Sector

Because of its maturity and growth, North America’s exploration and production (E&P) sector is less likely to respond as quickly as in the past when there were unsustainable commodity prices, and thus, the industry will trend toward less activity directed at short-term production maximization, according to analysts with RBC Capital Markets.

The energy merchant sector took another hit Friday, after Boise-based IDACORP Inc. announced plans to wind down its power marketing business and cut in half its 120-member trading staff in the next year and a half. The decision was made to reaffirm “its commitment to maintain a strong investment credit rating.” IDACORP’s news mirrored announcements by Aquila Inc. to close its Merchant Services unit on Tuesday, and Dynegy Corp.’s decision to stop online trading on Wednesday (see Daily GPI, June 19; June 21).

In the oil services sector, corporate earning estimates are down in 2003 while stock valuations are moving up — the first signs of an uptick in the cycle, which will lead to meaningful increases in the next 12 months as natural gas prices rise, according to analyst Marshall Adkins in Raymond James’ Stat of the Week.

Becoming increasingly unique in the troubled energy sector, San Diego-based Sempra Energy rode the consistency of its two large utility subsidiaries and solid growth in its merchant energy units, except trading, to increase its net income by 26% to $150 million, or 73 cents/diluted share, for the third quarter, compared to $96 million, or 46 cents/diluted share, the same period last year, which included a 12-cent/share charge for the sale of its Nova Scotia natural gas project. Energy trading, while remaining profitable, was the only business line with substantially decreased earnings.

As a third quarter rarity in the energy industry showing increased profits and a stable stock price, Bellevue, WA-based Puget Energy executives said last week they see 2003 as a chance to shake off two industry albatrosses — depressed wholesale power prices and a “dark cloud” of uncertainty hovering over western energy companies from the pending federal investigations of alleged trading and price manipulation in the wholesale market.

A newly formed alliance composed of California air quality, transportation and energy officials and private sector representatives released a list of specific goals last week for the deployment of more natural gas powered vehicles (NGVs) across the state.

A newly formed alliance composed of California air quality, transportation and energy officials and private sector representatives released a list of specific goals Tuesday for the deployment of more natural gas powered vehicles (NGVs) across the state.

With strong opposition from the state’s two major private sector utilities, a proposal to merge the natural gas-buying portfolios of San Diego-based Sempra Energy’s two utilities will be delayed until after a newly-ordered statewide regulatory investigation is completed, according to one of the commissioners on the five-member California Public Utilities Commission.

The current “trough” hanging over the power sector is likely to stretch three to five years and a key factor in determining just how long the industry will be stuck in its current funk will depend, at least in part, on how many forecasted gigawatts actually come online over the next couple of years, said Thomas Boren, executive vice president at PG&E National Energy Group (NEG).