Slowly

Relatively mild weather, weak weekend demand, declining storage space and slowly returning Gulf production pressured prices much lower on Friday with quite a few points down more than a dollar and the majority off more than 60 cents from levels on Thursday.

Recovery from the Katrina-Rita one-two punch has progressed slowly and producers began to take a closer look at the impact on third-quarter earnings from lower production, facility repairs and downtime due to third-party infrastructure damage.

Damage estimates by oil and natural gas producers and pipeline operators hit by back-to-back Hurricanes Katrina and Rita are slowly trickling in, but already, some are announcing they will be unable to hit their third quarter production targets.

Gas production onshore and offshore Louisiana and Texas is beginning to rise slowly, Golden, CO-based consulting firm Bentek Energy reported Wednesday. Total Gulf production, judging from scheduled gas pipeline nominations, as of Wednesday morning rose to 4,785 MMcf/d compared to a revised total for Tuesday of 4,529 MMcf/d and pre-Katrina levels of 13,820 MMcf/d, Bentek said in a Hurricane 2005 update.

It was deja vu all over again, as Hurricane Rita slowly churned into the southeastern Gulf of Mexico as a Category Two storm after dumping heavy rain in the Florida Keys on Tuesday. The storm is expected to intensify into a Category Three and its center was projected to reach the middle of the production area off Texas sometime Friday. In preparation, energy companies were stepping up offshore evacuations.

Despite beginning the day slowly Friday, October natural gas futures in afternoon trade went from nearly unchanged to lower in a hurry, settling at $11.144, down 19.2 cents on the day and 11.9 cents lower than the previous Friday’s close.

Natural gas production shut in by Hurricane Katrina in the Gulf of Mexico continued to slowly inch back on Friday, at the same time new damage reports pinpointed El Paso Energy’s Southern Natural Gas and Tennessee Natural Gas as the source of the majority of the lost volumes.

Continuing the upward momentum from trading on Tuesday, August natural gas went out with a bang on Wednesday. After starting the day slowly, August reached a high of $7.67 just before expiring at $7.647, up 22.2 cents for the day.

Gulf of Mexico producers and pipeline companies continued to make progress Tuesday repairing infrastructure damaged by Hurricane Ivan. The Minerals Management Service (MMS) said 22 companies reported that nine manned platforms and two rigs were still evacuated and 1,735.8 MMcf/d of gas and 453,092 bbl/d of oil were still shut in. Cumulative production shut-ins now stand at 67.861 Bcf of gas and 15.3 million bbl of oil.