Traction

An idea to convert some of TransCanada Corp.’s Mainline from natural gas to oil service is getting some traction among prospective customers, but it is still early days, a company pipeline executive said during a second quarter earnings conference call.

Augmented by more aggressive marketing from oil/gas producers, automakers, retailers and states, natural gas for transportation is beginning to get some real traction despite a defeat last week in the U.S. Senate of a national stimulus package for natural gas vehicles (NGV).

Augmented by more aggressive marketing from oil/gas producers, automakers, retailers and states, natural gas for transportation is beginning to get some real traction even as Congress came up short last Tuesday in attempts to add a national stimulus package to the specialized vehicular fuel aimed mostly at fleet operators.

In response to low natural gas prices, Chesapeake Energy Corp. on Monday said it would “immediately” curtail 0.5 Bcf/d, or 8% of its current operated gross natural gas output, which is 6.3 Bcf/d. As much as 1 Bcf/d could be curtailed “if conditions warrant.”

The prospect of offshore natural gas drilling could gain traction in a few coastal states. In South Carolina lawmakers are expected to endorse soon a pro-exploratory drilling recommendation of a legislative panel; in Florida the issue could come up in a special legislative session next month and drilling advocates are girding for battle, having failed to defeat a drilling moratorium earlier this year; and a Virginia lawmaker is keeping the pressure on for a 2011 lease sale.

The prospect of offshore natural gas drilling could gain traction in a few coastal states. In South Carolina lawmakers are expected to endorse next week a pro-exploratory drilling recommendation of a legislative panel; in Florida drilling advocates are girding for battle next year, having failed to defeat a drilling moratorium earlier this year; and a Virginia lawmaker is keeping the pressure on for a 2011 lease sale.

Though forecasts of seasonal springtime temperatures remain the norm for most areas, the cash market was able to find enough traction in weather-based demand to rise at all points Wednesday. It also derived support from the run-up of 6.8 cents in Tuesday’s expiration-day trading of May futures.

Gas-buying plays by public-sector utilities gained some traction in their credit ratings Wednesday as Standard & Poor’s Ratings Services (S&P) raised ratings on four deals while holding the line on a fifth. S&P Tuesday raised the credit rating on Merrill Lynch & Co., which has a role in each of the deals.

The natural gas futures market was at an impasse Tuesday as traction in either direction appeared hard to come by. After trading a slim $6.810 to $6.950 range, the November contract finished Tuesday’s regular session at $6.863, up 1.7 cents from Monday’s close.