Looming

Growing industrial consumption, a prolonged spell of poor prices, competition from rising overseas tanker imports and looming Alberta royalty hikes spell accelerating deterioration of Canadian natural gas supplies, industry analysts predict.

With an overall $1.9 billion capital expenditure program looming this year and next in its eight Midwest and West states, Minnesota-based Xcel Energy is focused on various key regulatory proceedings that will assure it recovery of the growing costs of its widespread infrastructure expansion programs, according to CFO Ben Fowke, who Wednesday reported strong second quarter earnings from continuing operations.

With a “wild card” storage report looming Thursday morning (see Daily GPI, July 26), it appeared that traders were positioning themselves for the most bullish scenario as August natural gas futures tore higher on Wednesday, one day ahead of the contract’s expiration. The prompt month put in a $6.900 high late in the session before closing at $6.887, up 47.8 cents from Tuesday’s close.

A reduction in generating resources, resulting from potential risk factors such as an aging number of power plants, environmental regulations, as well as financial uncertainty in the market, could bring about deficit electricity conditions in certain areas of New England within the next two to four years, ISO New England (ISO-NE) said on Thursday.

With a long holiday weekend and increasingly moderate weather looming on the immediate horizon, no one was surprised to see across-the-board declines in double digits Thursday for prices through the end of the month. And despite a surprisingly low storage injection report and the late-afternoon emergence of Tropical Storm Fabian, sources expect softening to continue Friday in trading for the initial September aftermarket.

Citing the uncertainty looming over the high-profile complaint case against El Paso Corp. at FERC, Moody’s Investors Service cut the senior unsecured debt ratings of the Houston-based energy corporation and its subsidiaries to junk status, or Ba2 from Baa3 last Tuesday, and also assigned a senior implied rating to El Paso of Ba1. It put the ratings outlook for embattled El Paso at negative.

Citing the uncertainty looming over the high-profile complaint case against El Paso Corp. at FERC, Moody’s Investors Service downgraded the senior unsecured debt ratings of the Houston-based energy corporation and its subsidiaries to junk, or Ba2 from Baa3 Tuesday, and also assigned a senior implied rating to El Paso of Ba1. It said the rating outlook for embattled El Paso was negative.

The prospect of the first significant voluntary production shut-ins in years is looming for the gas industry in about another month or so, according to an informal sampling of opinions among the trading community (“voluntary” means unrelated to a hurricane, pipeline maintenance or force majeure event). While a majority of sources fully expect to see such shut-ins beginning within a few weeks, it’s not a foregone conclusion, said a few dissenters.

The prospect of the first significant voluntary production shut-ins in years may be looming for the gas industry in about another month or so, according to an informal sampling of opinions among the trading community (“voluntary” means unrelated to a hurricane, pipeline maintenance or force majeure event). But although many sources fully expect to see such shut-ins beginning within a few weeks, it’s not a foregone conclusion, according to some dissenters.