Underground

FERC on Thursday issued a final rule that reforms the agency’s pricing policies to jump-start the development and construction of new underground natural gas storage facilities in the United States.

A third nonutility underground natural gas storage field in the state was approved Thursday by the California Public Utilities Commission, whose lead regulator on the case said the quick action on the proposal will allow the state to have an extra 1 Bcf of gas in storage before the next winter heating season begins in November.

The Energy Information Administration (EIA) reported Thursday morning that 46 Bcf was withdrawn from underground natural gas storage for the week ended Jan. 13. While the number was expected by the industry, February natural gas futures on Thursday went through a series of peaks and valleys before settling at $8.905, up 21.1 cents on the day.

Coming in well within industry expectations, the Energy Information Administration (EIA) reported Thursday morning that 162 Bcf was withdrawn from underground stores for the week ended Dec. 23. The report fell on mostly deaf ears within the industry as February natural gas futures worked lower into the afternoon to settle at $11.223, down 41.4 cents from Wednesday’s close.

FERC on Tuesday issued a certificate to allow Hardy Storage Co. LLC to develop and operate a new 12.4 Bcf underground natural gas storage facility in two partially depleted gas production fields in West Virginia. The Commission also approved a companion request by Columbia Gas Transmission Corp. to construct and operate transmission facilities to deliver the gas to parts of West Virginia, Maryland and Virginia (Docket No. CP05-144-000).

Bay Gas Storage Co. Ltd. has reached a multi-year agreement with Florida Power & Light (FPL) to supply natural gas storage services from the company’s third underground storage cavern, which is expected to be in service by mid-2007.

While an outright bearish natural gas storage report was needed to stem the recent meteoric rise in futures prices, traders received no such help Thursday morning as the Energy Information Administration (EIA) reported a slightly bullish 43 Bcf injection for the week ended Aug. 5.

The Energy Information Administration (EIA) reported Thursday morning that 75 Bcf was injected into underground storage for the week ended June 17, sending the market tumbling 20 cents in the first hour after the announcement. However, the futures market was resilient, and July natural gas rebounded higher in sympathy with a sizeable crude rally, settling at $7.473, up 3.1 cents on the day. August crude settled at $59.42/bbl, up $1.33.

After absorbing the news that a larger-than-expected 93 Bcf had been added to underground natural gas storage last week, June natural gas futures tumbled lower after 1 p.m. EDT Thursday as fund selling entered the fray. After notching a new, three-month low of $6.03 just before 2 p.m. EDT, the expiring contract rebounded modestly at the close. It finished at $6.123, down 19.2 cents for the day and nearly 70 cents below the price level from which it began its tenure as prompt month.