Return

In the long run — beyond 2010 — oil and natural gas prices should return to parity on a global basis, but the “most important and timely driver” will be the build-out of a global liquefied natural gas (LNG) infrastructure, Raymond James & Associates Inc. energy analysts said. They warned in the short term: “beware North American gas names in 2008.”

Prices dropped at nearly all points Wednesday as a Thursday return of especially severe winter weather that had been anticipated when the week began apparently was encountering delays. Tuesday’s 15.7-cent decline by February futures also contributed to cash market softness. Expectations that a relatively light storage pull will be reported for last week may have been another factor, one source said.

As Wednesday’s swing to mixed pricing that was mostly softer had hinted, the impending return of warmer weather in the East and the depressant effect of four straight losing sessions by December futures combined to bring cash prices down hard at nearly all locations Thursday. Only flat El Paso-San Juan numbers averted a total sweep of softer quotes.

The average full-cycle cost of new gas supply in Western Canada has more than doubled since 2000 to C$7.90/Mcf including a return on producers’ investment, significantly higher than the C$6.25/Mcf received by producers at the Alberta Gas Plant Gate during the first three quarters of 2007, according to Calgary-based Ziff Energy Group.

The average full-cycle cost of new gas supply in Western Canada has more than doubled since 2000 to C$7.90/Mcf including a return on producers’ investment, significantly higher than the C$6.25/Mcf received by producers at the Alberta Gas Plant Gate during the first three quarters of 2007, according to Calgary-based Ziff Energy Group.

Rising temperatures in the Northeast, modest futures strength on the previous Friday and the return of industrial load from its typical weekend downturn caused prices to rise Monday in most of the cash market. But in what is becoming a familiar — but unwanted — week-starting routine for Rockies producers, quotes plunged by double-digit amounts, leaving all points in the region averaging less than a dollar.

Upstream investment worldwide hit a world-class pace in 2006, but the return on reserves volumes was paltry. This year, investor enthusiasm has declined, but capital expenditures (capex) by exploration and production (E&P) companies — at least in the United States — show signs of support for organic growth in production volumes, two groups of energy analysts said in their reviews of the sector.

Unified price movement almost made one of its rare return visits to the cash market in recent weeks Thursday. All points responded to the previous day’s 22.1-cent advance by August futures with gains. Prices rose overall despite a substantial dearth of fundamental cooling load in many areas.

Calpine Corp.’s restructuring plan and accompanying disclosure statement offer hope the independent power plant developer/operator will return to profitability fairly quickly, company officials said Wednesday. However, it won’t be known if creditor claims will exceed the company’s value until it emerges from bankruptcy, and in the meantime the independent power plant developer has to quickly address major creditor claims and possible lawsuits.