Mmbtu

With natural gas futures prices stabilizing in the $7-8/MMBtu region and crude futures hovering around $60/bbl, it appears that North American producers are upping their drilling activity to capture profits from the higher prices. According to Houston-based Baker Hughes Inc., the North American count of rigs actively exploring for or developing oil and natural gas during February increased fairly significantly over both January 2007 and February 2006 tallies.

Without hurricane related production shut-ins this year, there is a strong possibility of a gas storage “capacity crunch” this fall and low enough natural gas prices that gas competes favorably with coal for power generation or prompts voluntary production shut-ins, consultants said in monthly reports on Wednesday.

Range Resources said it increased its natural gas hedge position, adding natural gas swaps in 2007 and 2008. The 2007 natural gas swaps average $9.34 per MMBtu, with the 2008 swaps averaging $9.42. To a lesser degree, additional natural gas collars were added in the third and fourth quarters of 2006. “With approximately 80% of Range’s reserves being natural gas, we have locked in outstanding prices on a significant portion of our production for the remainder of 2006 and for all of 2007 and 2008,” said CEO John H. Pinkerton. “With 15% production growth targeted for 2006 and 2007 combined with the attractive hedge prices, we anticipate generating record financial results. Importantly, the increased hedge position will allow us to aggressively pursue our growth strategy while continuing to build our financial strength.”

Cheniere LNG Marketing and Scottish Power PLC subsidiary PPM Energy Inc., made a 10-year purchase and sale agreement, giving Cheniere the ability to sell to PPM up to 600,000 MMBtu/d of gas at a Henry Hub-related index price and calling for Cheniere to allocate to PPM a portion of the liquefied natural gas (LNG) that it procures under certain long-term supply agreements.

North American natural gas prices will gradually ease over the coming years and eventually return to sub-$5/MMBtu levels toward the end of the decade because of growth in liquefied natural gas (LNG) imports and U.S. and Canadian unconventional gas resources, Cambridge Energy Research Associates (CERA) predicted last week.

North American natural gas prices will gradually ease over the coming years and eventually return to sub-$5/MMBtu levels toward the end of the decade because of growth in liquefied natural gas (LNG) imports and U.S. and Canadian unconventional gas resources, Cambridge Energy Research Associates (CERA) predicted Wednesday.

Southern California Edison (SCE) has issued a request for information (RFI) on the willingness of natural gas suppliers to provide it with up to 250,000 MMBtu/d through a combination of long-term financial instruments and physical natural gas contracts to underpin new power generation load. The physical and financial deals would run from one to 10 years, with progressive start times from June 1, 2006 through Nov. 1, 2010.

Transwestern will reduce WT-2 Station capacity by 120,000 MMBtu/d Thursday due to unplanned maintenance involving repair of a cooling tube. Ten points will be affected by the cut. WT-2 will return to normal capacity of 600,000 MMBut/d Friday.

Despite gas prices hovering near $11 currently and averaging $7.17/MMBtu so far this year (Henry Hub cash bidweek) mainly on fears of a supply shortage, the Potential Gas Committee’s latest report on the nation’s gas resources shows a total available gas resource of 1,308.3 Tcf, or nearly 70 years of gas supply produced near the current annual rate. The problem, according to the American Gas Association (AGA), is accessing that supply.