Daily GPI

The Gulf of Mexico is expected to remain one of the most prolific natural gas supply regions over the next two decades, with production levels projected to rise by nearly 30% to 6.4 Tcf in 2010, and by more than 40% to 7.2 Tcf in 2020, according to an INGAA Foundation-commissioned study that was forwarded to Senate Energy Committee Chairman Jeff Bingaman (D-NM) Tuesday.

Due to sharply rising oil prices, strong 30-day contract prices for May and a greater than expected fall-off in natural gas production during the first quarter 2002, Lehman Brothers analyst Thomas Driscoll said the firm is raising its 2002/2003 natural gas price forecasts by $0.25 and $0.50 to $3.00 and $3.50 per MMBtu, respectively.

EnCana Corp. mentioned in releasing its first quarter results last week that it planned to discontinue energy marketing and trading operations to focus on core exploration and production activities in the United States and Canada. A company spokesman said Monday that EnCana, which was formed by the merger of PanCanadian Energy and Alberta Energy Co., already has received some offers for the marketing unit, which includes 100 Houston employees and 2.3-2.7 Bcf/d of gas sales.

CapacityCenter.com, which tracks released capacity transactions across the North American pipeline grid, said 15.6 Tcf of released capacity was traded last year, nearly 75% of total U.S. gas consumption, and the top 25 capacity traders did 49% of the transactions representing about 72% of the total.

Citing volatility within the natural gas and electricity industry, AGL Resources Inc. on Tuesday reported earnings of $50.1 million ($0.89 per diluted share), a slight decline from the $52.3 million ($0.96 per diluted share) during the similar quarter a year ago. Excluding the gain on the sale of Utilipro, net income for the first quarter 2001 would have been $45.2 million.

Economic and institutional barriers remain for advocates of making liquefied natural gas (LNG) the fuel of choice for so-called Class-8 (heavy duty semi-tractors) trucking fleets that now operate on much dirtier diesel for the most part, according to a California Energy Commission-sponsored study by the Irvine, CA-based office of Arthur D. Little Inc. that was released last Friday.

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%.

To energy analyst Marshall Adkins of Raymond James, it is becoming clear that the United States is facing a “major natural gas supply problem that is likely to lead to higher gas prices over the summer and a potential gas price explosion next winter.” Adkins, who last month had predicted a bullish first quarter sequential decline of 2% and year-over-year decline of 3%, said Monday that not only is U.S. gas production falling faster than analysts first thought, but “the supply deterioration has been shocking even to us.”

“We’re very committed to maintaining investment grade ratings, and will take whatever steps are necessary” to do so, an Aquila spokesman said Monday, following the announcement from Moody’s Investors Service Friday that the company and Aquila Merchant Services were being put on a negative outlook (see Daily GPI, April 29).