Winds

As the clock winds down on the deadlines to comply with the Dodd-Frank Wall Street reform act, the Commodity Futures Trading Commission (CFTC) Monday is expected to clear up questions in the market pertaining to the deadline for registration of swap dealers.

High winds kept crews for a unit of Chesapeake Energy Corp. from bringing under control a runaway natural gas well that has been spewing gas and drilling mud since Tuesday near the town of Douglas, WY, in part of the Niobrara Shale formation in Converse County.

October natural gas fell again in uninspired trading that saw traders ascribe the losses to more mild weather patterns. October dropped 6.8 cents to $3.730 and November fell 6.5 cents to $3.820. November crude oil lost $1.00 to $85.92/bbl.

In the early days of Barnett Shale drilling in North Texas it would have been nice to have better communication among area residents, municipal governments, regulators and energy companies, Railroad Commission of Texas (RRC) Commissioner David Porter told NGI’s Shale Daily. To make that happen in the fast-emerging Eagle Ford Shale of South Texas, Porter would like to see a task force focused on the play.

It is a perfect storm of conflicting economic supply/demand winds in the North American natural gas markets that is fouling the immediate futures of many independent electric generators, and the credit ratings of some of the merchant power firms are suffering, according to an industry report released last Thursday by Standard & Poor’s Ratings Services (S&P), “U.S. Power Merchants Continue to Suffer from Low Natural Gas Prices.”

As the winter heating season winds to a close, the natural gas industry is now looking towards the summer cooling season and the Atlantic hurricane season for indicators on the direction of natural gas prices. Special attention is being paid to the 2006 Atlantic hurricane season, which forecasters expect to be overly active. Focus on the hurricane season is even greater as Gulf of Mexico oil and gas producers continue to pick up the pieces six months after Hurricane Katrina’s devastation.

Florida Gas Transmission (FGT) said compressor station 12 in Munson, FL, was damaged by high winds. While staff is en route to the station to assist with repairs, damage to roads and bridges have slowed down travel time. For Friday’s gas day, FGT will be scheduling volumes up to 1.5 Bcf/d into the market area. Scheduled volumes into the market area have been about 2 Bcf/d for the past couple of days. If the damage is repaired overnight, FGT will determine if scheduled volumes can be brought up above the 1.5 Bcf/d. The pipeline had an overage alert day on Thursday with a 2% tolerance. Demand on the system continues to be high, while supply remains tight. FGT continues to experienced further decline in receipt gas in Zones 2 and 3. Total system linepack is very low.

Hurricane Isabel, packing super-powerful maximum sustained winds of nearly 140 mph and pointing at shooting the gap between southern Florida and Cuba, was accorded most of the credit Wednesday for rallying cash prices and sustaining a futures run-up. Cash market movement ranged from flat to slightly more than a dime higher. Most of the smallest gains were clustered at California and Rocky Mountains/Pacific Northwest points, which tend to be least affected by hurricane disruptions of offshore supply.

As the winter that wasn’t winds down, gas in storage will haveto come out like a lion during March if capacity holders are tomeet cycling requirements. Even if temperatures remain warmer thannormal the market should expect six weeks of relatively strongwithdrawals because many storage capacity owners must bring levelsdown to about 25% full.