Reset

Domestic natural gas production will be at an all-time high this year and is expected to reset that record for a third consecutive year in 2013, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook for September.

Sharp declines in onshore conventional natural gas activity and a more “permanent” shift to liquids plays may bring about a faster reset in the gas market than the futures strip implies, Credit Suisse analysts said Wednesday.

Penn Virginia Corp. CEO H. Baird Whitehead admitted to financial analysts last Thursday that the company is “essentially a one-trick pony at this moment” due to its heavy focus on the Eagle Ford Shale of South Texas. However, he said, “we think it’s a pretty good-looking pony.”

A Railroad Commission of Texas (RRC) hearing intended to get to the bottom of the matter of whether the Barnett Shale gas drilling activities of Range Resources Corp. led to the contamination of two water wells in Parker County, TX, has been postponed to Jan. 18 from Monday (Jan. 10). In the meantime, one interested observer told Shale Daily that both research that condemns the company and other findings that would exonerate it are incomplete.

Natural gas futures continued its trek lower Monday as traders were forced to pull weather premium out of the market, and technical traders reset support parameters. At the close October futures fell 8.1 cents to $3.800 and November skidded 9.3 cents to $3.916. November crude oil rose 3 cents to $76.52/bbl although more deferred contracts fell.

The risk of a winter weather “reset” on natural gas storage supplies has come in higher and sooner than forecast, and that alone could meaningfully swing the North American gas market in 2010, Barclays Capital analysts said this week.

As a result of early settlement and reset arrangements for 37% of its 2009 commodity hedge volumes, XTO Energy Inc. said it has realized about $900 million of after-tax proceeds that it has used to reduce its outstanding debt. The company expects to end the first quarter with net debt of approximately $11 billion. The net effect of the early settlements is to accelerate cash receipts, while maintaining XTO’s full hedge position against further declines in oil and natural gas prices during the year. By executing the transactions, the company said it has accomplished the lion’s share of its previously announced $1.25 billion minimum debt reduction. In November XTO said it had 1,745 MMcf of gas hedged at $8.83/Mcf for 2009 and 730 MMcf of gas hedged at $8.67/Mcf for 2010 (see Daily GPI, Nov. 21, 2008). At the same time, the company’s board of directors approved a 2009 capital budget for development and exploration expenditures of $3.3 billion and an additional $500 million was budgeted for the construction of pipeline infrastructure and compression and processing facilities. Fort Worth, TX-based XTO’s properties are concentrated in Texas, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska, Utah, Louisiana, Mississippi, Montana, North Dakota, Pennsylvania, New York, West Virginia and Kentucky.

To encourage shippers to run positive imbalances because of dwindling linepack during an especially severe cold snap in Western Canada, NOVA has reset its imbalance tolerance range to 0/+4.

Pacific Gas & Electric did not extend a systemwide high-inventory OFO beyond Saturday.