NGI The Weekly Gas Market Report

The 159 Bcf gas storage withdrawal for the week ending Dec. 13, announced Thursday by the Energy Information Administration (EIA), is “right smack in the middle of the range” for the same period over the past nine years, an energy expert said Thursday. However, the large withdrawals in recent weeks indicate that by next summer, supplies will be tight, ensuring that natural gas prices will be higher — already reflected in the futures market.

House Energy and Commerce Committee Chairman W.J. “Billy” Tauzin (R-LA) last week called on the Department of Energy (DOE) to conduct an expedited review of ways to raise the level of “transparency and validity” of published natural gas prices and market data, including available supply, demand, pipeline and production information, in order to restore confidence in domestic markets.

The panache of a “AA+” rating of the corporate parent by Standard & Poor’s Ratings Service apparently has failed to win over doubters, after UBS Warburg Energy switched off its online energy trading system (formerly EnronOnline) and announced it will terminate nearly all of its 380 Houston-based employees. Those not fired will be offered jobs in a UBS office in Stamford, CT, the company said Wednesday.

Moody’s Investors Service downgraded American Electric Power Co.’s (AEP) senior unsecured rating to Baa2 from Baa1, affecting $13 billion of debt, and placed its Prime-2 rating for commercial paper under review for possible downgrade. AEP’s Baa2 long-term rating and the long term ratings of the company’s utility subsidiaries, except Indiana Michigan Power and Kentucky Power, remain under review for possible downgrade. However, Moody’s said that it doesn’t expect AEP’s debt ratings to fall below investment grade.

Consultants at Energy and Environmental Analysis Inc. (EEA) expect gas storage levels to drop to near record lows at 600 Bcf by the end of the traditional withdrawal season under normal weather conditions because of an alarming decline in U.S. natural gas producing capacity.

Under a new California law passed this year (SB 39XX) to tighten private sector power plant maintenance and operating standards, a newly created three-person committee will meet next week to begin a two-month process for cranking out the tougher state standards early next year. The California Independent System Operator (CAISO) will submit draft rules for the committee’s initial review Dec. 20.

In a reprise of action two months ago, PG&E Corp.’s financially struggling National Energy Group (NEG) announced late last Thursday that it agreed with lenders to provide funding for two of the merchant energy developer’s new electric generating plants — the 840 MW natural gas/fuel oil-fired Lake Road plant in Connecticut and 1,121 MW gas-fired, combined cycle La Paloma unit in California.

PacifiCorp Power Marketing Inc., ScottishPower’s competitive U.S. energy business, said last week that it will officially change its name to PPM Energy Inc. on Jan. 15. The news comes one day after the Portland, OR-based company completed the acquisition of Aquila Inc.’s Katy gas storage facility, two development opportunities and two other storage facilities.

Seeking out an investor to finance its coalbed methane (CBM) exploration in Wyoming, Galaxy Energy Corp. said last week that it has entered into a funding agreement with Horizon Exploitation Inc., a U.S. affiliate of the German-based Horizon Exploitation Fund GmbH & Co. KG, managed by Rhein Investors AG. in Basil, Switzerland.