Storms

This year’s devastating storms led Devon Energy Corp. to lower its oil and natural gas production outlook for the year, but the Oklahoma City-based producer increased its estimate of proven oil and natural gas reserves.

Devastating storms in the third quarter jolted energy markets and sent natural gas prices soaring, but despite the upheaval in prices and the continuing entry of new investment bankers into the marketplace, natural gas trading in North America continues to stabilize and grow, up an estimated 4%, to 96.45 Bcf/d from 92.81 Bcf/d a year ago, according to NGI’s latest gas marketer survey.

Devastating storms in the third quarter jolted the energy markets and sent natural gas prices soaring, but despite the upheaval in prices and the continuing entry of new investment bankers into the marketplace, natural gas trading in North America continues to stabilize and grow, up an estimated 4%, to 96.45 Bcf/d from 92.81 Bcf/d a year ago, according to NGI’s latest gas marketer survey.

Despite taking a hit from Gulf of Mexico storms in the third quarter, Occidental Petroleum Corp. said Monday higher commodity prices lifted third quarter earnings to $1.747 billion ($4.32/share), more than double the $758 million ($1.91) reported in 3Q2004. The Los Angeles-based major also reported a 13% rise in domestic natural gas production from fields in California, the Hugoton Basin and the Permian Basin.

Two new Gulf of Mexico storms could threaten offshore natural gas production in the near future, and “blistering heat” over much of the United States in the past six weeks has increased cooling demand — two factors that could sustain high natural gas prices going forward, energy analysts said Monday.

Tropical storms may have been the big news of the day, but large rebounds in the cash market Tuesday weren’t exactly small potatoes. Storm-related shut-ins (see related story) combined with high heat levels in a few areas and a stronger Friday screen to generate price increases that were as small as a little less than a quarter, but mostly were substantially larger.

With fears swirling over the possible one-two punch to Gulf of Mexico production from Tropical Storms Cindy and Dennis, August natural gas futures found themselves 30.4 cents higher at $7.475 by the end of the regular trading session Tuesday.

As some early spring storms were hitting the parched Pacific Northwest, the California Independent System Operator (CAISO) last week released its official summer electrical assessment, predicting sufficient supplies unless a 1-in-10-year excessive heat situation is encountered, and then the areas in the southern half of the state could turn up about 2,000 MW short in peak-demand situations. In addition to the vulnerability to an extreme hot spell, the southern parts of the state have less tolerance for a string of unplanned plant outages.

With below normal temperature forecasts and no immediate threat from tropical storms or hurricanes, the natural gas futures market tumbled to fresh, four-month lows Monday on selling from both commercial and speculative accounts.