Returning

After making little more than a dent in natural gas supplies from the Gulf of Mexico, Hurricane Claudette was downgraded to a tropical storm late Tuesday afternoon and slipped into a tropical depression overnight into Wednesday as it made its way west/northwest toward Mexico. Gulf producers continued to repopulate platforms and rigs in the Western and Central Gulf, but about 2.2 Bcf/d of gas production remained shut in Wednesday, according to the Mineral Management Service (MMS).

A combination of two key settlements and stability returning to the wholesale power markets allowed Southern California Edison Co. to get California state regulators to authorize a $1.25 billion retail rate decrease, effective Aug. 1. It comes about six months ahead of schedule for the utility, and there is more to come before the year’s out, Edison’s President Robert Foster said Thursday during an interview with NGI.

Dollar-plus gains at all Northeast citygates and on Dominion in Appalachia were mixed into overall cash spikes Tuesday. Upticks of half a dollar or greater were consistent throughout the East and in the Waha/Permian Basin markets. The rest of the West tended to lag behind but still saw fairly strong advances of about 20-30 cents or so.

Despite current moderate to extreme drought conditions in the Pacific Northwest region, the Northwest Power Planning Council (NPPC) reiterated in a report this week that it does not expect any power supply problems this winter or next year because of about 3,000 MW of new non-hydro generation that has been built.

Despite current moderate to extreme drought conditions in the Pacific Northwest region, the Northwest Power Planning Council (NPPC) reiterated in a report last week that it does not expect any power supply problems this winter or next year because of about 3,000 MW of new non-hydro generation that has been built.

The Gulf Coast oil and gas industry was somewhat fortunate Thursday that Lili made landfall in central Louisiana as a Category 2 hurricane with 100 mph winds rather than the Category 4 with 145 mph winds it had been Wednesday evening. While it will take a few days for complete damage assessments, the readily apparent loss is that of supply. Lili’s presence and that of the weaker Isidore last week have removed 60 Bcf of gas production and 10 million barrels of oil from the market over the past two weeks, according to the Mineral Management Service (MMS) (see related story).

The power industry is returning to more than just a “commodity business,” and long-term contracts, low-cost supplies and strategic plant locations are going to increasingly determine winners and losers in the industry, according to a Calpine Corp. senior executive who spoke last Wednesday at the three-day Lehman Brothers “CEO Energy/Power Conference” in New York City.

Given the uncanny similarity to events of a decade ago, the outlook for the natural gas and power industry bears a strong resemblance to the markets in the early 1990s, according to a new report issued by Credit Suisse First Boston Equity Research Tuesday. The key difference is the current valuation for the S&P 500 Index is 10% higher than it was in 1992, while the valuation for the natural gas and power sector is 30% lower, it said.

High heat levels were returning Monday in some areas that had enjoyed some weekend relief, such as the Northeast, and never really left other areas, such as the South. The resultant power generation load was being felt in rising gas prices at nearly every point. Except for flat to slightly higher numbers for some Rockies pipes, Niagara, and ANR ML7, price increases elsewhere ranged from about a nickel to more than 40 cents at Transco Zone 6-New York City pool. Most were in the vicinity of a dime.