Needs

Southcentral Alaska and the railbelt area have enough gas reserves to meet their needs for a decade or more, according to a new study of gas reserves in the Cook Inlet basin released recently by the Alaska Department of Natural Resources (DNR). The study suggests that recently voiced fears of a regional gas shortage are premature; however, gas and electric utilities in the region still have had difficulty securing supplies.

Southcentral Alaska and the railbelt area have enough gas reserves to meet their needs for a decade or more, according to a new study of gas reserves in the Cook Inlet basin released this week by the Alaska Department of Natural Resources (DNR). The study suggests that recently voiced fears of a regional gas shortage are premature; however, gas and electric utilities in the region still have had difficulty securing supplies.

The Astoria, OR, port commission failed to give Oregon LNG the 30-year state land lease it needs to develop a liquefied natural gas (LNG) receiving terminal on a 96-acre tract on the Skipanon Peninsula near the mouth of the Columbia River. Because of pending litigation and an investigation, company executives said they could not comment on the port action. Oregon LNG backers contend they already had a commitment for a 30-year lease with the Oregon Department of State Lands, but the five-member Astoria Port Commission, following four hours of discussion, voted unanimously to extend the existing lease by only two years. Oregon LNG filed an application last October with the Federal Energy Regulatory Commission, noting that it was staying on schedule and the extensive application demonstrated the project, originally conceived by a Calpine Corp. affiliate, was still feasible and should be approved (see Daily GPI, April 28). FERC formally accepted the application, and the project already has completed local land-use approvals, according to Oregon LNG CEO Peter Hansen, who helped launch the project at Calpine. The commissioners faced an Aug. 31 deadline to act on what they said was a “pass-through lease” of state land for Oregon LNG. The port leased the land from the state and in turn subleased it to the LNG developer. The five-year terms expire this year.

Given the U.S. government’s stress test assessment that Bank of America (BofA) needs a multi-billion-dollar capital infusion, Standard & Poor’s Ratings Services (S&P) on Wednesday adopted a “negative” credit watch for some of the high-profile public-sector utility long-term natural gas purchases. The gas prepayment deals have been under credit rating downward pressures for the past year (see Daily GPI, Sept. 17, 2008).

ExxonMobil Corp. boosted its proven reserves in 2008 by 1.5 billion boe, more than replacing the amount of oil and natural gas it produced. The Irving, TX-based major said reserves added totaled 103% of the resources it produced last year. ExxonMobil had 22.8 billion boe of reserves at year-end 2008, split evenly between natural gas and oil. Excluding asset sales, the producer replaced 110% of its output. Using the Dec. 31, 2008 oil and gas prices required by the Securities and Exchange Commission to make reserves calculations, ExxonMobil replaced 136% of its output, the company said. Prices from a single day, it said, are not useful for making long-term investment decisions. At the end of 2008, ExxonMobil’s proved reserves base increased to 22.8 billion boe. The company’s reserves life, at current production rates, is 15.3 years. The portion of proved reserves already developed was estimated at 62%.

Some of the biggest natural gas producers in North America are doing what needs to be done to cope with low commodity prices and tight credit markets. Anadarko Petroleum Corp. has dropped around 30% of its U.S. onshore rigs since the end of 2008, the company said last week. And XTO Energy Inc. is slicing $1 billion from its capital expenditures (capex) for 2009.

According to Mastio’s Natural Gas Pipeline Value/Loyalty Benchmarking Study for 2008, the “top three customer needs” of pipeline customers are reliable firm transportation, accurate scheduled volumes and honest and forthright communications.

South-central Alaska gas distribution utility ENSTAR Natural Gas Co. has finally secured contracts for gas supply to meet its customers’ needs next year and beyond. Now it is seeking expedited state regulatory approval of the two contracts in order to avoid a gas supply shortfall as early as Jan. 1.

Environmental concerns seem to be trumping energy security needs when it comes to the issue of drilling in the waters off two pristine Northern California counties 100 miles up the coast from San Francisco, according to stakeholders on both sides of the issue.