There’s no need to worry about sharp drops in gas supply, said Arlington, VA-based investment bank Friedman, Billings, Ramsey & Co. (FBR) in a new report. Gas production from new deepwater projects in the Gulf of Mexico (GOM) and a boom in liquefied natural gas (LNG) imports will be more than enough to carry the load over the next few years and make up for any lasting effect from the current drilling decline.
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Softness Likely to Continue After Bearish Storage Report
Except for flat to slightly higher prices at some western points primarily related to the heat-scourged Northern California market, the general market was predictably softer Thursday. Most declines were between about a nickel and a dime, with a few scattered points seeing larger or smaller falls.
Heavy EIA Storage Injection Pressures Futures Lower
Natural gas futures broke to new seven-week lows this morning as traders reacted quickly to the latest gas storage data from the Energy Information Administration (EIA) showing that stocks increased by a whopping 105 Bcf last week. After plumbing to a $3.12 low at about 11:30 a.m. EDT, the July contract rebounded slightly amid light short-covering by locals. Estimated volume was high with 117,081 contracts changing hands.
Williams Says It ‘May Have Facilitated’ El Paso Merchant Wash Trade
El Paso Merchant Energy LP. has reported making natural gas trades that were similar to round-trip, or “wash,” transactions in Texas and the West during 2000 and 2001, but it said none were meant to deceive energy markets. Williams Energy Marketing & Trading, however, cited El Paso Merchant as a counterparty to a possible “wash” trade.
Western Gas Market Manipulations Denied; CPUC Adds Inquiry
A California Energy Commission analyst and two of the state’s major energy companies indicated earlier in the week that wash trades and other market manipulation didn’t take place as alleged in the western natural gas markets. Both PG&E Corp. and Calpine Corp. noted in responding to a Federal Energy Regulatory Commission data request that their gas operations did not include any activities designed to game the market.
Congressional Plan Aims to Cut Emissions from Power Plants on Mexican Border
The United States could extend its environmental reach into neighboring Mexico if a bipartisan congressional effort launched this week results in new restrictions on natural gas fired power plants developed from this year onward within 50 miles of the U.S. border. Proposed legislation has been offered by a San Diego-based U.S. congressman and the two senators from California to ban the export of U.S. natural gas to plants in Mexico that don’t meet U.S. air quality standards.
Judge Upholds Gas Monopoly Award Against Duke
A U.S. district judge has upheld an arbitration award in a natural gas monopoly lawsuit against Duke Energy Fuels LLP and Duke Energy Field Services Inc. (DEFS), ruling that Duke illegally maintained its monopoly power in the gas processing market in Panola County, TX. The ruling rejected Duke’s attempt to vacate an earlier award to provide a gas processing contract on competitive terms to American Central Eastern Texas Gas Co. LLP and American Central Gas Cos. Inc.
Knowles Seeks Canadian Support of Alaska Pipe; Yukon, NWT Feud Growing
Taking the offensive in a never-ending quest to secure a natural gas pipeline for his state, Alaska Gov. Tony Knowles on Wednesday touted the gain from new investments, billions of new revenue and lower gas prices if Canadian leaders lend their support to a proposed U.S. tax credit to spur pipeline construction. The Alberta and the Yukon Territories premiers appear to support the Alaska plan, but Knowles still needs approval of other more wary leaders, including the Northwest Territories, which would rather spurn Alaska altogether.
Canadian Superior Lines Up Drilling Services for Marquis Project
Looking to get started on its Marquis natural gas project, Alberta-based Canadian Superior Energy Inc. said Thursday morning that it has awarded several drilling services contracts for the initial drilling on the project, which is located 100 miles offshore Nova Scotia. The company estimated the value of the combined contracts at C$12.8 million.
Industry Briefs
Enron Corp.‘s board of directors unanimously accepted the resignations, effective June 6, of its four remaining long-standing directors, Robert A. Belfer, Norman P. Blake, Wendy L. Gramm and Herbert S. Winokur Jr. The board also elected Raymond S. Troubh as interim chairman of the board. Troubh is a financial consultant based in New York who was appointed to the board last November before the company filed for bankruptcy. The board is still awaiting approval from Enron’s bankruptcy court Creditors’ Committee on three new board candidates it has selected. In February, the board announced it would conduct an orderly transition composed of new, independent directors. Six of Enron’s board members resigned in February, two left in March and two more left at the end of May. Blake and Winokur, who were in charge of the board’s restructuring, said they will act as unpaid advisers to provide continuity of information in a brief transition period if needed.