Offsetting

Weaker-than-expected North American natural gas drilling in the last four months has taken a bite out of earnings for at least two major U.S. oilfield contractors, and the slowdown is expected to impact energy earnings across the board for the next few months, according to energy analysts.

As the deepwater Gulf of Mexico (GOM) matures, it will become increasingly difficult to offset natural gas production declines on the shelf, which “may imply a more severe U.S. gas production decline” than now estimated, according to an analysis by Southwest Securities’ John Gerdes.

As the deepwater Gulf of Mexico (GOM) matures, it will become increasingly difficult to offset natural gas production declines on the shelf, which “may imply a more severe U.S. gas production decline” than now estimated, according to an analysis by Southwest Securities’ John Gerdes.

Industrial gas demand should be down by only about 1-1.5 Bcf/d (out of 22 Bcf/d) this summer — not the 20% drop some analysts predicted — and demand from power generators probably will fall by about 2 Bcf/d to a total for the sector of about 10.4 Bcf/d, according to energy consultants at Energy and Environmental Analysis Inc. (EEA). But those demand losses should be offset by the substantial increase in demand to refill storage inventories.

Industrial gas demand should be down by only about 1-1.5 Bcf/d (out of 22 Bcf/d) this summer — not the 20% drop some analysts predicted — and demand from power generators probably will fall by about 2 Bcf/d to a total for the sector of about 10.4 Bcf/d, according to energy consultants at Energy and Environmental Analysis Inc. (EEA). But those demand losses should be offset by the substantial increase in demand to refill storage inventories.

Bellevue, WA-based Puget Energy’s utility said Friday it reached a natural gas general rate settlement for an increase in retail rates, but reduced wholesale supply costs will offset the increase, resulting in small, but still-undetermined retail rate decrease Sept. 1, according to a company announcement on the settlement with the state of Washington regulatory commission staff, state attorney general’s office and large industrial customers.

There’s no need to worry about sharp drops in gas supply, said Arlington, VA-based investment bank Friedman, Billings, Ramsey & Co. (FBR) in a new report. Gas production from new deepwater projects in the Gulf of Mexico (GOM) and a boom in liquefied natural gas (LNG) imports will be more than enough to carry the load over the next few years and make up for any lasting effect from the current drilling decline.

California state and local officials Thursday reviewed a new proposal from Houston-based Reliant Energy offering lower emergency spot market power prices in exchange for letting up on air emission restrictions that limit the hours of operation annually to some of Reliant’s power plants along the coast in Ventura and Santa Barbara counties.

California state and local officials Thursday reviewed a new proposal from Houston-based Reliant Energy offering lower emergency spot market power prices in exchange for letting up on air emission restrictions that limit the hours of operation annually to some of Reliant’s power plants along the coast in Ventura and Santa Barbara counties.