Uncertainty

Higher fuel prices, increased capital costs and uncertainty about climate policy are putting upward pressure on electric power prices at a time when substantial new investment in generation is needed — and natural gas will be the bridge fuel to new power generation resources for the near term, according to Charles Whitmore of FERC’s Office of Enforcement.

The top concern of industry executives is uncertainty about oil and natural gas prices this year, according to a survey released by business advisor Grant Thornton LLP last Tuesday.

The top concern of industry executives is uncertainty about oil and natural gas prices this year, according to a survey released by business advisor Grant Thornton LLP Tuesday.

Cash prices ended the week mixed, leaving traders with some uncertainty about whether continued cold temperatures, particularly in eastern and midwestern markets, and the likelihood of another big weekly storage withdrawal in the next report from the Energy Information Administration (EIA) would put additional upward pressure on the market.

With conflicting weather forecasts and uncertainty over Thursday’s storage report, traders on Wednesday appeared content to let the range-bound market remain range-bound. Following another failure just above $8, December natural gas drifted lower, ultimately closing at $7.823, up 6.8 cents from Tuesday’s close.

Citing the uncertainty surrounding the development of liquefied natural gas (LNG) facilities in the Bahamas, El Paso Corp.’s Seafarer US Pipeline System Inc. has withdrawn its application at FERC to build the U.S. leg of the proposed Bahamas-to-Florida Seafarer natural gas pipeline. But it kept open the possibility that it may refile at a later date if market conditions improve.

Uncertainty surrounding a long-term contract with bankrupt Calpine Corp. and a pending rate case leaves Kern River Gas Transmission Co. with a question about its future credit outlook, albeit with a current relatively high “A-” rating and the ultimate backing of its parent company, Berkshire Hathaway’s utility unit, MidAmerican Energy Holdings Co., according to Standard & Poor’s Ratings Services. S&P Monday affirmed the “A-” rating on senior secured debt of Kern River’s funding arm, Kern River Funding Corp, Salt Lake City.

In a world of accelerating decline rates, depleting reserves and LNG uncertainty, unconventional gas plays in the Lower 48 are something to be excited about. This is particularly true of the burgeoning Barnett Shale play in the Forth Worth basin of north-central Texas.

For a second consecutive regular session, natural gas futures were bent on testing lower levels in the morning only to be rebuffed in the afternoon. Uncertainty swirling around the potential damage to oil and natural gas infrastructure combined with a stagnant shut-in report helped October natural gas settle 21.6 cents higher Tuesday at $12.656, one day before the contract’s expiration.