Daily GPI

Canada’s Stoney First Nation chiefs threatened Tuesday to stop renewing leases for oil and gas companies that operate on their lands unless a Canadian agency collects from the companies more than C$10 million (US$6.4 million) they allege their tribes are owed in royalties. The gas-rich fields located on the Stoney lands include Shell Canada’s Jumping Pound field and the Wildcat Hills field of Petro-Canada. Both companies said Tuesday they would pay their share of royalties, but want the government to resolve the issue.

Citing a number of factors affecting the energy industry currently, Bedminster, NJ-based NUI Corp. on Wednesday reported earnings from continuing operations of $16.7 million ($1.18 per share) for the second quarter ended March 31, compared to $18.3 million ($1.41 per share) for the same quarter last year. Despite the decline, the company said it is not changing its current guidance of $1.80 – $1.90 per share for fiscal 2002, excluding the effect of the change in accounting and all non-recurring and discontinued items.

Great Lakes Gas Transmission, Southern Natural Gas and Dominion Transmission were the top three large pipelines, in that order, in Mastio & Co.’s sixth customer satisfaction ranking of the pipeline industry. The ranking was based on nearly 1,500 interviews with industrials, LDC’s, electric generation companies, independent power producers, producers and marketers.

The Energy Information Administration (EIA) released its methodology outlining how the organization will gather and prepare weekly estimates of working gas in storage. EIA will take over for the American Gas Association (AGA) on May 9, the first week after the AGA ceases its report. As previously announced, the government agency said it will release the weekly storage report between 10:30 and 10:40 a.m. on Thursdays (see Daily GPI, March 21; April 18). The report will be available on EIA’s web site at http://tonto.eia.doe.gov/oog/info/ngs/ngs.html, or within the organization’s Natural Gas Weekly Update, which is released at 2 p.m. each Thursday. To view a copy of the new EIA-912 form, visit http://tonto.eia.doe.gov/oog/info/ngs/form912.pdf. To see a map of the EIA’s region classification — which remains unchanged from AGA’s classification — visit http://tonto.eia.doe.gov/oog/info/ngs/ngmap.html. In an effort to protect the data until its release, EIA said it is taking on new security measures. One example is EIA’s decision to operate the data processing and estimation system on computers which are not connected to the EIA network. When estimates are ready to be released on the EIA web site, the organization said they will be transferred to the EIA network on disks. “This should discourage hacking into the EIA system and prevent accidental early release of data,” EIA said.

Florida Gas Transmission extended an Overage Alert Day notice for its market area through at least Tuesday and tightened the tolerance for negative daily imbalances from 15% to 5%.

In nearly all cases the May aftermarket got a very strong sendoff Tuesday. With few exceptions, swing prices were up 15-20 cents or more from last-of-April levels. Most points put even more distance between themselves and first-of-month indexes, with swing premiums of 30 cents or so common.

After gapping higher at the opening bell and moving sideways for most of the morning, natural gas futures vaulted higher Tuesday afternoon, as traders pushed prices through several key technical levels. At 1:45 EDT the newly anointed prompt month June had notched a new 10-month continuation chart high and filled the June 22, 2001 chart gap at $3.72. Cleverly placed buy stops positioned above $3.72 were triggered as a result, propelling the June contract another dime higher in the last 45 minutes of trading. At $3.795, June closed just shy of its $3.82 high for the session, up 23.4 cents from Monday’s settle.

Dynegy Inc. finally sparked the investor confidence it sorely needed Tuesday following a teleconference ostensibly to report first quarter earnings. Instead, news that it had renewed its much-needed revolving credit line for $900 million 24 hours before the deadline — thus guaranteeing the company’s liquidity in even the worst case scenario — pulled the stock ahead nearly 30%. Chairman Chuck Watson also appeared to soothe Wall Street nerves with his corporate-wide commitment to retain an investment credit rating, making it Dynegy’s top priority going forward.

The production drop-off “has been a lot sharper than we would have guessed,” said EOG Resources Chairman Mark Papa, commenting on production results coming in from the first quarter. “Now our 3-4% projected production decline this year may be conservative. I’m a bit concerned whether we as an industry underestimated the impact of a 29% reduction in drilling.”