Prices

The industry has to find a solution soon to the problem of drilling rigs being torn from their moorings and set adrift in the Gulf of Mexico during hurricanes. A football field-sized structure careening through the Gulf can cause billions of dollars in damage to production platforms and subsea pipelines, Doug Krenz, vice president of transportation for Enbridge, said in an interview with NGI last week.

Despite gas prices hovering near $11 currently and averaging $7.17/MMBtu so far this year (Henry Hub cash bidweek) mainly on fears of a supply shortage, the Potential Gas Committee’s latest report on the nation’s gas resources shows a total available gas resource of 1,308.3 Tcf, or nearly 70 years of gas supply produced near the current annual rate. The problem, according to the American Gas Association (AGA), is accessing that supply.

Offering no respite from the current tightness in the natural gas market and the off-the-chart high prices, the United States could be in for a “Polar Coaster” this winter, according to the 2006 Farmers’ Almanac.

While this year’s summer heat throughout most of the U.S. remains one of the largest supporting factors to skyrocketing energy prices, one forecasting firm warned that the winter could be a real doozy on the temperature charts. Calling this summer “one of the hottest U.S. summers of all time” from coast to coast, Weather 2000 warned that the country is not completely out of the woods yet heat-wise and that this winter could see significant snowfall and ample cold in certain regions.

With oil and natural gas at record prices and production levels falling, BP plc is on a massive recruiting drive, and has hired 13 search firms to hire 400 new geologists, reservoir engineers, drilling specialists and other technicians to boost its North American operations from the Gulf of Mexico to Canada by the end of the year.

The combination of softer crude oil prices and forecasts calling for moderating temperatures were enough to keep the bulls corralled Monday as the natural gas market eased from Friday’s 30-month highs. Monday’s price softness led September futures to a low of $9.38, but buyers stepped in and the contract closed for the day at $9.54, down 4.8 cents for the session.

While an outright bearish natural gas storage report was needed to stem the recent meteoric rise in futures prices, traders received no such help Thursday morning as the Energy Information Administration (EIA) reported a slightly bullish 43 Bcf injection for the week ended Aug. 5.

With higher prices and daily production up 28%, Houston-based independent Noble Energy Inc.’s second quarter income rose 90% from a year ago to the highest level in its history, $136.9 million ($1.87/share) compared with $72 million ($1.24) in 2Q2004. Cash flow grew 49% to $329.9 million compared with $221.4 million.

As it strengthens its position in the natural gas liquids (NGL) business, Oneok Inc. said its second quarter income rose 40% on strong gas, NGL and oil prices, along with higher sales and transportation volumes. Net income was $24.9 million (23 cents/share), compared with $17.8 million (17 cents) in 2Q2004.