Opportunity

TransColorado Gas Transmission said Friday that it is offering shippers an opportunity to bid on 74,500 Dth/d of firm transportation capacity in two packages that will become available at the end of October when two contracts expire. Each contract is subject to a prearranged bid of 26 cents/Dth for a term of five years. The company said the prearranged bid does not include an option for the current shipper to match higher bids.

FERC staff has offered the industry and price developers another opportunity to comment on the current state of natural gas and electricity price formation and to say whether there has been any increase in confidence in natural gas and electric price indices.

Despite the development of Tropical Storm Bill in the Gulf of Mexico over the weekend, natural gas futures turned only modestly higher Monday as bulls appear to be still reeling from last week’s very steep price downdraft. The August contract closed at $5.411, up 4.9 cents for the session and in the middle of the contract’s 13-cent trading range Monday. At 45,356, extremely light estimated volume was evidence of the lack of consensus surrounding the day’s trading activity.

In their first opportunity following the record-setting snowfall in the Northeast over the holiday weekend, natural gas traders bid the market higher in overnight (Monday) Access trading. However, the market could not sustain its early push above the $6.00 mark and sellers were eager to beat it back late Tuesday morning. The March contract finished at $5.911, up 6 cents for the session but more than a dime off its $6.02 top for the session.

How the energy wholesale marketplace sorts itself out in the wake of the past year’s stream of bad news remains to be seen, but regardless, there is a “tremendous” need to market the natural gas of producers, and the growing, underserved wholesale market presents a myriad of opportunities, energy executives believe.

Buoyed by stronger cash market prices driven by a storm bisecting the country Thursday, natural gas prices floated higher throughout the session as traders cautiously covered short positions initiated in the month-long decline. The March contract finished at $2.138 and by virtue of its 5.8-cent advance secured its third straight up-day. There was less interest in the back months, which limited the 12-month strip to a 1.2-cent gain and $2.518 close. Volume was weak, with 75,990 contracts changing hands.

“Although we have some exposure to commodity prices, we believe we have the opportunity to achieve the upper end of the range by continuing our track record of growth and cost containment, while also prudently managing our risk,” said CEO Robert Catell.

El Paso Merchant Energy, declining to match bids for aboutone-third of the capacity on its affiliate El Paso Natural GasPipeline into California, “passed up a short-term profit” (and morecontroversy) to focus on “building our long-term relationship withour California customers,” according to spokesman Mel Scott.

Millennium Pipeline President David Pentzien said yesterday it ismore evident now than ever before that significant additional capacityis needed to the Northeast. His remarks ran contrary to theconclusions of a recent Energy Information Administration report (seeDaily GPI, May 25), which found onlyabout 840 MMcf/d of additional capacity is needed in the near term incontrast to the more than 2 Bcf/d of capacity that is planned. ButPentzien noted recent market indicators show an undeniable need forlots more supply access.