Shrinking

In order to offset shrinking production in the traditional natural gas basins in the United States, Congress in two years should begin to phase out the moratoriums that have prevented producers from drilling in promising gas-prone areas of the Outer Continental Shelf (OCS), the National Petroleum Council (NPC) recommended in a much-anticipated study released last Thursday.

An offshore project is shrinking, but Arctic plans are growing as Canadian natural gas producers work out the kinks in their next generation of large-scale supply projects.

In a saga that could be renamed “The Incredible Shrinking Company,” Enron Corp. told the Securities and Exchange Commission (SEC) in a filing last week that up to 38% of the total assets it listed when it filed for bankruptcy — $24 billion in assets and derivative values — should be erased because of “possible accounting errors or irregularities” that overstated the company’s value. The company also warned of a possible $8-10 billion reduction to unwind some of its derivatives contracts.

As an outgrowth of merchant power generation’s shrinking margins and spark spreads, Moody’s Investors Service last Wednesday changed the rating outlook from stable to negative on debt securities of PG&E Corp.’s National Energy Group (NEG). The move reflects “the growing reliance on less predictable cash flows coupled with the weak marketplace for merchant generation,” Moody’s said in announcing the change.

Hoisted somewhat on the petard of its own success and a shrinking merchant power market nationally, San Diego, CA-based Sempra Energy and its two principal utility subsidiaries had their credit ratings downgraded Wednesday by Standard & Poor’s, reflecting Sempra’s increased earnings from the nonutility businesses, particularly energy trading.

Strong cash price advances continued Tuesday, but there were signs that this week’s bull market may have just about run its course. The futures screen stayed positive for a while in the morning, but then later settled for a 12.6-cent loss that took it back to exactly where it had ended regular trading Friday. And unlike the previous couple of trading days where late quotes had moved sharply higher, cash prices were coming back off again near deadline Tuesday.

In the ever shrinking world of electronic energy exchanges, the bottom line remains that e-business is still business, according to a panel of B2B executives speaking last week at NGI’s GasMart/Power 2001 in Tampa. Altra Technologies’ Dixie Barrett, Intercontinental Exchange’s Rafael Pirutinsky and New York Mercantile Exchange’s Tom Martin told the audience that consolidation within their industry will continue, but the marketplace will only end up stronger.

In the ever shrinking world of electronic energy exchanges, the bottom line remains that e-business is still business, according to a panel of B2B executives yesterday speaking at NGI’s GasMart/Power 2001 in Tampa. Altra Technologies’ Dixie Barrett, Intercontinental Exchange’s Rafael Pirutinsky and New York Mercantile Exchange’s Tom Martin told the audience that consolidation within their industry will continue, but the marketplace will only end up stronger.

Shrinking demand due to warmer weather throughout the countryconspired with a 6.1-cent drop on the Nymex futures contractThursday to put an end to a small and short-lived boost from arelatively bullish storage report. Friday’s cash prices retreatedan average of 3-4 cents in most areas, erasing the small gains fromThursday’s trading, and bringing cash back to the level it hoveredaround most of the week.