Single

Thunder Horse, considered the world’s largest semisubmersible platform, has begun production in the deepwater Gulf of Mexico (GOM) from a single well and is on track to be fully commissioned before the end of 2008 following a three-year delay. The platform is jointly owned by BP plc, with a 75% stake, and ExxonMobil Corp., which holds 25%. Located 150 miles southeast of New Orleans on Mississippi Canyon Blocks 778 and 822, Thunder Horse is expected to be the largest oil and gas producer in the GOM once it begins full production. At full capacity, Thunder Horse would increase overall U.S. oil and gas output by 3.6%. Thunder Horse was to begin operations in 2005 and produce up to 250,000 b/d of oil and 200 MMcf/d of natural gas. However, the BP-operated facility has suffered from a series of natural and man-made delays. After Hurricane Dennis struck the platform in 2005, the platform was found listing 20 degrees, and BP said then it was unlikely that commercial production would begin before the end of 2005 (see NGI, Aug. 1, 2005). Following hurricanes Katrina and Rita, also in 2005, the Thunder Horse ramp-up timetable was again revised; production was set to begin by mid-2006 (see NGI, Dec. 5, 2005). A year later BP said it would “retrieve and rebuild” all of the seabed production equipment from the Thunder Horse field, and the start-up was pushed to this year (see NGI, Sept. 25, 2006).

While the Pacific Northwest clearly needs new natural gas supplies in the long term, including liquefied natural gas (LNG) imports, no single state, nor the hydroelectric-rich region as a whole, has enough demand to support the economics for new pipelines or LNG terminals, according to analyses done by San Francisco-based Pacific Gas and Electric Co. The major new supply projects need to be conceived and designed to serve the broader West, PG&E has concluded.

Prices skyrocketed to as high as $19.50/MMBtu Wednesday in the Northeast as low temperatures ranging from single digits to the 20s were forecast to keep the region chilled out Thursday. But with warming trends due in the South and Midwest while the West essentially maintains its status quo of seasonably cold to mild conditions, the market outside the Northeast saw mixed price movement that was mostly close to flat and biased toward the downside.

Prices continued to fall at most points Wednesday in spite of Thursday lows continuing to reach single digits or around zero in upper New England and much of the Midwest. Ongoing substitution of storage use for spot gas purchases, major prior-day screen weakness and looking ahead to weekend warming trends were the chief reasons for the cash market to keep softening in the face of what appears to be substantial fundamental weather demand.

As it did in other deals in other parts of the country, Standard & Poor’s Ratings Services (S&P) lowered the ratings from double-A (“AA-“) to single-A (“A+”) Thursday on two major natural gas deals Merrill Lynch & Co. Inc. has put together for two California public sector utilities in Long Beach and Roseville, CA, respectively. The outlook remains negative, according to S&P.

FERC Thursday approved the merger of affiliates Cheniere Creole Trail Pipeline and Cheniere Sabine Pass Pipeline into a single line that would serve two liquefied natural gas (LNG) terminals in Cameron, LA.

Attempting to ascertain how much natural gas is being traded by every single energy merchant in North America is a gambler’s game at best. Trends, however, are another story, and in a review of 1Q2007 gas marketing data, the Barnett Shale and the Rocky Mountains appear to be making an impact, albeit small, on the markets.

Attempting to ascertain how much natural gas is being traded by every single energy merchant in North America is a gambler’s game at best. Trends, however, are another story, and in a review of 1Q2007 gas marketing data, the Barnett Shale appears to be making an impact, albeit small, on the markets.

Sparked by natural gas futures gains through Thursday on the New York Mercantile Exchange, Northeast and Louisiana points mostly posted single-digit gains Friday, while low gas demand and moderate temperatures allowed most of the market to shed anywhere from a couple of pennies to 83 cents, with the largest drops coming from the Midcontinent and the West.