Incremental prices for the last day of March, finding little tono support from any direction, did the natural thing: they fell byanywhere from about a nickel to more than a dime. April bidweeknumbers also slid a bit further.
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Results from yesterday’s Central Gulf of Mexico Lease Sale 175were buoyed by strong commodity prices. This year’s sale activitydwarfed that of last year’s Central Sale 172 by about 60%,according to the Minerals Management Service’s Gulf of Mexicooffice. High bids received at the sale totaled nearly $300.57million compared to $171.62 million in high bids last year.
Scana Corp. did a little more than dust off its proposedCarolina’s interstate gas pipeline project last week. The company,along with Raleigh, NC, developer DFI Group Inc. and North CarolinaGovernor James Hunt, announced a $1.4 billion project that wouldcombine a new interstate gas pipeline with three new 200 MW powerplants, three ethanol production facilities and a new fiber opticcable in eastern North Carolina.
Except in the Northeast, cash price averages showed littlemovement yesterday as strong demand fought bearish weather to astandstill. Despite the lack of “real winter weather,” as onesource put it, the cash market’s recent resiliency had many tradersdisplaying quiet confidence about the market’s chances to maintainits bullish trend heading into the weekend.
Things are looking up, at least a little, for offshore rigutilization, according to Duff & Phelps Credit Rating Co.(DCR). The firm says operating rates have increased steadily overthe past 12 months as drilling day rates for a shallow waterjack-up rig have risen from a low of $22,000 to current levels ofaround $50,000. Offshore rig utilization has also steadilyincreased from a low of 72% during the summer of 1999, to 81% inFebruary 2000. Oil prices are averaging better than $20/barrel andOPEC countries continue to adhere to new, reduced productionquotas, resulting in lower reported crude oil supplies. Also,according to Oil & Gas Journal, natural gas energy consumptionis projected to increase 8.4 % by 2002.
Last week a little town in Oregon adopted a web site as itsofficial name for a one-year trial basis. During the Christmasholidays, Wal-Mart sold a computer with Internet access for about$500, and couldn’t keep up with demand. Some are saying 80%-90% ofthe United States will be Internet-connected by next year.
California Gov. Gray Davis’ $68 billion fiscal 2001 budgetproposal unveiled this week includes little or no emphasis onenergy issues, although some of the stated concerns about”infrastructure” may spill over into reliability issues in the gasand electricity transmission/distribution industries. For energyindustry observers there are mostly unanswered questions, includingpeople within state government.
While it is still too early to see if others in the industrywill follow the lead, Sempra Energy is not looking back afterdropping out of four major energy trade associations at year-end.Strategic direction, as much as cost-savings, was the key driver inthe $5 billion holding company’s decision, according to a seniorexecutive responsible for implementing the new direction. The moveis expected to save Sempra several million dollars annually in duesand expenses related to its employees’ participation.
Futures traders were unable to maintain upward momentum earlyyesterday after an initial push above the 40-day moving average toa high of $2.715. January futures fell back sharply in the morningand then traded sideways throughout the rest of the day to end down2.6 cents at $2.629. February lost 1.7 cents to settle at $2.609.The 12-month strip only lost eight-tenths of a cent.
Natural gas futures were nearly unchanged at the close yesterdayas traders grappled with the conflicting fundamentals of storageand weather. By virtue of its 0.3-cent decline to settle at $2.285,January was the only futures contract month to lose ground. Incomparison, both the February contract and the 12-month strip wereup 0.6 cents for the session to $2.322 and $2.401 respectively.