Huge

ChevronTexaco Corp., which this week reported a huge drop in earnings for 2001 related to their merger, are set to go after either Phillips Petroleum Co. or Conoco Inc. to pick up assets that would boost production, according to an article in Wednesday’s Wall Street Journal. Phillips and Conoco announced their merger of equals last year, which would create the third largest integrated major in the United States and the sixth largest in the world (see Daily GPI, Nov. 20, 2001).

The long-awaited energy legislation introduced by Senate Democrats Wednesday offers a huge financial carrot to the company or companies that are first in line to build a long-line natural gas pipeline to deliver more than 30 Tcf from Alaska’s North Slope to the continental United States.

Given the huge overhang of natural gas in storage at the end of November, the Energy Information Administration (EIA) has adjusted its prior-month forecast for spot gas prices “somewhat downward” to about $2.15/Mcf for the winter heating season. This is two-thirds lower than the average of $6.48/Mcf for last winter, and about 43 cents below the EIA’s November forecast for winter prices.

The long-awaited energy legislation introduced by Senate Democrats last Wednesday offers a huge financial carrot to the company or group of companies that is first in line to build a long-line natural gas pipeline to deliver more than 30 Tcf from Alaska’s North Slope to the continental United States.

Given the huge overhang of natural gas in storage at the end of November, the Energy Information Administration (EIA) has adjusted its prior-month forecast for spot gas prices “somewhat downward” to about $2.15/Mcf for the winter heating season. This is two-thirds lower than the average of $6.48/Mcf for last winter, and about 43 cents below the EIA’s November forecast for winter prices.

A source’s prediction the day before of a potential price “bloodbath” in trading for the long Thanksgiving Day weekend (see Daily GPI, Nov. 21) came true in spades Wednesday. The market’s hemorrhaging was severe, as plunges of around 70 cents or more were common in all regions despite a mostly flat screen, and the OFO-devastated Southern California border dropped about a dollar.

Weekend prices bowed under the weight of the umpteenth huge weekly storage injection report and generally mild weather in the key Midwest and Northeast market areas. Despite reports of air conditioning load starting to pick up to near-normal summer levels in the South and Midcontinent, quotes declined between a nickel and 20 cents at most points, with much bigger plunges seen in California.

Sen. Pete Domenici (R-NM) yesterday called on FERC to conduct astudy into why there is such a huge differential between prices fornatural gas in the supply basin and prices for the gas delivered tothe Southern California border.

There has been a huge increase in exploration and production”overspending” in the U.S. and Canada this year because of enormousgas price increases, and that probably will continue into 2001,said Salomon Smith Barney (SSB) E&P analysts in their 19thannual worldwide E&P spending survey.