Pressure

Under mounting pressure from Capitol Hill, the Federal Energy Regulatory Commission last week kicked off an investigation into whether the once-powerful Enron Corp. manipulated wholesale electricity prices during the energy crisis that rocked California last year. If manipulation is found, FERC Chairman Pat Wood told a Senate committee that federal regulators or the courts could void some of the long-term forward contracts that the state signed to lock in supplies.

Under mounting pressure from Capitol Hill, the Federal Energy Regulatory Commission has kicked off an investigation into whether the once-powerful Enron Corp. manipulated long-term electricity prices during the energy crisis that rocked California last year. If manipulation is found, FERC Chairman Pat Wood earlier this week said federal regulators or the courts could void some of the long-term forward contracts that the state signed.

Last week marked the second consecutive week of warmer than normal temperatures and the tenth overall this heating season, forcing UBS Warburg analyst Ronald Barone to concede his forecast for a $2.10/MMBtu average spot wellhead price this quarter could be a little too high. He also said his forecasts for the year may have to come down and other analysts agreed the fundamental picture continues to look weak despite the drilling decline.

Rig utilization continued to free fall last week under the pressure of low gas and oil prices. U.S. Gulf of Mexico oil and gas rig utilization has dropped to 58.1% from 85.5% last year and nearly 90% five years ago, according to ODS-Petrodata Group’s weekly offshore rig count. There was a net two-rig decline in the number of contracted rigs last week compared to the previous week.

As energy companies come under continuing pressure to improve financial performance, despite volatile price swings in the oil and gas markets, technology is the crucial key in reducing costs and improving margins for both the upstream and downstream markets, according to a new study prepared by Cambridge Energy Research Associates (CERA) and Sun Microsystems.

San Jose, CA-based Calpine Corp.’s “bad hair day” turned into an even worse week, and the question now is how badly the high-flying merchant power plant developer will be hurt by a growing wave of skepticism on Wall Street on the soundness of its strategy, financial ability and future earnings.

As energy companies come under continuing pressure to improve financial performance, despite volatile price swings in the oil and gas markets, technology is the crucial key in reducing costs and improving margins for both the upstream and downstream markets, according to a new study prepared by Cambridge Energy Research Associates (CERA) and Sun Microsystems.

Despite the downsizing of the Eastern Gulf of Mexico Lease Sale 181 after pressure from Florida congressmen and Gov. Jeb Bush, there still was a significant response last week from the industry — although some big name players, such as BP and ExxonMobil, were notably absent. The sale drew 190 bids from 14 exploration and production companies last Wednesday, the Department of the Interior’s Minerals Management Service reported. High bids totaling $341 million were made on 95 deepwater tracts out of the 233 tracts offered.

Stemming the selling pressure set in motion by Wednesday’s storage report, the natural gas futures market rebounded mid-morning Thursday as traders contemplated a supply-demand balance that may be tighter than previously thought. In a rare twist, the 12-month strip gained more (9.5 cents) than either the winter strip (9 cents) or the prompt month (6.8 cents). November closed at $2.486, just off its daily high at $2.51.