Tough

Rep. Edward Markey (D-MA), a strong proponent of ending liberal royalty relief for producers, assailed the Bush administration Wednesday for not being tough enough with producers to resolve the debacle over royalty-free deepwater oil and natural gas leases.

Enron Corp.’s former investor relations chief, Mark Koenig, stood his ground under tough cross examination Tuesday, contending it was wrong for the company to revise its earnings upward to meet Wall Street expectations.

Reflecting a get-tough policy to improve pipeline operator safety, federal pipeline safety regulators have proposed a hefty $600,000 fine against Williams’s Transcontinental Gas Pipe Line for federal violations that resulted in the release of natural gas and evacuation of school children and residents in a densely populated area in northern Virginia in October.

FERC Commissioners used tough language last Wednesday in saying that the federal agency will take action in response to a trend of power companies failing to make timely filings at the Commission related to their authority to sell power at market-based rates.

Following a bearish 98 Bcf natural gas storage withdrawal report, March natural gas futures on Thursday morning immediately dropped 12 cents to trade at $6.01, but found it tough initially to get below the $6.01 level. Near-month futures bounced off the $6.01 level five separate times in morning trading before finally breaking through in the afternoon.

With heating oil prices reaching a record high on Nymex Wednesday, crude oil staying above $52/bbl and gas futures above $7/MMBtu, energy consumers could be in for a whopper winter heating season. Two forecasts released Wednesday by the Energy Information Administration (EIA) predict that higher prices will remain the norm over the short term.

“We’re tough up this way; we don’t need heat,” a Midwest source jested as a way of trying to explain Thursday’s falling prices despite subfreezing temperatures across most of the region that would extend into the weekend. Quotes fell across the board, with losses ranging from a little more than a dime at some western points to about a half a dollar for New York City deliveries.

While cracking down on market fraud and abuse with tough new penalties, the draft energy bill also seeks to increase transparency in natural gas prices by ordering regulated entities to report prices to the Federal Energy Regulatory Commission and to price publishers.

With companies in all sectors tightening their waist line in the currently tough economic times, the outlook for the North American diversified natural gas transmission companies is stable, according to Mihoko Manabe, Moody’s vice president and senior credit officer. She noted that these companies are generally pulling back to focus on their regulated, low-risk businesses, working to reduce debt and enhance liquidity, and simplifying their business models.