Underlying

It’s the price, stupid! At least that seemed to be the underlying theme and tension for a supplier/marketer/end-users discussion of demand-side issues facing gas purchasers at GasMart 2008 in Chicago Wednesday.

It’s the green thing, stupid! That was part of the underlying message at Sempra Energy’s annual analyst conference in San Diego Thursday. Senior executives indicated they see new investment in the push to slow down greenhouse gas (GHG) emissions. But they also are counting on substantial growth and profits in both their energy trading and California utility businesses, and acknowledged a slowing of proposed liquefied natural gas (LNG) receiving terminal expansion because of the global pause in added liquefaction capacity.

While resources are adequate for the West as a multi-state region, there are underlying pockets of potential problems that a panel of experts took turns identifying Tuesday at the Western Power Supply Forum II conference in Burlingame, CA, near San Francisco International Airport. And after the past summer’s heat storm produced record peaks throughout the region and nation, none of the panelists were sanguine about the future.

Recent weaker market conditions have not changed the underlying tight gas supply/demand balance, energy consultant Kevin Petak of Energy and Environmental Analysis (EEA) said in a presentation to the Natural Gas Council (NGC) on Tuesday. Petak predicts that Henry Hub gas prices will average between $5 and $8/MMBtu for the next few years with longer-term prices in parity with crude oil prices.

The underlying fundamentals for natural gas prices — minus any weather-driven problems — remain extremely bullish, and sentiment in the gas market will improve over the coming months, according to a new report by Raymond James. Its current 2005 gas price forecast is $6.80/Mcf, with 2006 and long-term gas forecasts at $7.50/Mcf.

The underlying fundamentals for natural gas prices — minus any weather-driven problems — remain extremely bullish, and sentiment in the gas market will improve over the coming months, according to a new report by Raymond James. Its current 2005 gas price forecast is $6.80/Mcf, with 2006 and long-term gas forecasts at $7.50/Mcf.

Peeling back some of the underlying impacts on first quarter results among Western energy sector players this month, high wholesale natural gas prices play a part in just about all of them as found in the varying levels of success among several companies this week.

Updating its estimates for undiscovered technically recoverable resources (UTTR) underlying offshore waters on the Outer Continental Shelf (OCS), the Minerals Management Service (MMS) said last week that new exploration activities in the Gulf of Mexico and in the Scotian Basin offshore Canada have revealed that there is 12% more recoverable gas than estimated in 2000. The MMS now estimates that there are 76 billion barrels of oil and 406.1 Tcf of recoverable natural gas in federal offshore areas.

Updating its estimates for undiscovered technically recoverable resources (UTTR) underlying offshore waters on the Outer Continental Shelf (OCS), the Minerals Management Service (MMS) said Tuesday that new exploration activities in the Gulf of Mexico and in the Scotian Basin offshore Canada has revealed that 76 billion barrels of oil and 406.1 Tcf of natural gas are technically recoverable from federal offshore areas.