Saturday, May 31, 2008

Natural Gas Better Buy Than Oil!!

SAN FRANCISCO (MarketWatch) -- Natural gas is looking cheap compared to oil. Throw in a hot summer and an active Atlantic hurricane season, and opportunity isn't that hard to find.
"The summer cooling season is here and hurricane season is right around the corner, which won't help any to keep prices low," said Kevin Kerr, president of Kerr Trading International.
Summertime yields greater need for power, boosting demand for natural gas. Hurricane season in the Atlantic may threaten supplies of the commodity produced in the Gulf of Mexico.
"$16-plus natural gas is not only likely -- it's probable -- if we see an active hurricane season that impacts the Gulf," said Kerr, who edits MarketWatch's Global Resources Trader newsletter.
'Natural gas is a relative bargain versus oil.'
— Bernard Picchi, Wall Street Access
Even so, "natural gas is a relative bargain versus oil," said Bernard Picchi, a senior managing director at Wall Street Access.
Simply put, one dollar buys more gas than oil. July natural gas recently touched contract highs above $12 per million British thermal units on the New York Mercantile Exchange. July crude trades around $125 a barrel. One barrel is equal to 5.8 million BTUs, according to the U.S. Energy Department.
"The growth drivers of gas demand are relative cheapness vs. oil, abundance, and relative cleanliness vs. oil and, especially coal," said Picchi.
Natural gas is about 70% of oil equivalent value in the U.S., 80%-90% in Europe and Japan, and probably less than 40% of oil value in developing countries like those in the Persian Gulf, South and Central America, Russia and Central Asia and Africa, according to Picchi.
But even though natural gas has been often dubbed as a cheaper alternative for oil, futures are trading well below the all-time record of nearly $16 they reached following Hurricane Katrina in 2005.

Friday, May 30, 2008

Petronos Pays $2.5Billion for Liquid Natural Gas Ownership in Queensland!

MELBOURNE, Australia -- Petroliam Nasional Bhd., based in Malaysia, has agreed to pay Santos Ltd., of Australia, US$2.51 billion for a 40% stake in its liquefied natural-gas development at Gladstone in the state of Queensland.

Santos has staked its future growth plans on the US$7.7 billion development, and analysts say the deal with the Malaysian company, known as Petronas, will boost confidence in the project with crucial technical skills provided by the Malaysian group.

Santos said Thursday that Petronas will make an initial cash investment of US$2.01 billion to be followed by a further payment of US$500 million when a final investment decision is made on a second LNG processing train at Gladstone.

Adelaide-based Santos has been looking for a major oil and gas player with LNG expertise to be its partner on the project, and Petronas fits the bill as the largest LNG producer in Asia and operator of the giant Bintulu LNG complex in Sarawak in Malaysia.

Thursday, May 29, 2008

Natural Gas LNG Going Foreign Not Domestic?

The cost of a gallon of gas gets all the headlines, but the natural gas that will heat many American homes next winter is going up in price as fast or faster.

That fact makes the scene in the languid, alligator-infested marshland here in coastal Louisiana all the more remarkable.

Only a month after Cheniere Energy inaugurated its $1.4 billion liquefied natural gas terminal here, an empty supertanker sat in its berth with no place to go while workers painted empty storage tanks.

The nearly idle terminal is a monument to a stalled experiment, one that was supposed to import so much L.N.G. from around the world that homes would be heated and factories humming at bargain prices.

But now L.N.G. shipments to the United States are slowing to a trickle, and Cheniere and other companies have dropped plans to build more terminals.

A longstanding assumption of American energy policy has been that natural gas would be plentiful abroad, and therefore readily available for importation, as production falls off in North America, where many fields are tapped out.

But some experts are starting to question that idea, saying natural gas could be subject to the same explosion in overseas demand that has made oil so expensive.

As it is, the supertankers that were supposed to deliver cargoes of gas from Africa and the Middle East to the United States are taking them to places like Spain and Japan instead, pushing up gas prices and depleting the nation’s stockpiles as the hurricane season approaches.

Wednesday, May 28, 2008

Gazprom to Deliver 30 Million Cubic Meters/Day to Turkey

Russia's gas giant Gazprom raised daily natural gas supply to Turkey on Tuesday, the semi-official Anatolia news agency reported.

Gazprom raised the amount of natural gas transferred to Turkey to 30 million cubic meters per day, a statement by Gazprom spokesman Sergey Kupriyanov was quoted as saying.

Kupriyanov said in the statement that Gazprom decided to send additional natural gas to Turkey after a blast cut a Iran-Turkey pipeline on Monday.

Around 22 million cubic meters of natural gas was transported to Turkey via the Blue Stream pipeline per day before the blast.

Gazprom is one of the world's largest gas companies basically focused on geological exploration, production, transmission, storage, processing and marketing of gas and other hydrocarbons.

Its mission is to provide effective and well-balanced gas supply to Russian customers and to safely implement long-term gas export contracts.

Tuesday, May 27, 2008

Canada Government with Spectra Energy - Natural Gas Carbon Capture Project

The British Columbia government announced $3.4 million Monday to partner with a private company to study the feasibility of injecting harmful greenhouse gases back under the earth's surface as a way of keeping them out of the atmosphere.

If successful, B.C. Energy Minister Richard Neufeld said the project with Spectra Energy Transmission will be one of the largest carbon capture and storage projects in the world.

The total cost for the exploratory project, which will store carbon dioxide and hydrogen sulfide in natural geological reservoirs about two kilometres underground, is an estimated $12.1 million.

The project will take place at a natural gas processing plant owned and operated by Spectra near Fort Nelson, B.C., in the northeastern corner of the province.

Neufeld said the scheme represents a prime opportunity to help achieve the government's promise of reducing B.C.'s greenhouse gas emissions by 33 per cent by 2020 and Doug Bloom, president of Spectra Energy Transmission West, agreed.

"We believe carbon capture and storage technology holds real promise in providing a safe and effective means of reducing greenhouse gases and addressing climate change," Bloom said.

He said the company has a proven track record on carbon capture and storage and has been recognized by the International Panel on Climate Change as a leader in the technology, which it uses on a much smaller scale at eight other plants in western Canada.

"Our current processing facilities in B.C. and Alberta already divert more than 200,000 tonnes of CO2 from entering the atmosphere every year," said Gary Weilinger, vice-president of strategic development.

He said the Fort Nelson project has the potential to divert five times that amount.

"To put that into some sort of context and perspective, that's about the equivalent of taking 250,000 cars permanently off the road in the province of British Columbia."

But a researcher with the David Suzuki Foundation said there are still many questions about the viability of carbon capture and storage.

Ian Bruce said Norway has claimed to have reduced emissions for a number of years using this technique, but it appears site specific and dependent upon the proper geology to ensure the harmful gases will remain in place and not leak.

Bruce also wondered why the B.C. government is handing $3.4 million to a major natural gas company, instead of establishing a cap on industrial emissions to spur industry-funded research and development.

He pointed to a report prepared for Natural Resources Canada two years ago that indicated the oil and gas industry has one of the poorest research and development investment records in Canada, with a meagre 0.36 per cent of revenues, and less than one-tenth the Canadian industrial average of 3.8 per cent.

Monday, May 26, 2008

Israel Preparing Tender for Liquid Natural Gas

The government is continuing to press forward with preparations for publication of the tender for the import of liquefied natural gas, as the economy braces itself for shortages of natural gas. Sources inform ''Globes'' that the joint Ministry of Finance and Ministry of National Infrastructures tenders committee is expected to complete within two weeks the selection of the financial, legal and engineering consultants to support what is now considered the largest project ever undertaken in the energy economy.

Two months ago, the government approved the issue of a combined tender for the supply of natural gas and the building of a terminal for the storage of imported liquefied natural gas which will be able to handle four billion cubic meters of gas a year. The terminal will cost an estimated $700 million to build and should be operating by 2015

Sunday, May 25, 2008

Pakistan Government Expediting Natural Gas Exploration

ISLAMABAD: Federal Minister for Petroleum and Natural Resources Shah Mehmood Qureshi has directed the Ministry to evolve a proactive approach and expedite the Oil and Gas exploration in the country to meet the challenges of soaring International oil prices and reduction of oil import bill.

Federal Minister expressed these views while taking a briefing from the senior official of the Ministry of Petroleum.

Secretary Petroleum and Natural Resources Mr. Zafer Mehmood briefed the Minister about organization, functions and on-going projects of the Ministry.

The Minister was pleased to know that Ministry is making vigorous efforts with regard to Oil and Gas exploration.

The Minister also took note of the huge potential of development of mineral wealth i.e. coal and copper. He took special interest in all the projects aimed at developing minerals in the Country.

The Minster said that the energy is the life line of the economy and stated that Ministry of Petroleum and Natural Resources would make consorted efforts for the development of energy resources in the Country. He urged for utilizing vast coal reserves in the country for power generation which would help reduce power shortage.

The meeting was also attended by Addl. Secy (P&NR), DG (Mineral), DG (Oil), DG (Hydro carbon Development), Joint Secretary (development), MD Inter State Gas System and other officials of the Ministry.

Saturday, May 24, 2008

Natural Gas $11.09/mmBtu - May 23, 2008

SAN FRANCISCO (MarketWatch) -- Natural-gas futures climbed closer to $12 per million British thermal units Friday, as concerns about the potential for disrupted output during the Atlantic hurricane season fed a rally that lifted prices for the commodity by almost 7% for the week.

Crude-oil futures closed higher after losing more than $2 on Thursday. The benchmark contract ended the week with a gain of nearly 5%, fueled by a four-session winning streak.

Supply concerns, as well as weakness in the dollar, continue to support oil prices.
Natural gas for June delivery climbed as high as $11.87 per million British thermal units on the New York Mercantile Exchange. That's the highest level that contract has ever reached on the exchange.
It closed up 15.7 cents, or 1.3%, to $11.857. The contract closed out last Friday at $11.09.

Friday, May 23, 2008

Alaska Governor Recommends Natural Gas Pipeline LIcense

Alaska's governor is recommending state lawmakers approve a proposal from TransCanada Corp. to build a natural gas pipeline from Alaska's North Slope to a hub in Alberta, Canada.

At an Anchorage press conference Thursday, Gov. Sarah Palin, flanked by the state's natural resources and revenue commissioners, said the plan by the Calgary-based company merits a state license under the Alaska Gasline Inducement Act and a $500 million cash inducement.

Palin said the multibillion dollar project was far better than a competing proposal from oil giants BP PLC and ConocoPhillips because TransCanada's plan was binding and enforceable.

"This plan puts Alaskans first," Palin said. "It's a better proposal then we'd even hoped for."

Alaska lawmakers will have 60 days to decide if the state should grant the license and seed money. They will meet in special session starting June 3 in Juneau.

The application from TransCanada Alaska Co., LLC, and Foothills Pipelines Ltd. proposes a 4.5 billion cubic-feet-per-day, 48-inch-diameter pipeline running 1,715 miles from a gas treatment plant at Prudhoe Bay on the North Slope to the Alberta hub.

The state license would require TC Alaska to hold an open season to solicit firm shipping commitments from producers for natural gas. That would establish the economics of the project and assist the company in financing construction.

After the open season, TC Alaska would apply for a federal certificate. If approved by the Federal Energy Regulatory Commission, pipeline construction could begin. Construction is projected to take about three years.

Palin said producers who commit to ship gas would get reserved capacity on the pipeline and fixed tariff rates.

The proposal also allows for expansion of the line to accommodate gas from smaller and newer producers, she said, thus encouraging new exploration and discovery in the North Slope Basin.

Britain's BP and Houston-based ConocoPhillips appeared undaunted by the governor's announcement. BP spokesman Steve Rinehart said their competing joint venture, called the Denali Project, is already in motion. He said about 50 people are setting up an Anchorage office and preparing for summer field work.

"So this decision does not affect us. We think our project offers the best opportunity for a successful project, and that's why we have committed to about $600 million to get to open season," Rinehart said.

But Palin said the oil giants' plan has no enforceable commitments to move the project forward and does not address the commercial and fiscal terms that producers have said are essential. She said that makes the costs and benefits to the state uncertain.

Palin's gas team also dismissed the option of an exclusively LNG project that would supply markets in Asia and Alaska. They said it was less economic and less likely to succeed because it did not address energy needs in the rest of North America.

Palin said the TC Alaska proposal does leave open the option of an LNG spur line as well as a small diameter "bullet line" to funnel gas to communities in Southcentral Alaska.

Revenue Commissioner Pat Galvin said all indications show the TC Alaska proposal to be economically robust.

"The dollars that are generated by the TransCanada project take your breath away," Galvin said.

Though ConocoPhillips and BP PLC with Exxon Mobil Corp. hold the leases to the North Slope gas, Palin said, she is confident they would commit their gas to the project once they see the projected returns under TC Alaska's plan.

Both TC Alaska and the joint venture have said they could start moving gas by 2018. Neither has ruled out an eventual partnership though the producers contend the governor's licensing process under the Alaska Gasline Inducement Act is flawed and will not deliver a pipeline.

Lawmakers plan to convene their special session in Juneau and meet for about a week. They will then break to hold presentations in about half a dozen communities before returning to Juneau for formal deliberations.

House Speaker John Harris, R-Valdez, said he expects lawmakers will bring many players to the table to give a thorough vetting to all options for moving Alaska gas to market.

"Everybody's going to get an invitation, the producers, the port authority, everybody. We need to know what we are up against," said Harris.

Tony Palmer, president of TC Alaska, said he was pleased with the governor's recommendation but cautious.

"This is a positive movement forward but we will await the outcome of the Legislature," Palmer said.

TransCanada Corp. owns one of the world's largest natural gas pipeline networks, including 36,500 miles of pipe that move nearly 30 billion cubic feet of gas each day.

At an estimated cost of $26 billion to $30 billion, a pipeline between Alaska and Canada could become the largest private sector project ever undertaken in North America.

Thursday, May 22, 2008

231 Trillion Cubic Feet of Natural Gas in Public Lands USA

A survey of onshore oil and gas resources show public lands contain 31 billion barrels of oil and 231 trillion cubic feet of natural gas, but not all of it is available for development - something the Bush administration would like to change, according to a new report.
The so-called Phase III inventory, ordered up as part of the 2005 Energy Policy Act, and released today by the U.S. Bureau of Land Management, looks at the potential for energy development, as well as development's obstacles.
Utah, Wyoming and Colorado are among the states considered to have the greatest potential.
A key provision of the 2005 energy bill was to speed carbon-based energy development. The survey aims to ensure policymakers' decisions will minimize restraints on oil and gas production "unless it is absolutely necessary for the preservation of other resources present on the land," the report says.
Obstacles and impediments include literally anything that might stand in the way of full development, such as environmental protection law, municipal development, private property concerns, wildlife and even National Park designation.

Wednesday, May 21, 2008

New Jersey Wants Third Natural Gas Pipeline

A Canadian energy company and privately held New York firm are looking to build a deep-water natural gas pipeline off the coast of New Jersey.

The $550 million project, called the Liberty Natural Gas Transmission Project, is being touted by the companies as a clean energy source with minimal environmental impact that won't be visible from the shore.

Under the proposal by Excalibur Energy, a joint venture between the New York-based Global LNG Inc. and Canadian Superior Energy Inc., the pipeline would stretch about 50 miles and have four underwater turrets on the seabed 15 miles due east of Asbury Park. Buoys attached to the turrets would hook up to supply ships.

The liquefied natural gas carried by the ships would be re-gasified onboard and pumped through the turrets into the pipeline, the company said.

Tuesday, May 20, 2008

Spectra Delivering Natural Gas to ConocoPhillips

Spectra Energy Corp. has signed an agreement with Houston energy giant ConocoPhillips to deliver up to 395 million cubic feet per day of Rocky Mountain natural gas from the Clarington, Ohio, supply point to a location near in York County, Pa.

Houston-based Spectra (NYSE: SE) plans to transport the natural gas via an expansion of its Texas Eastern Transmission pipeline system, known as the Temax Project.

The expansion will include adding about 33 miles of pipe from Marietta, Pa. to a point near Station 195 on the Transcontinental Gas Pipeline Corp's pipeline system near Delta, Pa.

The delivery is expected to be at the Pennsylvania station by November of 2010.

Monday, May 19, 2008

Natural Gas Rich UAE to Import Coal

They are countries so rich in oil and gas that they would never want for fuel to drive their booming economies and the lavish lifestyles of their rulers.

Now, however, in a role reversal that makes selling sand to Saudi Arabia look like a sensible business transaction, the oil-rich Gulf states are planning to import coal.

An acute shortage of natural gas has led to the city states of the United Arab Emirates seeking alternative fuels to keep the air cool, the lights on and the water running.

Abu Dhabi is working with Suez, the French utility company, on a nuclear power project but coal is emerging as the best quick fix to avert blackouts as the world’s biggest hydrocarbon exporters struggle to cope with high prices for oil and natural gas, infrastructure weakness and a development boom. Some of the world’s biggest oil exporters may soon find themselves reliant on imported fuel from a leading coal exporter, such as South Africa.

Sunday, May 18, 2008

Lancaster Natural Gas Rates Up 11.4%

Beginning June 1, UGI Utilities Inc. will raise rates by 11.4 percent for about 51,000 residential natural gas customers across Lancaster County.

UGI said the hike is necessary to compensate for increased wholesale costs.

The average residential heating customer's bill will rise from $135.91 to $151.47 per month — the highest rate for any quarter, said Sonny Popowsky, head of the Pennsylvania Office of Consumer Advocate.

According to UGI, the average residential retail heating customer uses about 85 ccf (hundred cubic feet) of natural gas per month.

Vicki Ebner, UGI's vice president of marketing and gas supply, said the price is affected by weather as well as global events that influence oil and other energy prices.

"We recognize the burden that higher rates can place on our customers," Ebner said. "However, the reality is that natural gas prices, like all energy commodities, have increased in recent months."

Saturday, May 17, 2008

Canadian Power Company Wants Natural Gas Producer Cordero Energy

CALGARY, Alberta, May 16 (Reuters) - Enmax Corp, the municipally owned power utility in Calgary, said on Friday it is boosting its offer for junior natural gas producer Cordero Energy Inc (COR.TO: Quote, Profile, Research) by 9.2 percent because of rising prices for the fuel.

Enmax is now offering C$4.75 a share for Codero and again extended its bid -- for the third time -- to May 28.

The revised bid values Cordero at about C$176.4 million ($176.4 million), based on 37.14 million outstanding shares. The stock has traded above Enmax's original February offer of C$4.35 a share, for about C$160 million in total, for the past two months as gas prices climbed.

"Just after we put the initial offer out gas prices rose," said Peter Hunt, a spokesman for Enmax. "In light of that the market thought there was a need for a re-evaluation of what Cordero is worth."

Canadian spot natural gas prices have climbed by more than 20 percent, to a recent C$9.45 per gigajoule, since the original bid was made.

The deal was originally expected to close on April 15, but Enmax has extended the offer twice as it failed to win sufficient backing from shareholders.

Enmax is looking to the acquisition to help it guarantee gas supplies for the Calgary Energy Centre, from which it is buying power under a 20-year tolling agreement signed last year.

Friday, May 16, 2008

May 15, 2008 Natural Gas Price $11.79/mmBTU!!!

A two-year slump in natural gas prices appears to be over.

Prices hit their highest point since January, 2006, this week - underlying the drive by energy companies to bring new sources of gas on stream, and also the rising gas bills consumers are likely to face.

On the New York Mercantile Exchange late Tuesday, natural gas price futures hit $11.79 (U.S.) per million British thermal units, a figure that's strong both historically and seasonally. April and May is the "shoulder season," the period between winter heating and summer air conditioning during which gas prices are supposed to drop because demand is low.

That hasn't happened this year, not least because of the strength of oil; both gas and heating oil can be used for generating power for heating, so gas prices tend to track those of crude.

Thursday, May 15, 2008

Anadarko Natural Gas Pointed Northern Border

Northern Border Pipeline Company (Northern Border) today announced that it has signed a letter agreement with Anadarko Energy Services Company, a subsidiary of Anadarko Petroleum Corporation (NYSE: APC), subject to the approval of Anadarko's Board of Directors, outlining among other things terms to establish Anadarko as a foundation shipper on the proposed Bison Pipeline Project. Anadarko's commitment is for 250 million cubic feet of natural gas per day (MMcf/d) on the proposed project with a term of 10 years.

"We have enjoyed working with Anadarko to secure its participation in the proposed Bison Project, which will provide Anadarko with a new outlet to diverse markets for its Powder River Basin supply of natural gas," said Paul F. Miller, vice president and general manager of Northern Border. "This foundation shipper commitment with Anadarko represents over 60 percent of the expected project capacity and is a milestone toward obtaining the necessary shipper support to advance the project."

Brian Jeffries, executive director of the Wyoming Pipeline Authority (WPA) indicates that the WPA has believed for some time that additional pipeline capacity from Wyoming was needed. Bison, a proposed new interstate pipeline that originates in Wyoming and terminates in North Dakota, where it links to the Northern Border system will provide natural gas producers with access to a major downstream pipeline system with 2.4 billion cubic feet of capacity and thereby a wide range of pricing and market opportunities.

As previously announced, Northern Border's wholly owned subsidiary, Bison Pipeline LLC, is conducting a binding open season for potential shippers to request firm pipeline capacity on the proposed Bison Pipeline Project. As proposed in the open season documents, Bison will consist of approximately 289 miles of 24-inch pipeline, compression and appurtenant facilities beginning near Dead Horse, Wyoming, and the facilities of Fort Union Gas Gathering, L.L.C. and Bighorn Gas Gathering, L.L.C. The pipeline will extend in a northeasterly direction to its terminus in Morton County, North Dakota, near Northern Border's Compressor Station No. 6. It is anticipated that the initial capacity of Bison will be approximately 400 MMcf/d with a maximum capacity of 660 MMcf/d. The projected in-service date for Bison is Nov. 15, 2010.

Wednesday, May 14, 2008

Natural Gas Power Encana Split Up Welcome by Markets

OTTAWA -(Dow Jones)- EnCana Corp.'s (ECA) oil sands business may enjoy only a fleeting independence, as the Canadian energy giant's decision to spin off the unit could attract takeover bids as well as new investors.

EnCana - Canada's largest energy company by output and the biggest natural gas producer in North America - said Sunday it will split up into two companies, separating its growing oil sands business from its massive natural gas operations in a bid to rev up its stock. EnCana's management has long considered the company's shares undervalued.

The market response Monday was an immediate thumbs-up: Shares jumped nearly 7% to C$92.20 on the Toronto Stock Exchange, helping to push the index to a new record high and boosting EnCana's market capitalization to C$69 billion ($68.8 billion). Shares closed 1.5% lower Tuesday at C$90.85.

"We've been long-time holders of EnCana and think they've really done a terrific job over the last 18 months," said Laura Wallace, managing director at Toronto-based Coleford Investment Management Ltd. "The split will highlight the individual merits of each unit...(especially) the oil sands."

The move comes as crude oil continues to smash records almost on a daily basis, rising to within a hair's breadth of $127 a barrel in intraday trading Tuesday on the New York Mercantile Exchange. These prices have already boosted EnCana's stock, but the hope is that a focused oil sands business will profit further still as it comes out from the shadow of EnCana's much bigger natural gas operations, and opens up to investors looking for more exposure to the sector. But stripped of the gas unit's considerable heft, the oil sands could find itself swallowed up by a major company looking to do the same.

"The split definitely makes (the oil sands) a more attractive acquisition opportunity," said Fraser McKay, corporate analyst at Edinburgh-based consultancy Wood Mackenzie. "If you're a major oil company and you consider your own portfolio underweight in the oil sands... then it obviously provides a great target. And EnCana owns arguably the highest quality leases in Alberta."

Close To Conoco

The integrated oil sands business is the product of a 2006 joint venture with ConocoPhillips (COP). EnCana swapped equity in its oil sands for a stake in two of the U.S. major's Midwest refineries. Comprising about a third of EnCana's current assets, the oil sands would still be a major acquisition, but not impossible for a company big enough and determined to grab good assets among increasingly slim pickings.

ConocoPhillips' existing relationship with EnCana - and the sheer size of the U.S. energy firm - make it an obvious bidder. At present, the Houston-based company's oil sands production totals 60,000 barrels a day from the EnCana venture and a minority stake in Syncrude Canada Ltd. But it is investing heavily in Alberta, aiming for a massive jump to 1 million barrels a day over the next two decades from its existing partnerships and wholly owned leases.

Earlier this year, ConocoPhillips Canada President Kevin Meyers said he would "never rule out anything in the future" as regards further oil sands acquisitions.

"I'm not aware of any plans (for more acquisitions)," said ConocoPhillips spokesman Bill Graham, adding that it would be "pure speculation" to say if Conoco would consider snapping up the rest of EnCana's oil sands spinoff. In any case, EnCana's reorganization shouldn't have any impact on the existing relationship between the two companies, Graham said.

The gas company, however, is a different prospect. After the split, the natural gas company to come out of EnCana will become the No. 2 producer in North America because some gas assets will go to the oil sands company. However, the growth potential of that massive asset portfolio could see the natural gas company regain the top spot before too long, reckons Wood Mackenzie's McKay.

Tuesday, May 13, 2008

Utah Sets Natural Gas Production Records in 2007

Natural gas drillers last year set a production record in Utah. Drillers produced more than 385 billion cubic feet of natural gas. That was up 12 percent over 2006.
The Utah Division of Oil, Gas and Mining attributes the increase to markedly higher drilling. There were nearly 4,700 wells producing gas.
Uintah County was the state's largest producer of natural gas, followed by Emery, San Juan and Summit counties.
Oil production, once in decline, rebounded to more than 19 million barrels - the highest since 1997 but still below the record of 41 million barrels. Duchesne County is the state's biggest oil producer.

Monday, May 12, 2008

EnCana Splitting Off Natural Gas Division

CALGARY - In a surprise Mother's Day announcement, EnCana Corp. on Sunday gave birth to two offspring companies, effectively calving off its integrated oilsands and natural gas divisions.

Even as cement trucks poured the foundations of EnCana's new headquarters in downtown Calgary, a block away CEO Randy Eresman was laying the groundwork for the split, which will take effect in 2009.

"We believe this is the right time," he said. "It's the logical next step in the evolution of EnCana."
The split will see the country's largest energy concern split into two of Canada's 20-largest corporations, ranking among the six largest firms in the oil patch.

Eresman said the as yet unnamed gas company would be North America's second largest natural gas producer while the integrated oil company will benefit from interests in refineries in Illinois and Texas.

Eresman will head the gas producer while present EnCana finance chief Brian Ferguson will become CEO of the integrated oil producer, which is currently being dubbed 'IOCco.'

Steve Calderwood, an analyst with Raymond James in Calgary, said he expects EnCana's stock to rise today, where it is traded in both Toronto and New York.

"A lot of it depends on commodity prices, but on a stand alone basis, this is going to be good for the stock price," he said. "The shares of EnCana are likely to rise."

Andrew Potter at UBS Securities Canada Ltd., also predicted the market could look favourably on the shuffle, particularly the oilsands piece.

"I like this transaction," said Potter, who said the move is not radically different from what EnCana was planning last year.

EnCana, which last year formed a downstream partnership with American refining giant ConocoPhillips, expects to increase oilsands production from the Foster Creek and Christina Lake fields in eastern Alberta to 400,000 barrels per day within the next decade.

"From the moment of its creation, I expect this company to be an industry leader in terms of sustained growth," Ferguson said.

He further noted that each individual company would be roughly equal or bigger than the original EnCana when it was formed from the merger of Alberta Energy Company and PanCanadian Petroleum in 2002.

The deal comes as oil prices hit an all-time high of $125.96 per barrel in New York on Friday and natural gas rebounded to $11.54 per million British thermal units. Canadian gas prices on Friday gained almost 23 cents to close at $9.90 per gigajoule.

Several analysts have predicted oil prices could eventually hit $200.

"A lot of it's to do with prices and a lot of it's to do with chasing opportunities that are out there," said Martin Molyneaux, who heads Calgary-based FirstEnergy Capital Corp.'s research department. "This really isn't about short-term numbers, it's more about long-term growth."

Molyneaux said splitting the company allows a more clear distribution of capital between EnCana's oil and natural gas assets.

"This way you don't constantly have to through the debate over where should I allocate dollars between the two."

Eresman said dividing the company along operational lines means "business as usual" for EnCana's 6,500 employees and business partners. In addition, the restructuring will have no impact on the construction of the new Calgary office tower, which is expected to be complete in 2011.

In fact, Eresman said it is likely that each company will increase staffing and that the combined economic impact on the city will be equal to or greater than EnCana's stand-alone presence.

This is EnCana's second attempt at restructuring after it unsuccessfully proposed spinning off assets into a royalty trust 18 months ago. That prompted the federal government on Oct. 31, 2006 to essentially eliminate the trust sector.

Plans were further delayed by the Alberta government's ongoing royalty review through most of 2007.

Eresman infamously threatened to pull about $1 billion in capital spending from the province after the review panel released its recommendations to jack up rates in September of last year, but the EnCana CEO said the culmination of the province's decision to review the "unintended consequences" of the plan has given it the green light to proceed with the reorganization.

In addition, he said it's likely that the company would increase spending for both oil and natural gas drilling.

Sunday, May 11, 2008

Venezuela and Argentina Natural Gas Agreement

The governments of Venezuela and Argentina have signed an accord to set up a joint natural gas liquefaction and transportation enterprise in Guiria, a city in Venezuela's eastern state of Sucre, Venezuela's state oil enterprise PDVSA said Friday.

The accord was signed by the heads of PDVSA and Argentina's state-run energy firm Enarsa during the First South American Energy Council, which concluded Thursday.

The enterprise aims to develop, build and operate a train with a freight volume of 4.7 million tons a year.

The enterprise will also be in charge of the construction and operation of a gas pipe from Block-2 of Deltana Platform to Guiria, to feed the train.

PDVSA said the joint venture will also be responsible for the purchase, transportation and processing of natural gas, as well as for commercializing it in the international market.

The Venezuelan government, through PDVSA, will have 60 percent share in the enterprise, while Enarsa will have 10 percent. The rest will be assigned to third parties by PDVSA.

Saturday, May 10, 2008

Ireland to Export Natural Gas in Future

IRELAND is well placed to meet future gas demand, according to Bord Gais' first transmission-development statement, which provides a seven-year forecast of the demand for natural gas, sources of supply and the infrastructure requirements of the transmission system.

Bord Gais said that security of supply outlook is "positive" in the short to medium term, given the expected increase in new sources of supply from Corrib and Shannon LNG, secure interconnection with the UK and access to its diverse sources of gas.

It said that Ireland's geographical position puts it in an "advantageous position" given its proximity to politically secure North Sea production and global LNG markets.


Bord Gais has called for the adoption of an appropriate security of supply standard for Ireland to enhance the country's security of gas supply in the long term, taking into account the needs of gas markets and electricity generating sector, which it says will provide a reference point for investment decisions.

It said that it has initiated discussions with EirGrid on the components of an appropriate standard and will be reporting its views to the regulatory authorities.

Michael O'Sullivan, head of gas transportation at Bord Gais, explained the impact: "When Corrib and Shannon LNG commence production, the nature of the gas flows on the existing transmission system will change, with more gas flowing from the west coast to the east coast.

"In order to accommodate this change in gas flow, the system will need to be reinforced so that demand in the main market on the east coast can be met from these new sources and to allow for the potential export of gas through the interconnection with Great Britain."

Friday, May 9, 2008

Natural Gas Research Under Attach by Bush

The Department of Energy program which funded a robotic pipeline inspection tool could be shut down if the Bush administration has its way. The development of the Explorer II pipeline instrument was funded by the Strategic Center for Natural Gas and oil, run out of the National Energy Technology Laboratory (NETL) in Morgantown, WV The Strategic Center is spending $75 million in the current 2008 fiscal year on natural gas research. But the Bush administration wants to zero it out in fiscal year 2009. At hearings before the Senate Energy Committee in early February, Energy secretary Samuel Bodman said the fiscal 2009 budget "continues to shift resources away from oil and gas research and development programs, which have sufficient market incentives for private industry support, to other energy priorities. Federal staff, paid from the program direction account, will work toward an orderly termination of the program in FY 2009."

But members of Congress are unlikely to accept the program's termination. Sen. Jeff Bingaman (D-NM), chairman of the Senate Energy Committee, said at that hearing, "This administration has a real blind spot when it comes to developing new domestic natural gas resources. The gas that is most available to the consumers who need it is located onshore, and the key players in developing it are independent oil and gas producers. They aren't big enough to have R&D departments that undertake the research needed to keep our natural gas supplies robust.

"If DOE walks away from the R&D needed to keep natural gas flowing in an economic and environmentally responsible manner, then consumers will pay through higher prices and working families will pay through loss of manufacturing jobs that depend on natural gas. This is another short-sighted decision that I hope the Congress reverses," Bingaman said.

Thursday, May 8, 2008

Exxon Looking for Natural Gas in South Texas

Irving oil giant Exxon Mobil Corp. signed a deal with Newfield Exploration Co. to explore for natural gas in South Texas, continuing the trend of working with local companies to produce oil and gas close to home.

Newfield said in a press release Wednesday the companies will explore and drill on 87,000 acres in the Vicksburg Trend field, in Kenedy, Brooks and Hidalgo counties.

Exxon and Newfield will each own half of a joint venture to develop the field. Newfield said it expects to have an active drilling program during the next three years.

Newfield, a Houston independent oil and gas production company, has been active in South Texas for eight years.

Separately, Exxon is working with Harding Co. in North Texas to produce natural gas in the Barnett Shale field.

Wednesday, May 7, 2008

Exxon Natural Gas CO2 Capture Project - On!

Exxon Mobil Corp. said it is building a commercial demonstration plant near LaBarge, Wyo., to test an improved natural gas treating technology that could offer several financial and environmental benefits. The effects of the “Controlled Freeze Zone” (CFZ) technology are threefold.

It could offer an affordable answer to the removal of carbon dioxide and other substances from natural gas; assist in the development of additional gas resources to meet the world’s growing demand for energy; and facilitate the application of carbon capture and storage, to reduce greenhouse gas emissions, said Exxon Mobil Corp. Senior Vice President Mark Albers.

The more than $100 million experiment involves a process of freezing out and removing carbon dioxide and hydrogen sulfide from so-called “sour” gas. Natural gas is called “sour” if there are more than 5.7 milligrams of H2S per cubic meter of natural gas, which is equivalent to approximately 4 ppm by volume.

Once removed, the carbon dioxide could be used for enhanced oilfield recovery or injected into underground storage, which could reduce the cost of producing gas from sour gas fields, Exxon said.

Exxon will begin building the plant this summer, expects operations to start in late 2009, plans to test the plant, which will process about 14 million cubic feet of gas per day, for one to two years.

Exxon said it reduced its emissions by 8 million metric tons in 2006 as a result of energy efficiency improvements since 1999. However the company also said greenhouse gas emissions were 146 million metric tons, a 5.4-percent increase over the year before.

Tuesday, May 6, 2008

Chilean Natural Gas Sourced by Methanex

VANCOUVER, BRITISH COLUMBIA, May 5, 2008 (Marketwire via COMTEX News Network) ----Methanex Corporation (TSX:MX)(NASDAQ:MEOH)(SANTIAGO:Methanex) announced today that it has signed an agreement with ENAP (the Chilean state-owned oil and gas company) to accelerate gas exploration and development in the Dorado Riquelme exploration block and supply new Chilean-sourced natural gas to Methanex's production facilities in Chile. Under the arrangement, Methanex expects to contribute approximately $100 million in capital over the next three years and will have a 50 percent participation in the block. It is expected that deliveries of gas from the block will commence later this year and that the block has the potential to become a significant new supply source for Methanex's facilities in Chile. The arrangement is subject to approval by the Government of Chile.

Bruce Aitken, President & CEO of Methanex commented, "I am very pleased to announce this agreement with ENAP, which represents an important step in returning our assets in Chile back to full operating rates. With this arrangement, our recently announced agreement with GeoPark, and the new oil and gas activity associated with the bidding round recently conducted by the Government of Chile, we expect to receive increasing quantities of Chilean gas in the next few years."

Methanex's Latin America Senior Vice President, Paul Schiodtz, added, "We are very pleased to have reached this agreement with ENAP, which we have enjoyed a strong relationship with as our primary gas supplier in southern Chile over the last 20 years. The Dorado Riquelme block represents an excellent opportunity. Our involvement will add additional capital and personnel dedicated to accelerate development activity of the block. In addition, the area has existing pipeline and other infrastructure in place to make it possible for gas to be flowing to our plants later this year."

Methanex is a Vancouver-based, publicly traded company and is the world's largest supplier of methanol to major international markets. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX", on the NASDAQ Global Market in the United States under the trading symbol "MEOH" and on the foreign securities market of the Santiago Stock Exchange in Chile under the trading symbol "Methanex". Methanex can be visited online at

ENAP (Empresa Nacional del Petroleo) is the Chilean state-owned oil and gas company which was created in 1950 by the state of Chile. ENAP is involved in the exploration, production and commercialization of hydrocarbons and their derivatives, which it does both in Chile and abroad.

Monday, May 5, 2008

Phillipine Natural Gas Power Plant to Stop Next Year

MANILA, Philippines--State-run PNOC Exploration Corp. is preparing for the possibility of stopping the operations of the 3-megawatt (MW) San Antonio Gas Power Plant in Isabela by the second half of the year.

In its 2007 annual report submitted to the Philippine Stock Exchange, the state firm said the plant's project life was expected to last only till June due to decreasing well-head pressure at the gas field.

"While the project continues to operate, preparations for abandonment are also ongoing. Possible uses of residual gas other than for power generation are also being investigated," the report stated.

The plant last year produced 14,707.98 megawatt-hours of electricity. Gas production from the gas field, on the other hand, reached 324.8 million cubic feet.

It is the first facility in the country to run on natural gas.

It currently provides electricity to more than 10,000 households in Isabela through the Isabela Electric Cooperative 1, which sells power at a cheaper rate compared with that charged by the National Power Corp.

"The project showed that a small onshore gas field can be commercialized. It also helps promote the use of indigenous energy resource in the country aside from generating electricity using a very clean fuel. The project also created livelihood and employment to local residents around the project area," the annual report stated.

Earlier, PNOC-EC said that the San Antonio plant "is a model small-scale gas power generation facility that can be replicated in other parts of the country with marginal gas reserves."

The facility also holds the country's first compressed natural gas (CNG) refueling station for CNG-fed vehicles.

PNOC-EC registered a 32-percent drop in net income in 2007 to P834.7 million, due mainly to lower revenues from the Malampaya Deep Water Gas-to-Power Project and higher operating expenses.

Last year's profit represented only 27 percent of revenues, as compared with 42 percent in 2006.

Sunday, May 4, 2008

Canadian Natural Gas at $10/MMBtu

Happy times again for natural gas firms
Cold in the second half of winter in the East has depleted gas in storage and boosted prices
Jon Harding, Canwest News Service
Published: Saturday, May 03, 2008

Analyst Steve Calderwood of Raymond James is one of the few dissenters, saying rising production from the U.S. Rockies will drive North American gas prices down to $7 US per million British thermal units by year's end.

Long term, however, Raymond James sees gas trading above $10 US, which is the same territory that FirstEnergy sees it -- at $11 US per million British thermal units or higher between 2012 and 2015.

Tristone Capital Inc. has also lifted its natural gas pricing forecasts higher, near term and long term.
Chris Theal, head of research at the energy advisory firm, believes LNG's importance as a supply source to North America will grow, forcing the continent into a more global natural gas game, in which large importers of LNG, such as Japan and China, are already locking up long-term contracts with suppliers and paying $16 US per million British thermal units.

Theal also predicts, as many do, that global natural gas pricing will converge with oil, and ultimately the two fuels will trade in a close tandem.

"There's an awful lot of LNG that's going to get locked up under long-term contract and we believe it'll leave a scarcity of gas beyond 2010 and 2011," said Theal. "And if you want to meet your power generation requirements with natural gas, you're going to have to pay an oil-link price to land that gas ashore."

While juniors like Silverwing Energy may enjoy a financial lift from the impressive recovery of natural gas, it remains to be seen how, and even if, large conventional producers of the resource will pour investment back into the Western Canadian sedimentary basin.

Northeastern B.C.'s Montney and Horn River unconventional gas plays aside, large finds are few and far between across the West, where finding-and-development costs remain among the highest in the world.

Natural-gas production in Western Canada has fallen by about 900 million cubic feet per day since 2006, according to Theal, while the Canadian Association of Petroleum Producers (CAPP) anticipates invest- ment by conventional oil-and gas-companies in Alberta, alone, will have declined by $7.5 billion this year compared to 2005.

Saturday, May 3, 2008

Dallas Fed Reserve Predicts Higher Future Natural Gas Prices

U.S. natural gas prices are poised to head higher over the long term when commercial demand increases, according to a report by the Federal Reserve Bank of Dallas.

"Higher oil prices, several cold spells, seasonal gains in demand, reduced inventories and expectations of increasing natural gas use to generate electricity are continuing to push prices upward," the bank said in its first-quarter energy report.

Nonetheless, domestic prices are still depressed compared with the fast-rising prices commanded on the international market for liquefied natural gas, selling for between $18 and $19 per million cubic feet, about twice the domestic Henry Hub price.

"The only avenue for arbitrage of natural gas prices between the U.S. and the rest of the world is a sharp reduction in LNG imports," the report said.

But in the long term, the report suggests that as U.S. manufacturing activity improves as the effects of the economic downturn fade, higher prices for domestic supplies are in the cards.

"Much higher natural gas prices seem likely even though U.S. producers are thought to be sitting on sizable supplies of undeveloped resources," the bank said. "A recovery in U.S. manufacturing should sharply boost natural gas demand. Once LNG imports become the marginal source of U.S. supply, much higher international natural gas prices should prevail."

Friday, May 2, 2008

Papua New Guinea Discovers Natural Gas

May 1 (Bloomberg) -- InterOil Corp., the company developing Papua New Guinea's first liquefied natural gas facility, surged the most in more than eight months after announcing a natural-gas discovery in the country.

InterOil reported finding gas and gas liquids in its Elk-4 well in the Antelope structure in a statement distributed by Marketwire today. The discovery will ``significantly augment'' gas found in a previous well, InterOil said.

InterOil didn't provide details on how much gas it found.

``Drilling operations experienced a gas kick and a flow of gas liquids to surface which was circulated and flared,'' the company said in the statement. InterOil also said it doesn't currently have reserves or resources as defined by Canadian rules of disclosure for oil and gas activities. Anesti Dermedgoglou, InterOil's vice- president for investor and public relations, didn't immediately return a call seeking comment.

The oil and natural-gas explorer had the biggest gain in the Standard & Poor's/TSX Composite Index, rising 18 percent to C$22.34 in Toronto trading, its biggest advance since Aug. 3. The stock had fallen 40 percent in the past year through yesterday, compared with a 4 percent gain for the S&P/TSX index.

InterOil said its assets in Papua New Guinea include exploration licenses that cover about 9 million acres, an oil refinery, as well as retail and distribution facilities.

Thursday, May 1, 2008

Crosstex Building Natural Gas Plant in North Texas

Dallas pipeline company Crosstex Energy LP said Monday it will build an $80 million natural gas processing facility in North Texas.

The plant will be near Crosstex’s existing facilities in Hood County, and the company plans to begin operating the new plant in the third quarter next year.

The plant will have a capacity of 200 million cubic feet per day, boosting the company’s total capacity in the Barnett Shale natural gas field to 485 million cubic feet per day.

Natural gas must be processed when it comes out of the ground to clean it or to separate various gases to be sold separately.