Surge

Higher oil and natural gas prices have resulted in robust revenue for exploration and production (E&P) companies, but the accompanying surge in service costs has dampened the financial windfall — and an $8/Mcf gas price may be required to deliver a market return on capital going forward, according to energy analysts.

Rising costs are accompanying an unprecedented building surge in liquefied natural gas (LNG) and pipeline/storage projects in North America, leaving companies like Sempra Energy that are far along in project development sitting in strong bargaining positions, a panel of industry CEOs and CFOs emphasized last week at the Citi Power, Gas and Utilities Conference in Charleston, SC. Even with ever-higher costs, the panelists think lucrative returns will continue for all three gas sectors — LNG, pipelines and storage.

Rising costs are accompanying an unprecedented building surge in liquefied natural gas (LNG) and pipeline/storage projects in North America, leaving companies like Sempra Energy that are far along in project development sitting in strong bargaining positions, a panel of industry CEOs and CFOs emphasized Thursday at the Citi Power, Gas and Utilities Conference in Charleston, SC. Even with ever-higher costs, the panelists think lucrative returns will continue for all three gas sectors — LNG, pipelines and storage.

Belen Station became unavailable Wednesday morning due to surge control valve problems, El Paso said, adding that parts are being shipped in and if all goes well, the station will be returned to service Friday afternoon. Meanwhile, Belen’s outage has changed a capacity reduction of the San Juan Crossover from 29 MMcf/d to 75 MMcf/d through Friday.

A surge of power generation demand in the Southeast and in other areas to some extent, prompted by the arrival of more summer-like conditions, along with Friday’s 22.9-cent rally by June futures helped the cash market to realize double-digit price gains across the board Monday. The return of industrial load from its customary weekend hiatus also contributed to market firmness.

Although one source dismissed the latest surge of winter cold in northern market areas as “nothing to write home about,” temperatures are dropping low enough to ignite price increases at virtually all points Thursday. The previous day’s screen rebound of 19.1 cents provided additional support for cash quotes Thursday.

The odds that had once favored a spring natural gas “mega-glut” have suddenly dropped to zero, and the late surge of extreme cold weather will impact North American gas markets through most of the year, Stephen Smith Energy Associates said last week.

The odds that had once favored a spring natural gas “mega-glut” have suddenly dropped to zero, and the late surge of extreme cold weather will impact North American gas markets through most of the year, Stephen Smith Energy Associates said Wednesday.

In advance of an expected liquefied natural gas surge, Sempra Pipelines & Storage and ProLiance Transportation and Storage LLC last week launched an open season to solicit market interest in expansion capacity at their Liberty Gas Storage LLC facility in Calcasieu Parish, LA. Bids will be taken until March 2.