March

John W. Somerhalder II, who directed El Paso Corp.’s natural gas pipeline group before resigning earlier this year (see Daily GPI, March 31), has entered into an agreement and general release with the company. He also entered into a Professional Services Agreement to provide consulting services to El Paso on various pipeline projects for $41,000 per month for 12 months. Under the severance agreement, Somerhalder will receive $642,000. El Paso also agreed to provide Somerhalder with a prorationing of his incentive compensation for 2005, which included one third of his target 2005 annual cash incentive bonus in the amount of $203,300, a cash equivalent in the amount of $12.815 million equal to the prorated value of a 2005 equity award had he received that grant and eight months of continued medical coverage subject to his payment of the required contributions. Upon his departure, Somerhalder had 95,000 vested nonqualified stock options and 49,531 shares of vested restricted stock.

Instead of focusing on Thursday morning’s natural gas storage report for the week ended March 25, energy traders were fixated on a new research report from Goldman Sachs predicting that the oil market has entered a “super-spike” period that could see prices surge as high as $105/bbl. The firm also said Henry Hub natural gas prices could soar to $13/MMBtu by 2007 (see related story).

Buoyed by Tuesday’s expiration-day screen spike of 32.4 cents and almost nothing else, prices for end-of-March flows saw substantial gains Wednesday. Increases were fairly consistent and spread evenly through all market areas in ranging from a little less than 20 cents to nearly 35 cents in nearly all cases (the exception was a rise of a little more than a dime by OGT in the Midcontinent).

With the natural gas storage report for the week ended March 18 revealing a relatively small 89 Bcf withdrawal, April natural gas futures traders took the bearish news and immediately probed lower, breaking through support at $7.05 within the first five minutes following the report.

Nine more rigs were searching for oil and natural gas in the United States during the week ended March 4 than in the previous week, according to the latest Baker Hughes rotary rig count.

Williams on Thursday began a nonbinding open season through March 31 to gauge market interest in an expansion of its Northwest Pipeline system, which would provide additional natural gas capacity from supply basins in the Rockies to western U.S. markets.

Williams on Thursday began a nonbinding open season through March 31 to gauge market interest in an expansion of its Northwest Pipeline system, which would provide additional natural gas capacity from supply basins in the Rockies to western U.S. markets.

As traders had predicted based on Thursday’s below-expectations storage report, the accompanying March futures drop of nearly 19 cents and the usual extra loss of industrial load over a long holiday weekend, the entire cash market was united in softer prices Friday.

The Minerals Management Service (MMS) Friday announced the availability of the Final Notice of Lease Sale 197, an offshore oil and gas lease sale in the Eastern Gulf of Mexico, scheduled for March 16, 2005. This lease sale is the third Eastern GOM Outer Continental Shelf lease offering in the last five years. The configuration is the same as MMS Eastern GOM Lease Sales 181 and 189, held in December 2001 and December 2003, respectively. The lease sale area encompasses the unleased blocks in an area of the Eastern GOM OCS Planning Area. The area is directly south of Alabama. These 124 unleased blocks cover about 714,240 acres and are located from 100 to 196 miles offshore in water depths of 1,600 to more than 3,425 meters. Estimates of undiscovered economically recoverable hydrocarbons in this proposal range from 65 to 85 million barrels of oil and 0.265 to 0.34 Tcf of natural gas. The Final Notice of Lease Sale 197 will be posted on the MMS website at http://www.gomr.mms.gov.