Warned

National Fuel Gas Co. warned investors Thursday that its exploration and production subsidiary, Seneca Resources, will take a $35-40 million (41-47 cents/share) after-tax noncash charge against earnings in the latest quarter to write down the value of its Canadian oil and gas producing properties due to a decline in gas prices on June 30.

National Fuel Gas Co. warned investors Thursday that its exploration and production subsidiary, Seneca Resources, will take a $35-40 million (41-47 cents/share) after-tax noncash charge against earnings in the latest quarter to write down the value of its Canadian oil and gas producing properties due to a decline in gas prices on June 30.

Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, warned Interior secretary nominee Idaho Gov. Dirk Kempthorne Thursday not to side with one coastal state against another in the ongoing, heated dispute over whether to allow greater oil and natural gas leasing in the gas-prone eastern Gulf of Mexico.

The American Gas Association (AGA) has warned in a new study that despite recent record gas prices and strong gas-directed drilling, the changing composition of domestic natural gas supply and the politics that continue to impede exploration and development will limit the ability of the gas industry to meet growing gas demand in the future. AGA believes that if the status quo is preserved, U.S. gas production will remain at about 19 Tcf, no higher, for the next five to15 years.

FERC staff warned the Commission Thursday not to expect lost Gulf production to be offset somehow this winter by imports or gas from storage. Although storage levels have continued to rise in November putting the country in a better position to manage cold weather, storage alone cannot make up for 3.7 Bcf/d of shut-in production, much of it likely to remain shut in until next spring, said Stephen Harvey, deputy director of the Office of Market Oversight and Investigations.

Storage levels may be continuing to rise with this warm November weather, but Global Insight consultant Jim Osten warned that Northeast consumers should still expect to see $15/MMBtu wholesale gas prices at the citygate for January bidweek.

A top KeySpan Energy official on Wednesday warned federal energy regulators that electric generators in New England face potential natural gas curtailments this winter, given that a large number of them have failed to negotiate firm transportation contracts to ensure the delivery of gas to power their facilities. A spokeswoman for ISO New England, the operator of the region’s bulk power system and wholesale electricity markets, said it shares KeySpan Energy’s concerns.

In the aftermath of Hurricanes Katrina and Rita, the chief energy policymaker in the Senate warned the nation Thursday to expect a potential natural gas shortage and unprecedented high prices during the upcoming winter heating season. Top industry executives, reeling from the effects of the twin hurricanes, shared those concerns.

Two senior Bush administration officials warned Tuesday of possible natural gas shortages because of the slow recovery following Hurricane Katrina, and their statements were mirrored in the Minerals Management Service report, which showed shut-in gas volumes had barely inched down in 24 hours to 3.720 Bcf/d, or 37.20% of daily gas production offshore, compared with Monday’s shut-in report of 3.784 Bcf/d. Leaping into the breach, the American Gas Association (AGA) quickly announced that it expected no supply disruptions this winter.