Severe

The political backlash from high winter heating bills may not be nearly as severe as first expected because mild weather has pulled the rug out from under wholesale prices. Consumers Energy said Wednesday that its customers can expect about half of the increase in prices that the utility previously projected.

Despite a lack of severe cold in most areas and mounting evidence that minuscule storage space remains for injections, most prices continued to advance Thursday. However, weakness in both the screen and physical fundamentals is expected to send the cash market lower Friday.

Severe economic pain will be felt this winter by natural gas customers nationwide. Utility companies in Texas, Minnesota, Alabama and elsewhere warned customers last week that winter bills will be about 40-90% higher than last winter.

Severe economic pain will be felt this winter by natural gas customers nationwide. Atmos Energy Corp., the largest gas-only utility company in the nation, warned its 1.4 million customers in north and central Texas on Wednesday that residential gas bills may be 60-90% higher this winter compared to last winter.

California’s energy future is balanced precariously between runaway costs and the threat of severe shortages, particularly in a “hotter-than-average” summer, according to the California Energy Commission’s (CEC) draft 2005 “Integrated Energy Policy Report,” released last Friday. Touching on everything from global climate change to the cost of gasoline and growing reliance on natural gas, the 157-page report delivers a sobering message for Californians.

Although it appears that the badly listing Thunder Horse platform in the Gulf of Mexico may require extensive repairs after taking a severe beating by Hurricane Dennis, BP was taking an optimistic view on Wednesday. Meanwhile, other producers have nearly completed repopulating Gulf platforms and rigs, and the Minerals Management Service (MMS) has reported no other major damage to Gulf infrastructure. Gas production shut-ins have fallen to about 1 Bcf/d.

Severe thunderstorms knocked out multiple natural gas processing plants near Empress, AB, on Tuesday evening, affecting several Bcf/d of processing capacity and significant production of ethane, propane and other gas liquids. TransCanada PipeLines said six processing plants and related operations lost power and suffered some damage, including plants owned by ConocoPhillips, EnCana, Atco, Inter Pipeline and BP Canada. No injuries were reported in any of the outages.

Following a long holiday weekend in which severe winter weather in the East snarled transportation, left many without power and even brought a quite rare snow event to South Texas, the prospect for more moderate conditions this week resulted in price drops across the board Monday.

Despite indications that severe cold might linger in the Northeast and become more entrenched in the Midwest, prices continued to fall throughout most of the cash market Thursday. But several points — mostly in the Rockies — were flat to up slightly, and Westcoast Station 2 managed a gain of nearly C20 cents despite the pipeline’s imbalance tolerances continuing to encourage maximum drafting.