Infrastructure

Domestic production of dry natural gas fell 1% to 19.17 Tcf in 2004 due largely to the damage to infrastructure caused by Hurricane Ivan in the fourth quarter and the drop in new gas field discoveries, according to the Energy Information Administration ‘s (EIA) annual report on U.S. oil and natural gas reserves.

Washington Gas Light (WGL), which serves metropolitan Washington, DC, has called on FERC to reject the proposed expansion of Dominion Cove Point LP’s liquefied natural gas (LNG) terminal and associated pipeline project until it can be demonstrated at a evidentiary hearing that imported LNG is fully interchangeable with traditional gas and will not negatively impact the utility’s system.

With Hurricane Wilma firmly in the rear view mirror with no harm to Gulf of Mexico oil and gas infrastructure, November natural gas on Monday failed to push lower, leading some to believe the premium built into the market might already have been taken out. The prompt month ended up settling at $13.004, 13.2 cents higher on the day.

As oil and natural gas infrastructure continues to limp back to service following Hurricanes Rita and Katrina, many eyes in the natural gas industry are focused on the Henry Hub near Erath, LA, a physical delivery point that is used as a benchmark for the Nymex futures contract. The hub has been offline since Sept. 22, and no one will even speculate on when it will be back to normal (see Daily GPI, Sept. 27, Sept. 28, Oct. 6).

With Rita fast approaching Gulf of Mexico infrastructure, gas production shut-ins rising rapidly and many traders in transit, the cash market was extremely volatile and illiquid on Thursday. Trading appeared to completely dry up at many locations. Some Northeast averages were more than $5 away from others. Most western locations fell 25-60 cents.

A Los Angeles Department of Water and Power (LADWP) $1.2 billion bond sale to cover infrastructure upgrades and a natural gas reserve purchase was halted Tuesday by the city council, sending the proposed sale back to the city-run utility for reworking. The action, along with the LADWP oversight board being in transition, could postpone the sale for weeks if not months, a utility official conceded Wednesday.

Besides the extensive power infrastructure that has to be rebuilt, Entergy said there also was “extensive damage” to its natural gas system, affecting service to many of its 147,000 customers in the New Orleans area.

The inherent vulnerability of the Pacific Northwest’s energy infrastructure to terrorist attack is a strong reason to expand energy efficiency and conservation programs to lessen the general public’s dependence on centralized oil, natural gas and electricity supply sources, according to the Seattle-based Northwest Environment Watch, a research organization, in its annual report released earlier this month.

The inherent vulnerability of the Pacific Northwest’s energy infrastructure to terrorist attack is a strong reason to expand energy efficiency and conservation programs to lessen the general public’s dependence on centralized oil, natural gas and electricity supply sources, according to the Seattle-based Northwest Environment Watch, a research organization, in its annual report released earlier this month.