Daily GPI

Coming as no surprise Thursday, Aquila Inc., which shut down its marketing and trading business earlier this week (see Daily GPI, Aug. 7), reported a loss of $5.69 per share for the second quarter, compared to earnings per share of $1.21 in the second quarter of 2001. The troubled Kansas City-based company took its lumps on its Quanta Services investment, company restructuring and lower commodity trading volumes and prices.

The senior executive bonuses for this year are gone, some of the long-term executive incentives have been eliminated, capital spending has been reduced even more, and up to $2 billion more in assets will be sold. As El Paso Corp.’s chairman noted, the interstate pipeline leader is not reacting, but rather responding to what shareholders and the marketplace now demand. “We are doing what management is supposed to do,” explained CEO William Wise on Thursday. “We are all sharing the pain.”

Assuming the weather cooperates, spot natural gas prices are expected to average about $3.12/Mcf next winter, up about 70 cents from prices during last year’s heating season, but “only” 10-15% higher than current gas prices, according to the Energy Information Administration (EIA). It projects the annual gas price will average about $2.78/Mcf, down significantly from the year-ago level of $4 and down 11 cents from its July forecast. EIA also lowered its 2003 price forecast 20 cents to $3.02.

Houston-based independent producer, Anadarko Petroleum Corp., said Thursday its board of directors has given thumbs-up to a company plan to raise its capital budget by 10% to $2.2 billion for the year, a move that will be largely funded by the anticipated proceeds from $320 million in asset sales and company cash flow.

Nine months after approving a settlement to unbundle the Southern California Gas Co. backbone transmission and underground storage systems, stakeholders and California regulators are still waiting for it to happen (see Daily GPI, March 18; Dec. 12, 2001)

Offshore Nova Scotia is on the precipice of becoming a vital natural gas producing basin in North America, and will play a “dominant role” in supplying the U.S. Northeast, the Maritimes and possibly central Canada, according to a new report by the Ziff Energy Group.

Florida Gas Transmission ended Thursday an Overage Alert Day notice for its market area that had been in effect since July 27.

A day after confirming that a lateral leak near Matagorda Offshore Pipeline System (MOPS) Platform 703 had been repaired and an outage of the Matagorda 703/704/709 receipt point had ended last Saturday (see Daily GPI, Aug. 7), MOPS operator Northern Natural Gas reported Wednesday that a leak had been detected again on the lateral. Matagorda 703/704/709 was taken to zero flow again, affecting 22,000 MMBtu/d. The expected downtime is unknown, NNG said. NNG owner Dynegy did not respond to an inquiry about whether this was a new leak or a recurrence of the old one.

With milder weather reaching as far as the Southeast and energy futures back on a downward slope, it was virtually inevitable that cash prices continued to slide Wednesday at nearly all points. Besides the above factors, sources said the soft market also was reflecting what some believe will be a relatively big storage injection report Thursday morning for a period covering record-setting heat and electricity demand.