West

While large spreads of federal lands technically may be open for oil and natural gas exploration, producers still are prevented from drilling on them because of restrictions in their leases and a severe backlog of drilling permitting requests, the president of the American Petroleum Institute (API) said last week.

Sen. Frank Murkowski (R-AK) last week called on Energy Secretary Spencer Abraham to provide the Senate Energy and Natural Resources Committee with a comprehensive inventory of all possible energy sources to head off the worsening power shortages that are anticipated for California and other western markets this summer.

While vast stretches of federal lands technically may be openfor oil and natural gas exploration, producers still are preventedfrom drilling on them because of restrictions in their leases and asevere backlog of drilling permitting requests, the CEO of theAmerican Petroleum Institute (API) said earlier this week.

Sen. Frank Murkowski (R-AK) yesterday called on Energy SecretarySpencer Abraham to provide the Senate Energy and Natural ResourcesCommittee with a comprehensive inventory of all possible energysources to head off the worsening power shortages that areanticipated for California and other western markets this summer.

Prices emerged from the weekend flat to slightly higher or lowerMonday at nearly all points outside the declining California andRockies/San Juan markets. There probably would have been moreeastern softness, sources said, if weather in the Northeast andMidwest hadn’t exhibited more of a tendency to retreat back intowinter, rather than press forward into spring. Even the South wasseeing more chill than normal for this time of year.

Prices leveled off Tuesday in the East with few points varyingby more than a couple of cents in either direction from flat.Western markets generally were softer except for flat numbers inthe Pacific Northwest and a gain of more than a dollar at theSouthern California border. The Golden State’s power situationremained dire enough that a second straight day of rollingblackouts was ordered (see related story).

Houston-based El Paso Corp. signed a letter of intent last week to purchase liquefied natural gas from a new Australian LNG production facility to be built by Phillips Petroleum Co., which would provide up to 4.8 million tons of LNG beginning in 2005 for North American markets. El Paso and Phillips expect to complete a definitive agreement on the deal by mid-year.

Panda Energy International announced that it will build a $400million natural gas fired electric power plant in West Point, MS.The 1,300 MW Panda Black Prairie Project is expected to be incommercial service in 2004. “This is an excellent location for apower plant,”stated Garry Hubbard, Panda’s senior vice president ofdevelopment. “There is immediate access to electric transmissionfacilities and we are close to water and natural gas. Thiscombination will play a key role in helping us meet the energyneeds of the state.”

Making himself a domestic energy diplomat moving betweenmeetings in Washington, DC, and the West, Energy Secretary BillRichardson last week supported the need for a western regionalwholesale power price cap as he extended for another week hisearlier emergency order requiring generators and marketers to makepower available to the continuing tight California market to avoidthe threat of rolling blackouts. The order, which was first issuedon Dec. 14, expired Tuesday at midnight. The new order will remainin effect until Dec. 27, unless modified.