Perceptions

April natural gas futures tumbled as traders rushed to cash in on recent gains amid perceptions of market instability Friday. Futures prices at one point had the trajectory of a Saturday morning cartoon character falling off a cliff and traders noted that much of the selling took place late in the session as traders holding gains “bolted for the door.”

Contrary to perceptions, liquefied natural gas (LNG) proponents are still active in California, and on the eve of a deadline for the state’s governor weighing in on an offshore terminal proposal, activity continues to attempt what some critics consider politically impossible — siting an LNG terminal somewhere along the Southern California coast. The longest-running proposal to site a terminal in Long Beach harbor is still alive as are four separate offshore terminal proposals.

Prices relied on Monday’s return of industrial load after the weekend and perceptions of hotter weather later this week in some locations to realize mostly moderate rebounds from Friday’s plunges. Eastern points tended to range from down a few pennies to 20 cents higher. The West recorded similar movement at some points but also saw even larger gains close to half a dollar at the Southern California border and PG&E citygate and around 30 cents or so in the San Juan Basin.

Despite the desperate need for natural gas currently, long-haulpipeline construction is headed for a temporary lull over the nextfive years, according to Thomas Howard, director of strategicproducts at PIRA Energy Group, a New York City-based energyconsulting firm.

Despite the desperate need for natural gas currently, long-haulpipeline construction is headed for a temporary lull over the nextfive years, according to Thomas Howard, director of strategicproducts at PIRA Energy Group, a New York City-based energyconsulting firm.

The future of merchant power will be inhibited unless there arenew approaches and new perceptions about the technical, economicand political approaches applied, according to a panel of expertsat GasMart/Power 2000 Tuesday in Denver. Regardless of what preciseindustry changes are made, not all of the proposed new power plantswill get built, and distributed generation ultimately will have toplay a role to satisfy the expected growing demand that equates toabout 5 Tcf of added gas over the next 10 years, according topanelists discussing “The Runaway World of Merchant Power.”

Perceptions of whether September prices were still fallingFriday sometimes depended on the specific market. A trader in theSouthwest basins said numbers bounced around a bit Friday butessentially had hit bottom late Thursday. But another source saidChicago citygates continued to fall to a low of $1.62.