Unusual

In an unusual display of harmony, the majority of California and east-of-California shippers, large natural gas consumers and state regulators either support or do not oppose El Paso Natural Gas pipeline’s proposed three-year settlement for transportation rates and services on its system. It appears that the only shipper contesting the settlement is Phoenix, AZ-based Phelps Dodge Corp.

U.K. gas traders had an unusual situation on their hands last week. The opening of the Langeled pipeline between Norway and the United Kingdom flooded the market with supplies and pushed prices below zero. That is, sellers were paying buyers up to 5 pence/therm for the privilege of “selling” their gas.

U.K. gas traders have an unusual situation on their hands. The opening of the Langeled pipeline between Norway and the United Kingdom last weekend has flooded the market with supplies and pushed prices below zero. That is, sellers are paying buyers up to 5 pence/therm for the privilege of “selling” their gas.

Las Vegas, NV-based Southwest Gas Corp. reported an unusual second-quarter net profit with net income of $3.7 million, or 9 cents/share, compared with a loss of $2.8 million, or 7 cents/share, for the same period in 2005. The second and third quarters traditionally are not profitable for the natural gas-only utility serving the mostly arid, warm weather parts of Nevada, Arizona and California’s eastern mountain/desert areas.

While traders digested the news of an unusual net decline in storage in the middle of the traditional injection season, cash prices rose Thursday at most points. The continuation of hot weather in many regions and a screen spike on Wednesday were the chief instigators of the overall rally, but bullish anticipation of a low storage injection or possibly even a withdrawal likely also played a part, one source said.

Kern River was in the unusual position Thursday of asking customers to refrain from drafting its system as low linepack conditions continued in all four segments. For much of this year it has been reporting high linepack. “It is imperative that operators only take their scheduled quantity,” the pipeline said. “In addition, if you have an imbalance that is owed to Kern River, please make arrangements to pay back this imbalance as soon as possible.”

After several one-time utility gains and charges, San Diego-based Sempra Energy reported a 37% increase in third quarter earnings compared to the same period last year, racking up $211 million, or $1/share, for the quarter, compared to $150 million, or 73 cents/share for the period in 2002. Without the one-time items earnings would have been $232 million, or $1.09/share, the company reported Thursday.

After several one-time utility gains and charges, San Diego-based Sempra Energy reported a 37% increase in third quarter earnings compared to the same period last year, racking up $211 million, or $1/share, for the quarter, compared to $150 million, or 73 cents/share for the period in 2002. Without the one-time items earnings would have been $232 million, or $1.09/share, the company reported Thursday.

EOG Chairman Mark Papa said he expects U.S. gas production to be down 1-3% this year and another 1-2% in 2004, while Canadian supply has been even weaker than expected, down about 600 MMcf/d so far this year. Meanwhile, Mexico continues to draw about 1 Bcf/d from the United States. Despite the supply concerns and continuing high gas prices, however, Papa said E&P competition in several traditional areas has fallen dramatically.