastating hurricanes in the Gulf of Mexico continued to play havoc with London-based BP plc’s production in the final quarter of 2005, with output down from a year ago and lost profits and repairs costing nearly $1 billion.

While weak shoulder month gas demand minimized the market impact of Hurricane Lili and Tropical Storm Isidore, the two storms did cut substantial volumes of gas and oil production in the Gulf of Mexico, and on Friday continued to have an impact, with 670 MMcf/d of gas and 105,000 b/d of crude oil production remaining curtailed, according to the Minerals Management Service (MMS).

In yet another indication that Enron Corp.’s bankruptcy is continuing to wreak havoc in the energy business, Houston-based junior independent Contour Energy said Tuesday that a bankruptcy filing is likely after a trustee for its senior notes called for the immediate and full payment of $105 million in principal and interest of its debt in an acceleration notice. In April, Contour began to evaluate its options after losing its natural gas price hedges as a result of Enron’s bankruptcy.

Still reeling from a “devastating” weather picture the naturalgas futures market gapped lower on the open yesterday and continuedlower as traders added to short positions. By slipping 7.3 cents to$2.451 the December contract came perilously close to breakingthrough the lowest level of any spot contract since summer lowswere put in. The January contract, meanwhile, fared even worse,dropping 8.5 cents to finish at $2.596.