NEW YORK, Aug 28 (Reuters) - The number of rigs drilling for natural gas in the United Stases rose four this week to 699, the sixth straight weekly gain after sinking in mid-July to the lowest level in more than seven years, according to a report on Friday by Baker Hughes in Houston.
U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 in September, and now stand at 907 rigs, or 56 percent, below the same week last year.
During the week ended July 17, the natural gas rig count dipped to 665, its lowest level since May 3, 2002, when there were 640 gas rigs operating.
Tighter access to credit and a 75 percent slide in natural gas prices to below $3 per mmBtu over the last year or so have forced many producers to scale back gas drilling operations.
But while the steep decline in drilling this year has started to slow production and tighten supplies, most traders agreed it has not been enough yet to offset recession-related cuts in industrial demand and slight gains in imports of LNG.
The U.S. Energy Information Administration estimates that domestic gas production fell for a fifth straight month in July, with output in June dropping below the same year-ago month for the first time this year. (Reporting by Joe Silha; Editing by Marguerita Choy)
Monday, August 31, 2009
Sunday, August 30, 2009
http://weblogs.baltimoresun.com/business/hancock/blog/2009/08/natural_gas_prices_hit_7year_l.html
Natural gas prices hit their lowest levels in seven years on Thursday following a new government report on how much of the stuff is building up in pipes, unburnt. Idle factories and slower-running electricity generators have caused a plunge in demand that would have been unimaginable a year ago, when prices were four times higher. That's bad for gas producers and good for consumers who will use it to heat their homes this winter.
Thanks partly to large new wells tapped in recent years, natural gas prices refuse to rise as the economy starts to recover. This quote from a Bloomberg story tells the tale:
“I’ve tried to guess a bottom on this market a thousand times and it just keeps getting crushed,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. “We have a lot in storage. I don’t know what will turn it.”
For BGE customers, natural gas prices more or less float from month to month, and they'll probably bump up a bit from today's level before the cold months. They usually do. But they promise to stay far below levels of a year ago. BGE has already stocked up some gas at prices slightly higher than today's. So far we've avoided a major Gulf Coast hurricane, which was really the only thing that could cause a return to 2008 levels.
The question, as always after prices drop like this, is: Should you lock in a long-term natural gas deal with Washington Gas Energy Services? So far I haven't done so. At 85 cents per therm for a two-year deal, WGES is still way above today's prices. (BGE is charging 56 cents this month.) And it's probably above what prices will be all this winter.
There's a chance BGE's price will be more than 85 cents for the winter of 2010-2011 if the economy recovers in a decent way. But it might not be. And even if it is, I'm betting the money I save this winter by sticking with BGE's lower, floating price will be at least equal to any extra I might have to pay for the second winter. And if natural gas prices continue to fall, the longer-term deals from WGES and other alternative suppliers should improve.
Natural gas prices hit their lowest levels in seven years on Thursday following a new government report on how much of the stuff is building up in pipes, unburnt. Idle factories and slower-running electricity generators have caused a plunge in demand that would have been unimaginable a year ago, when prices were four times higher. That's bad for gas producers and good for consumers who will use it to heat their homes this winter.
Thanks partly to large new wells tapped in recent years, natural gas prices refuse to rise as the economy starts to recover. This quote from a Bloomberg story tells the tale:
“I’ve tried to guess a bottom on this market a thousand times and it just keeps getting crushed,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. “We have a lot in storage. I don’t know what will turn it.”
For BGE customers, natural gas prices more or less float from month to month, and they'll probably bump up a bit from today's level before the cold months. They usually do. But they promise to stay far below levels of a year ago. BGE has already stocked up some gas at prices slightly higher than today's. So far we've avoided a major Gulf Coast hurricane, which was really the only thing that could cause a return to 2008 levels.
The question, as always after prices drop like this, is: Should you lock in a long-term natural gas deal with Washington Gas Energy Services? So far I haven't done so. At 85 cents per therm for a two-year deal, WGES is still way above today's prices. (BGE is charging 56 cents this month.) And it's probably above what prices will be all this winter.
There's a chance BGE's price will be more than 85 cents for the winter of 2010-2011 if the economy recovers in a decent way. But it might not be. And even if it is, I'm betting the money I save this winter by sticking with BGE's lower, floating price will be at least equal to any extra I might have to pay for the second winter. And if natural gas prices continue to fall, the longer-term deals from WGES and other alternative suppliers should improve.
Saturday, August 29, 2009
Natural Gas at $2.692 MMBtu
By Reg Curren
Aug. 27 (Bloomberg) -- Natural gas fell in New York as a government report showed that U.S. supplies expanded last week more than analysts estimated, keeping inventories on a pace that will strain storage capacity.
Inventories gained 54 billion cubic feet to 3.258 trillion in the week ended Aug. 21, the Energy Department said. Analysts forecast an increase of 52 billion. Stockpiles typically climb 67 billion cubic feet for the week over the past five years. Gas touched $2.692, the lowest level since Aug. 8, 2002.
“Lots of gas equals low prices,” said Ellen Hannan, an energy analyst at brokerage Weeden & Co. in Greenwich, Connecticut. “It’s good to be a gas consumer today, not a producer.”
Natural gas for September delivery fell 6.7 cents, or 2.3 percent, to settle at $2.843 per million British thermal units at 3:01 p.m. on the New York Mercantile Exchange. Gas has declined 50 percent this year.
The more actively traded October futures dropped 8.8 cents to $3.206 per million Btu. The September contract expired today.
Supply increases may be higher than forecast as producers are able to find additional space after the Energy Department increased its estimate on available storage by 100 billion cubic feet, Hannan said.
“If we were this full, I would expect to see injections around 41, 42 or 43 billion” as producers cut supplies, she said. “If we have added 100 billion, there’s more capacity to inject.”
Hannan said industrial demand will have to rebound to begin working down the surplus of gas. The economy hasn’t yet provided that lift, she said.
Storage Capacity
Peak capacity to store natural gas will probably reach about 3.9 trillion cubic feet this year, about 100 billion more than in 2008, Jose Villar, an economist at the Energy Department’s Energy Information Administration, said yesterday.
“I’ve tried to guess a bottom on this market a thousand times and it just keeps getting crushed,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. “We have a lot in storage. I don’t know what will turn it.”
Overall U.S. gas consumption may contract by 2.6 percent as the recession that began in December 2007 cuts demand, the department said in its Short-Term Energy Outlook on Aug. 11.
Gas use at factories is forecast to tumble 8.6 percent this year because of the recession, the department said.
“In some regions, capacity will be reached so supply gets backed to the producer and you get depressed prices,” Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant, said before the report. “It’s going to take an event to change anyone’s mind about storage. It would have to be a storm capable of taking 100 billion to 200 billion cubic feet off the market.”
Hurricane Threat
No storms are forecast at this time to threaten natural gas output in the Gulf of Mexico, according to the National Hurricane Center in Miami.
The Atlantic hurricane season, which began June 1 and runs to the end of November, hasn’t produced a storm that has made its way into the energy-producing region of the Gulf.
“From a fundamental standpoint, the weak to null hurricane season is certainly adding to the bearish picture,” Laurent Key, an analyst at Societe Generale in New York, said in a report yesterday.
Stockpiles of gas this fall will probably exceed the record of 3.545 trillion cubic feet in storage reached on Nov. 2, 2007, according to Energy Department estimates.
Inventories will probably reach 3.9 trillion cubic feet by the end of October, keeping prices depressed as excess gas clogs the pipeline and storage network, Ritterbusch said.
Warmer Winter
Gas demand may not rise as much as some are anticipating when the winter arrives because the northern half of the country will have higher-than-normal temperatures, Travis Hartman, a meteorologist at MDA Federal Inc.’s EarthSat Energy Weather, said in an interview in Calgary today.
“The Midwest and Northeast have the greatest chance of departure from the 30-year normal,” he said. “Once we get to the winter months we’ll have a moderate El Nino” boosting temperatures above average in cities like Chicago.
About 72 percent of households in the Midwest rely on natural gas for heating. Mild weather there would slow the reduction in the supplies and keep prices depressed.
El Nino is a warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Last Updated: August 27, 2009 15:19 EDT
Aug. 27 (Bloomberg) -- Natural gas fell in New York as a government report showed that U.S. supplies expanded last week more than analysts estimated, keeping inventories on a pace that will strain storage capacity.
Inventories gained 54 billion cubic feet to 3.258 trillion in the week ended Aug. 21, the Energy Department said. Analysts forecast an increase of 52 billion. Stockpiles typically climb 67 billion cubic feet for the week over the past five years. Gas touched $2.692, the lowest level since Aug. 8, 2002.
“Lots of gas equals low prices,” said Ellen Hannan, an energy analyst at brokerage Weeden & Co. in Greenwich, Connecticut. “It’s good to be a gas consumer today, not a producer.”
Natural gas for September delivery fell 6.7 cents, or 2.3 percent, to settle at $2.843 per million British thermal units at 3:01 p.m. on the New York Mercantile Exchange. Gas has declined 50 percent this year.
The more actively traded October futures dropped 8.8 cents to $3.206 per million Btu. The September contract expired today.
Supply increases may be higher than forecast as producers are able to find additional space after the Energy Department increased its estimate on available storage by 100 billion cubic feet, Hannan said.
“If we were this full, I would expect to see injections around 41, 42 or 43 billion” as producers cut supplies, she said. “If we have added 100 billion, there’s more capacity to inject.”
Hannan said industrial demand will have to rebound to begin working down the surplus of gas. The economy hasn’t yet provided that lift, she said.
Storage Capacity
Peak capacity to store natural gas will probably reach about 3.9 trillion cubic feet this year, about 100 billion more than in 2008, Jose Villar, an economist at the Energy Department’s Energy Information Administration, said yesterday.
“I’ve tried to guess a bottom on this market a thousand times and it just keeps getting crushed,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. “We have a lot in storage. I don’t know what will turn it.”
Overall U.S. gas consumption may contract by 2.6 percent as the recession that began in December 2007 cuts demand, the department said in its Short-Term Energy Outlook on Aug. 11.
Gas use at factories is forecast to tumble 8.6 percent this year because of the recession, the department said.
“In some regions, capacity will be reached so supply gets backed to the producer and you get depressed prices,” Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant, said before the report. “It’s going to take an event to change anyone’s mind about storage. It would have to be a storm capable of taking 100 billion to 200 billion cubic feet off the market.”
Hurricane Threat
No storms are forecast at this time to threaten natural gas output in the Gulf of Mexico, according to the National Hurricane Center in Miami.
The Atlantic hurricane season, which began June 1 and runs to the end of November, hasn’t produced a storm that has made its way into the energy-producing region of the Gulf.
“From a fundamental standpoint, the weak to null hurricane season is certainly adding to the bearish picture,” Laurent Key, an analyst at Societe Generale in New York, said in a report yesterday.
Stockpiles of gas this fall will probably exceed the record of 3.545 trillion cubic feet in storage reached on Nov. 2, 2007, according to Energy Department estimates.
Inventories will probably reach 3.9 trillion cubic feet by the end of October, keeping prices depressed as excess gas clogs the pipeline and storage network, Ritterbusch said.
Warmer Winter
Gas demand may not rise as much as some are anticipating when the winter arrives because the northern half of the country will have higher-than-normal temperatures, Travis Hartman, a meteorologist at MDA Federal Inc.’s EarthSat Energy Weather, said in an interview in Calgary today.
“The Midwest and Northeast have the greatest chance of departure from the 30-year normal,” he said. “Once we get to the winter months we’ll have a moderate El Nino” boosting temperatures above average in cities like Chicago.
About 72 percent of households in the Midwest rely on natural gas for heating. Mild weather there would slow the reduction in the supplies and keep prices depressed.
El Nino is a warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Last Updated: August 27, 2009 15:19 EDT
Friday, August 28, 2009
Natural Gas Aplenty in the USA
By Reg Curren
Aug. 27 (Bloomberg) -- Natural gas fell in New York as a government report showed that U.S. supplies expanded last week more than analysts estimated, keeping inventories on a pace that will strain storage capacity.
Inventories gained 54 billion cubic feet to 3.258 trillion in the week ended Aug. 21, the Energy Department said. Analysts forecast an increase of 52 billion. Stockpiles typically climb 67 billion cubic feet for the week over the past five years. Gas touched $2.692, the lowest level since Aug. 8, 2002.
“Lots of gas equals low prices,” said Ellen Hannan, an energy analyst at brokerage Weeden & Co. in Greenwich, Connecticut. “It’s good to be a gas consumer today, not a producer.”
Natural gas for September delivery fell 6.7 cents, or 2.3 percent, to settle at $2.843 per million British thermal units at 3:01 p.m. on the New York Mercantile Exchange. Gas has declined 50 percent this year.
The more actively traded October futures dropped 8.8 cents to $3.206 per million Btu. The September contract expired today.
Supply increases may be higher than forecast as producers are able to find additional space after the Energy Department increased its estimate on available storage by 100 billion cubic feet, Hannan said.
“If we were this full, I would expect to see injections around 41, 42 or 43 billion” as producers cut supplies, she said. “If we have added 100 billion, there’s more capacity to inject.”
Hannan said industrial demand will have to rebound to begin working down the surplus of gas. The economy hasn’t yet provided that lift, she said.
Storage Capacity
Peak capacity to store natural gas will probably reach about 3.9 trillion cubic feet this year, about 100 billion more than in 2008, Jose Villar, an economist at the Energy Department’s Energy Information Administration, said yesterday.
“I’ve tried to guess a bottom on this market a thousand times and it just keeps getting crushed,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. “We have a lot in storage. I don’t know what will turn it.”
Overall U.S. gas consumption may contract by 2.6 percent as the recession that began in December 2007 cuts demand, the department said in its Short-Term Energy Outlook on Aug. 11.
Gas use at factories is forecast to tumble 8.6 percent this year because of the recession, the department said.
“In some regions, capacity will be reached so supply gets backed to the producer and you get depressed prices,” Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant, said before the report. “It’s going to take an event to change anyone’s mind about storage. It would have to be a storm capable of taking 100 billion to 200 billion cubic feet off the market.”
Hurricane Threat
No storms are forecast at this time to threaten natural gas output in the Gulf of Mexico, according to the National Hurricane Center in Miami.
The Atlantic hurricane season, which began June 1 and runs to the end of November, hasn’t produced a storm that has made its way into the energy-producing region of the Gulf.
“From a fundamental standpoint, the weak to null hurricane season is certainly adding to the bearish picture,” Laurent Key, an analyst at Societe Generale in New York, said in a report yesterday.
Stockpiles of gas this fall will probably exceed the record of 3.545 trillion cubic feet in storage reached on Nov. 2, 2007, according to Energy Department estimates.
Inventories will probably reach 3.9 trillion cubic feet by the end of October, keeping prices depressed as excess gas clogs the pipeline and storage network, Ritterbusch said.
Warmer Winter
Gas demand may not rise as much as some are anticipating when the winter arrives because the northern half of the country will have higher-than-normal temperatures, Travis Hartman, a meteorologist at MDA Federal Inc.’s EarthSat Energy Weather, said in an interview in Calgary today.
“The Midwest and Northeast have the greatest chance of departure from the 30-year normal,” he said. “Once we get to the winter months we’ll have a moderate El Nino” boosting temperatures above average in cities like Chicago.
About 72 percent of households in the Midwest rely on natural gas for heating. Mild weather there would slow the reduction in the supplies and keep prices depressed.
El Nino is a warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Last Updated: August 27, 2009 15:19 EDT
Aug. 27 (Bloomberg) -- Natural gas fell in New York as a government report showed that U.S. supplies expanded last week more than analysts estimated, keeping inventories on a pace that will strain storage capacity.
Inventories gained 54 billion cubic feet to 3.258 trillion in the week ended Aug. 21, the Energy Department said. Analysts forecast an increase of 52 billion. Stockpiles typically climb 67 billion cubic feet for the week over the past five years. Gas touched $2.692, the lowest level since Aug. 8, 2002.
“Lots of gas equals low prices,” said Ellen Hannan, an energy analyst at brokerage Weeden & Co. in Greenwich, Connecticut. “It’s good to be a gas consumer today, not a producer.”
Natural gas for September delivery fell 6.7 cents, or 2.3 percent, to settle at $2.843 per million British thermal units at 3:01 p.m. on the New York Mercantile Exchange. Gas has declined 50 percent this year.
The more actively traded October futures dropped 8.8 cents to $3.206 per million Btu. The September contract expired today.
Supply increases may be higher than forecast as producers are able to find additional space after the Energy Department increased its estimate on available storage by 100 billion cubic feet, Hannan said.
“If we were this full, I would expect to see injections around 41, 42 or 43 billion” as producers cut supplies, she said. “If we have added 100 billion, there’s more capacity to inject.”
Hannan said industrial demand will have to rebound to begin working down the surplus of gas. The economy hasn’t yet provided that lift, she said.
Storage Capacity
Peak capacity to store natural gas will probably reach about 3.9 trillion cubic feet this year, about 100 billion more than in 2008, Jose Villar, an economist at the Energy Department’s Energy Information Administration, said yesterday.
“I’ve tried to guess a bottom on this market a thousand times and it just keeps getting crushed,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. “We have a lot in storage. I don’t know what will turn it.”
Overall U.S. gas consumption may contract by 2.6 percent as the recession that began in December 2007 cuts demand, the department said in its Short-Term Energy Outlook on Aug. 11.
Gas use at factories is forecast to tumble 8.6 percent this year because of the recession, the department said.
“In some regions, capacity will be reached so supply gets backed to the producer and you get depressed prices,” Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant, said before the report. “It’s going to take an event to change anyone’s mind about storage. It would have to be a storm capable of taking 100 billion to 200 billion cubic feet off the market.”
Hurricane Threat
No storms are forecast at this time to threaten natural gas output in the Gulf of Mexico, according to the National Hurricane Center in Miami.
The Atlantic hurricane season, which began June 1 and runs to the end of November, hasn’t produced a storm that has made its way into the energy-producing region of the Gulf.
“From a fundamental standpoint, the weak to null hurricane season is certainly adding to the bearish picture,” Laurent Key, an analyst at Societe Generale in New York, said in a report yesterday.
Stockpiles of gas this fall will probably exceed the record of 3.545 trillion cubic feet in storage reached on Nov. 2, 2007, according to Energy Department estimates.
Inventories will probably reach 3.9 trillion cubic feet by the end of October, keeping prices depressed as excess gas clogs the pipeline and storage network, Ritterbusch said.
Warmer Winter
Gas demand may not rise as much as some are anticipating when the winter arrives because the northern half of the country will have higher-than-normal temperatures, Travis Hartman, a meteorologist at MDA Federal Inc.’s EarthSat Energy Weather, said in an interview in Calgary today.
“The Midwest and Northeast have the greatest chance of departure from the 30-year normal,” he said. “Once we get to the winter months we’ll have a moderate El Nino” boosting temperatures above average in cities like Chicago.
About 72 percent of households in the Midwest rely on natural gas for heating. Mild weather there would slow the reduction in the supplies and keep prices depressed.
El Nino is a warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Last Updated: August 27, 2009 15:19 EDT
Thursday, August 27, 2009
Natural Gas Prices Low For A While
By MARK WILLIAMS (AP) – 2 hours ago
Natural gas prices are at seven-year lows and it looks like heating bills may be cheap for a while.
How did prices get so low, and how long are they likely to stay there? Are there ways we could be using natural gas — beyond staying warm and cooking food — to take advantage of this cheap source of energy?
Here are some questions and answers about what is happening with natural gas prices.
Q: Where are prices now?
A: Natural gas prices fell 2.8 cents Wednesday to $2.88 per 1,000 cubic feet. That is down 80 percent from last summer, when prices spiked to nearly $14 per 1,000 cubic feet.
Q: Why have prices fallen so much?
A: It is Economics 101. There is little demand, and new drilling technology has made easy pickings of huge reserves of natural gas that was once out of reach.
The Potential Gas Committee in Golden, Colo., reported in June that estimated U.S. reserves are 35 percent higher than just two years ago, thanks to new technology that has allowed producers to drill for gas in shale rock. Energy companies can now drill downward, and then sideways, for miles.
As a result, reserves are at their highest level since the group started tracking the information 44 years ago.
The natural gas-backed American Clean Skies Foundation said a year ago the U.S. has a 118-year supply of natural gas at 2007 production levels.
Meanwhile, the recession has crippled demand for gas. The federal government expects consumption to decline by 2.6 percent this year, driven by a huge drop in demand from the nation's factories. At the same time, summer weather for much of the country has been mild, reducing the power plant-taxing use of air conditioning, and there have been no hurricanes so far to disrupt key production areas in the U.S.
Storage levels for gas headed into the heating season are at record levels and gas has become so cheap that it has become competitive with coal for generating electricity from big power plants.
Q: With prices so low, I should get a nice break on my heating bill this winter, right?
A: Right, assuming you are in one of the 60 million homes heated by gas. The price of gas makes up about two-thirds or three-quarters of a typical gas bill. Gas prices already have started to moderate from the winter, but how much of a break you will get depends on when your distributor locks up prices.
Columbia Gas of Ohio, which adjusts prices monthly, says its prices for September will be about half of what they were in September 2008.
Q: What if I heat my home with electricity?
A: You may still be in luck. Utilities generate about a fifth of the nation's electricity with gas, so those prices figure to come down. How much they'll fall depends on a whole host of factors, including whether your utility is fully regulated or deregulated, how much your utility relies on gas for power generation and how far out they locked into power contracts. Also, some utilities have been raising rates to cover costs for new power plants and pollution controls.
Q: How long will prices remain low?
A: That really depends on the wind, both economic and meteorological. Winter is on the way and the recession won't last forever. Still, most weather forecasters expect a relatively mild winter, and we are still struggling to recover from the economic downturn. Odds are, a substantial rebound in prices is not going to happen soon.
But it's not out of the question.
In the summer of 2002, as the country recovered from the last recession, natural gas cost $2.66 per 1,000 cubic feet. Then it got really cold. By February, prices had doubled, and then they quickly spiked to nearly $11, in part because of one-time events — like a huge fire at an oil and gas storage facility in New York caused by an explosion of a barge carrying propane. It is difficult for energy companies to ramp up operations, but once they do, prices tend to fall — natural gas was back to $5 by August.
The difference this time is the size of the recession (a lot bigger) and the size of our reserves (also a lot bigger).
"The fundamentals weigh against the potential for $10 gas," said oil and gas trader and analyst Stephen Schork.
Q: Given that there is an abundance of natural gas, why aren't we using it to power cars and everything else? Can't we become more energy independent?
A: Natural gas is already used extensively. It heats our homes, makes our water hot and dries our clothes. It is used by industries that make, among other things, steel, plastics and chemicals, and utilities rely on gas to generate electricity.
Some people would like to see natural gas used more extensively as a transportation fuel, beyond its limited uses by some public bus systems and corporate vehicle fleets. As of yet, the infrastructure does not exist for more widespread use.
Airports and cities have built facilities where natural gas-powered buses can return for a recharge, and there are companies trying to build more natural gas stations for everyday use. If new climate regulations are enacted by the U.S., there may be an even stronger push for more such stations because natural gas produces nowhere near the emissions of gasoline.
Copyright © 2009 The Associated Press. All rights reserved.
Natural gas prices are at seven-year lows and it looks like heating bills may be cheap for a while.
How did prices get so low, and how long are they likely to stay there? Are there ways we could be using natural gas — beyond staying warm and cooking food — to take advantage of this cheap source of energy?
Here are some questions and answers about what is happening with natural gas prices.
Q: Where are prices now?
A: Natural gas prices fell 2.8 cents Wednesday to $2.88 per 1,000 cubic feet. That is down 80 percent from last summer, when prices spiked to nearly $14 per 1,000 cubic feet.
Q: Why have prices fallen so much?
A: It is Economics 101. There is little demand, and new drilling technology has made easy pickings of huge reserves of natural gas that was once out of reach.
The Potential Gas Committee in Golden, Colo., reported in June that estimated U.S. reserves are 35 percent higher than just two years ago, thanks to new technology that has allowed producers to drill for gas in shale rock. Energy companies can now drill downward, and then sideways, for miles.
As a result, reserves are at their highest level since the group started tracking the information 44 years ago.
The natural gas-backed American Clean Skies Foundation said a year ago the U.S. has a 118-year supply of natural gas at 2007 production levels.
Meanwhile, the recession has crippled demand for gas. The federal government expects consumption to decline by 2.6 percent this year, driven by a huge drop in demand from the nation's factories. At the same time, summer weather for much of the country has been mild, reducing the power plant-taxing use of air conditioning, and there have been no hurricanes so far to disrupt key production areas in the U.S.
Storage levels for gas headed into the heating season are at record levels and gas has become so cheap that it has become competitive with coal for generating electricity from big power plants.
Q: With prices so low, I should get a nice break on my heating bill this winter, right?
A: Right, assuming you are in one of the 60 million homes heated by gas. The price of gas makes up about two-thirds or three-quarters of a typical gas bill. Gas prices already have started to moderate from the winter, but how much of a break you will get depends on when your distributor locks up prices.
Columbia Gas of Ohio, which adjusts prices monthly, says its prices for September will be about half of what they were in September 2008.
Q: What if I heat my home with electricity?
A: You may still be in luck. Utilities generate about a fifth of the nation's electricity with gas, so those prices figure to come down. How much they'll fall depends on a whole host of factors, including whether your utility is fully regulated or deregulated, how much your utility relies on gas for power generation and how far out they locked into power contracts. Also, some utilities have been raising rates to cover costs for new power plants and pollution controls.
Q: How long will prices remain low?
A: That really depends on the wind, both economic and meteorological. Winter is on the way and the recession won't last forever. Still, most weather forecasters expect a relatively mild winter, and we are still struggling to recover from the economic downturn. Odds are, a substantial rebound in prices is not going to happen soon.
But it's not out of the question.
In the summer of 2002, as the country recovered from the last recession, natural gas cost $2.66 per 1,000 cubic feet. Then it got really cold. By February, prices had doubled, and then they quickly spiked to nearly $11, in part because of one-time events — like a huge fire at an oil and gas storage facility in New York caused by an explosion of a barge carrying propane. It is difficult for energy companies to ramp up operations, but once they do, prices tend to fall — natural gas was back to $5 by August.
The difference this time is the size of the recession (a lot bigger) and the size of our reserves (also a lot bigger).
"The fundamentals weigh against the potential for $10 gas," said oil and gas trader and analyst Stephen Schork.
Q: Given that there is an abundance of natural gas, why aren't we using it to power cars and everything else? Can't we become more energy independent?
A: Natural gas is already used extensively. It heats our homes, makes our water hot and dries our clothes. It is used by industries that make, among other things, steel, plastics and chemicals, and utilities rely on gas to generate electricity.
Some people would like to see natural gas used more extensively as a transportation fuel, beyond its limited uses by some public bus systems and corporate vehicle fleets. As of yet, the infrastructure does not exist for more widespread use.
Airports and cities have built facilities where natural gas-powered buses can return for a recharge, and there are companies trying to build more natural gas stations for everyday use. If new climate regulations are enacted by the U.S., there may be an even stronger push for more such stations because natural gas produces nowhere near the emissions of gasoline.
Copyright © 2009 The Associated Press. All rights reserved.
Wednesday, August 26, 2009
Natural Gas Prices Dip Below $2.90/mmBTU
http://www.cattlenetwork.com/US-GAS--Futures-End-Lower-Amid-Mild-Weather-Forecasts/2009-08-25/Article.aspx?oid=829542&fid=CN-LATEST_NEWS_
HOUSTON (Dow Jones)--Natural gas-futures ended lower as weather forecasts called for below-normal temperatures that could stifle cooling demand.
Natural gas for September delivery on the New York Mercantile Exchange settled 4.1 cents, or 1.40%, lower at $2.882 a million British thermal units. The front-month contract fell as low as $2.819/MMBtu in earlier trading.
Prices were under pressure from a mild weather outlook that analysts said would temper demand for natural gas-fired power for air conditioning. Traders were also adjusting their positions ahead of the Thursday expiration of September gas futures, analysts said.
"Our overall cooling demand for natural gas next week looks like it is less than it was a day ago," said Tim Evans, an analyst with Citi Futures Perspective in New York.
The National Weather Service forecast for Aug. 30 to Sept. 3 calls for below-normal temperatures in the Midwest and across parts of the northeastern and southeastern U.S.
Hot weather can help drive demand for natural gas and cut into storage injections - which are expected to push natural gas stocks to record levels before winter heating season begins.
Natural gas in U.S. storage for the week ended Aug. 14 stood at 3.204 trillion cubic feet - 21% higher than last year and 19% above the five-year average storage level.
Storage levels could even test capacity this fall, despite the brisk pullback in U.S. drilling activity brought about by lower natural gas prices, analysts said.
The price of natural gas has fallen more than 75% since hitting highs last summer above $13/MMBtu as U.S. gas production soared and the economic downturn undermined demand for the fuel. In response to lower prices, natural gas producers let rigs fall idle to curb the flow of gas into the marketplace.
The number of rigs drilling for natural gas has fallen by more than half since last September, when the gas rig count peaked at 1,606 rigs. However, natural gas output has not yet shown marked declines.
"Near brimming storage will cause more production to be shut in or widespread flaring, unless or until a stronger economic recovery kicks up industrial demand, a sustained heat wave slows inventory builds or a series of summer storms disrupts supplies," Mike Fitzpatrick, an analyst with MF Global in New York, wrote in a note to clients Tuesday.
The National Hurricane Center is tracking a tropical disturbance about 325 miles north-northeast of San Juan, Puerto Rico. The weather system has a greater than 50% chance of tropical cyclone formation.
However, it was not expected Tuesday to go on and threaten energy infrastructure in the U.S. Gulf of Mexico, private forecasters said.
The energy-rich U.S. Gulf accounts for about 11% of domestic natural gas output.
FUTURES SETTLEMENT NET CHANGE
Nymex Sep $2.882 -4.1c
Nymex Oct $3.288 -4.9c
Nymex Nov $4.261 -4.6c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $2.83-$2.91 $2.65-$2.80
Transco 65 $2.85-$2.98 $2.67-$2.84
Tex East M3 $3.20-$3.32 $2.95-$3.30
Transco Z6 $3.21-$3.37 $2.99-$3.33
SoCal $2.73-$2.89 $2.62-$2.74
El Paso Perm $2.65-$2.80 $2.58-$2.72
El Paso SJ $2.62-$2.70 $2.45-$2.52
Waha $2.72-$2.83 $2.60-$2.78
Katy $2.76-$2.85 $2.61-$2.79
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
HOUSTON (Dow Jones)--Natural gas-futures ended lower as weather forecasts called for below-normal temperatures that could stifle cooling demand.
Natural gas for September delivery on the New York Mercantile Exchange settled 4.1 cents, or 1.40%, lower at $2.882 a million British thermal units. The front-month contract fell as low as $2.819/MMBtu in earlier trading.
Prices were under pressure from a mild weather outlook that analysts said would temper demand for natural gas-fired power for air conditioning. Traders were also adjusting their positions ahead of the Thursday expiration of September gas futures, analysts said.
"Our overall cooling demand for natural gas next week looks like it is less than it was a day ago," said Tim Evans, an analyst with Citi Futures Perspective in New York.
The National Weather Service forecast for Aug. 30 to Sept. 3 calls for below-normal temperatures in the Midwest and across parts of the northeastern and southeastern U.S.
Hot weather can help drive demand for natural gas and cut into storage injections - which are expected to push natural gas stocks to record levels before winter heating season begins.
Natural gas in U.S. storage for the week ended Aug. 14 stood at 3.204 trillion cubic feet - 21% higher than last year and 19% above the five-year average storage level.
Storage levels could even test capacity this fall, despite the brisk pullback in U.S. drilling activity brought about by lower natural gas prices, analysts said.
The price of natural gas has fallen more than 75% since hitting highs last summer above $13/MMBtu as U.S. gas production soared and the economic downturn undermined demand for the fuel. In response to lower prices, natural gas producers let rigs fall idle to curb the flow of gas into the marketplace.
The number of rigs drilling for natural gas has fallen by more than half since last September, when the gas rig count peaked at 1,606 rigs. However, natural gas output has not yet shown marked declines.
"Near brimming storage will cause more production to be shut in or widespread flaring, unless or until a stronger economic recovery kicks up industrial demand, a sustained heat wave slows inventory builds or a series of summer storms disrupts supplies," Mike Fitzpatrick, an analyst with MF Global in New York, wrote in a note to clients Tuesday.
The National Hurricane Center is tracking a tropical disturbance about 325 miles north-northeast of San Juan, Puerto Rico. The weather system has a greater than 50% chance of tropical cyclone formation.
However, it was not expected Tuesday to go on and threaten energy infrastructure in the U.S. Gulf of Mexico, private forecasters said.
The energy-rich U.S. Gulf accounts for about 11% of domestic natural gas output.
FUTURES SETTLEMENT NET CHANGE
Nymex Sep $2.882 -4.1c
Nymex Oct $3.288 -4.9c
Nymex Nov $4.261 -4.6c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $2.83-$2.91 $2.65-$2.80
Transco 65 $2.85-$2.98 $2.67-$2.84
Tex East M3 $3.20-$3.32 $2.95-$3.30
Transco Z6 $3.21-$3.37 $2.99-$3.33
SoCal $2.73-$2.89 $2.62-$2.74
El Paso Perm $2.65-$2.80 $2.58-$2.72
El Paso SJ $2.62-$2.70 $2.45-$2.52
Waha $2.72-$2.83 $2.60-$2.78
Katy $2.76-$2.85 $2.61-$2.79
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
Tuesday, August 25, 2009
Natural Gas Up from 2.72 to 2.96 mmBTU
http://www.upi.com/Business_News/2009/08/24/Crude-oil-cant-break-75-mark/UPI-64021251122265/
NEW YORK, Aug. 24 (UPI) -- Crude oil prices tried to push past $75 per barrel Monday, but couldn't quite make it, settling at $74.37 on the New York Mercantile Exchange.
Investors took a comparative breather from the front-month light sweet crude contract, which had seen frenzied trading last week on optimism a U.S. economic recovery is in the offing. Trading volume for the October 2009 contract was 202,632, well down from Friday's 275,213, NYMEX said. Oil finished 15 cents lower.
Heating oil futures settled higher at $1.9234 per gallon, gaining 1.85 cents. Reformulated gasoline futures also finished well higher at $2.0491, jumping by $0.0126, while natural gas prices rebounded nicely off a low of $2.726 per 1,000 cubic feet, ending at $2.923.
The average price of a gallon of unleaded gas fell 0.001 cent from Sunday's $2.627 to $2.626, the AAA reported.
NEW YORK, Aug. 24 (UPI) -- Crude oil prices tried to push past $75 per barrel Monday, but couldn't quite make it, settling at $74.37 on the New York Mercantile Exchange.
Investors took a comparative breather from the front-month light sweet crude contract, which had seen frenzied trading last week on optimism a U.S. economic recovery is in the offing. Trading volume for the October 2009 contract was 202,632, well down from Friday's 275,213, NYMEX said. Oil finished 15 cents lower.
Heating oil futures settled higher at $1.9234 per gallon, gaining 1.85 cents. Reformulated gasoline futures also finished well higher at $2.0491, jumping by $0.0126, while natural gas prices rebounded nicely off a low of $2.726 per 1,000 cubic feet, ending at $2.923.
The average price of a gallon of unleaded gas fell 0.001 cent from Sunday's $2.627 to $2.626, the AAA reported.
Monday, August 24, 2009
Natural Gas Tax Revenue Down for Texas and Oklahoma
By BEN CASSELMAN
http://online.wsj.com/article/SB125106951994952269.html
Energy-rich states, flooded with cash last year when oil and natural-gas prices soared to record highs, are now being drained as gas prices plunged to a seven-year low Friday.
In Texas, revenue from gas-production taxes has fallen 43% from last year, costing the state more than $1 billion in lost revenue. In New Mexico, lawmakers are scrambling to close a $433 million budget gap even as they worry the gap could widen if gas prices stay low. In Oklahoma, the state government is furloughing employees and cutting school budgets.
Natural gas "is the primary driver of our state's economy," Oklahoma Treasurer Scott Meacham said. "There's not a lot you can do as a government other than manage the downturn."
In much of the U.S., falling natural-gas prices have been a rare piece of good economic news, driving down electricity costs for homeowners and businesses and promising lower heating bills this winter.
But the decline in prices to less than $3 per million British thermal units from more than $13 per million BTUs last year has reversed the fortunes of energy-producing states such as Texas, Louisiana and Wyoming.
Last year, high energy prices helped insulate those states from the national economic downturn. But as the recession worsened, demand for energy fell, dragging down prices and eroding that protection.
"The mineral sector looks like it's going to be less and less able to hold us up," said Greg Albrecht, chief economist for Louisiana's state legislature.
Across the country, states are struggling with sharply lower income from income, sales and property taxes because of the weak economy. A report by the nonpartisan Center on Budget and Policy Priorities this month found that 48 states -- all but Montana and North Dakota -- either face or have already addressed deficits for the 2010 fiscal year, just two months after it began.
Some states are still getting a boost from oil prices, which are back over $70 a barrel after falling to under $35 a barrel in December. But those gains have been more than offset by the falling price of natural gas, which accounts for more than 70% of U.S. drilling activity and in recent years has generated the majority of many states' oil and gas revenues.
The effects of lower gas prices are rippling through state economies as gas producers cut back drilling activity, causing higher unemployment, lower consumer spending and lower income-tax receipts. The Texas Workforce Commission said Friday that the state's unemployment rate had hit 7.9% in July, still below the national rate of 9.4% but up sharply from a year ago.
Oklahoma has been especially hard-hit. Tax revenue on natural-gas production, which can make up as much as 20% of the state's overall revenue when prices are high, was down 75% in July compared with July 2008, when prices were peaking. The state recently ordered all government divisions to cut their budgets by 5%, and Mr. Meacham, the state treasurer, said he expects more cuts.
The pain is extending beyond state governments to cities, schools and churches that are seeing sharply lower revenues from gas production on their land. Dallas-Fort Worth International Airport, which signed a drilling lease with Chesapeake Energy Corp. in 2006, has seen its monthly royalty revenues fall to about $1.5 million, down from nearly $5 million in September.
States are trying to hang in there. New Mexico's projected $433 million deficit for the 2010 fiscal year, which began July 1, is based on a year-long average natural-gas price of $4.30 per million British thermal units -- well above current prices.
Laird Graeser, chief economist for the New Mexico Department of Finance and Administration, said the state is still counting on natural-gas prices rebounding before the end of the year. "This is a highly speculative industry," he said.
Write to Ben Casselman at ben.casselman@wsj.com
http://online.wsj.com/article/SB125106951994952269.html
Energy-rich states, flooded with cash last year when oil and natural-gas prices soared to record highs, are now being drained as gas prices plunged to a seven-year low Friday.
In Texas, revenue from gas-production taxes has fallen 43% from last year, costing the state more than $1 billion in lost revenue. In New Mexico, lawmakers are scrambling to close a $433 million budget gap even as they worry the gap could widen if gas prices stay low. In Oklahoma, the state government is furloughing employees and cutting school budgets.
Natural gas "is the primary driver of our state's economy," Oklahoma Treasurer Scott Meacham said. "There's not a lot you can do as a government other than manage the downturn."
In much of the U.S., falling natural-gas prices have been a rare piece of good economic news, driving down electricity costs for homeowners and businesses and promising lower heating bills this winter.
But the decline in prices to less than $3 per million British thermal units from more than $13 per million BTUs last year has reversed the fortunes of energy-producing states such as Texas, Louisiana and Wyoming.
Last year, high energy prices helped insulate those states from the national economic downturn. But as the recession worsened, demand for energy fell, dragging down prices and eroding that protection.
"The mineral sector looks like it's going to be less and less able to hold us up," said Greg Albrecht, chief economist for Louisiana's state legislature.
Across the country, states are struggling with sharply lower income from income, sales and property taxes because of the weak economy. A report by the nonpartisan Center on Budget and Policy Priorities this month found that 48 states -- all but Montana and North Dakota -- either face or have already addressed deficits for the 2010 fiscal year, just two months after it began.
Some states are still getting a boost from oil prices, which are back over $70 a barrel after falling to under $35 a barrel in December. But those gains have been more than offset by the falling price of natural gas, which accounts for more than 70% of U.S. drilling activity and in recent years has generated the majority of many states' oil and gas revenues.
The effects of lower gas prices are rippling through state economies as gas producers cut back drilling activity, causing higher unemployment, lower consumer spending and lower income-tax receipts. The Texas Workforce Commission said Friday that the state's unemployment rate had hit 7.9% in July, still below the national rate of 9.4% but up sharply from a year ago.
Oklahoma has been especially hard-hit. Tax revenue on natural-gas production, which can make up as much as 20% of the state's overall revenue when prices are high, was down 75% in July compared with July 2008, when prices were peaking. The state recently ordered all government divisions to cut their budgets by 5%, and Mr. Meacham, the state treasurer, said he expects more cuts.
The pain is extending beyond state governments to cities, schools and churches that are seeing sharply lower revenues from gas production on their land. Dallas-Fort Worth International Airport, which signed a drilling lease with Chesapeake Energy Corp. in 2006, has seen its monthly royalty revenues fall to about $1.5 million, down from nearly $5 million in September.
States are trying to hang in there. New Mexico's projected $433 million deficit for the 2010 fiscal year, which began July 1, is based on a year-long average natural-gas price of $4.30 per million British thermal units -- well above current prices.
Laird Graeser, chief economist for the New Mexico Department of Finance and Administration, said the state is still counting on natural-gas prices rebounding before the end of the year. "This is a highly speculative industry," he said.
Write to Ben Casselman at ben.casselman@wsj.com
Sunday, August 23, 2009
Natural Gas Rig Count Up Another Week
http://money.cnn.com/news/newsfeeds/articles/djf500/200908211336DOWJONESDJONLINE000461_FORTUNE5.htm
HOUSTON-(Dow Jones)- The number of rigs drilling for oil and natural gas in the U.S. rose this week as producers increased drilling activity on hopes of an economic recovery that will spur energy demand.
The number of oil and gas rigs climbed to 985, up 17 from the previous week, according to data from oil-field services company Baker Hughes Inc. (BHI). The number of gas rigs was 695, an increase of seven rigs from last week, while the oil rig count climbed to 280, an increase of eight rigs. The number of miscellaneous rigs was 10, an increase of two rigs.
The number of gas rigs in use peaked at 1,606 in September 2008.
Producers have reined in oil and gas drilling over the past several months amid falling prices, but companies have begun putting some rigs back to work.
"There is optimism that prices will rebound," said Kent Bayazitoglu, an analyst with Houston-based Gelber & Associates.
Gas supplies remain ample. U.S. inventories are expected to approach maximum storage capacity before the winter. Swelling storage levels have contributed to a sharp price decline. Natural gas prices have dropped more than 75% from their highs last summer above $13/MMBtu. This week, prices dropped below $3/MMBtu for the first time in seven years.
Analysts anticipate that the sharp decline in natural gas drilling activity earlier this year will eventually bring supply back in line with demand and help bolster gas prices.
Gas for September delivery on the New York Mercantile Exchange was recently down 4.7 cents, or 1.6%, at $2.898 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
(END) Dow Jones Newswires
08-21-09 1336ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Top of page
HOUSTON-(Dow Jones)- The number of rigs drilling for oil and natural gas in the U.S. rose this week as producers increased drilling activity on hopes of an economic recovery that will spur energy demand.
The number of oil and gas rigs climbed to 985, up 17 from the previous week, according to data from oil-field services company Baker Hughes Inc. (BHI). The number of gas rigs was 695, an increase of seven rigs from last week, while the oil rig count climbed to 280, an increase of eight rigs. The number of miscellaneous rigs was 10, an increase of two rigs.
The number of gas rigs in use peaked at 1,606 in September 2008.
Producers have reined in oil and gas drilling over the past several months amid falling prices, but companies have begun putting some rigs back to work.
"There is optimism that prices will rebound," said Kent Bayazitoglu, an analyst with Houston-based Gelber & Associates.
Gas supplies remain ample. U.S. inventories are expected to approach maximum storage capacity before the winter. Swelling storage levels have contributed to a sharp price decline. Natural gas prices have dropped more than 75% from their highs last summer above $13/MMBtu. This week, prices dropped below $3/MMBtu for the first time in seven years.
Analysts anticipate that the sharp decline in natural gas drilling activity earlier this year will eventually bring supply back in line with demand and help bolster gas prices.
Gas for September delivery on the New York Mercantile Exchange was recently down 4.7 cents, or 1.6%, at $2.898 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
(END) Dow Jones Newswires
08-21-09 1336ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Top of page
Saturday, August 22, 2009
Natural Gas Prices Down While Gas Companies Selling Stock
HOUSTON, Aug 21 (Reuters) - Investors are buying companies like Chesapeake Energy Corp (CHK.N) and Devon Energy Corp (DVN.N) on a bet that the natural gas market has bottomed out, but prices likely will not recover this year with stockpiles at record levels, analysts said.
U.S. natural gas futures are trading at 7-year lows as the global economic slowdown cuts into industrial demand. As a result, domestic inventories have swelled to record levels, government data shows. [ID:nN20240249]
Summer weather has also been mild in the most populated areas of the country, depressing demand for electricity to run air conditioners. An unusually quiet start to the Atlantic hurricane season has also reduced fears that offshore production could suffer.
But even with a bearish outlook for gas prices, the American Stock Exchange index of natural gas producers .XNG, which includes companies like Apache Corp (APA.N) and XTO Energy (XTO.N) climbed more than 2 percent on Friday. The index has climbed 56 percent from the year's low hit in March.
"The perception is that gas has finally gotten to its lowest point, so people are buying exploration and production stocks," Marshall Adkins, energy analyst at Raymond James, said.
In response to the slide in prices, many exploration and production companies have cut production and are drilling wells but not tapping them for gas.
However these actions will not be enough to rescue the oversupplied gas market this year, Adkins said, estimating that producers will need to shut in as much as 10 percent of U.S. supply to keep storage from overfilling.
His firm expects natural gas prices to fall below $2.50 per thousand cubic feet in the coming months.
Houston-based energy research firm Simmons & Co International sees natural gas prices falling as low as $2.25 to $2.50 per thousand cubic feet, representing the marginal cost to produce natural gas.
Still, most expect the natural gas market to rebalance in 2010 as a result of the steep cuts in production made in 2009.
"By the second quarter of 2010, we expect U.S. production to decline 10 percent year over year and replace the storage overhang as the most important fundamental driver of U.S. natural gas prices," Jason Gammel, oil analyst at Macquarie Research said in a note to clients this week.
Stocks likely to do well when natural gas prices recover include high-growth exploration companies like Chesapeake, XTO and Goodrich Petroleum Corp (GDP.N), Gammel said. (Reporting by Anna Driver in Houston; editing by Gunna Dickson)
U.S. natural gas futures are trading at 7-year lows as the global economic slowdown cuts into industrial demand. As a result, domestic inventories have swelled to record levels, government data shows. [ID:nN20240249]
Summer weather has also been mild in the most populated areas of the country, depressing demand for electricity to run air conditioners. An unusually quiet start to the Atlantic hurricane season has also reduced fears that offshore production could suffer.
But even with a bearish outlook for gas prices, the American Stock Exchange index of natural gas producers .XNG, which includes companies like Apache Corp (APA.N) and XTO Energy (XTO.N) climbed more than 2 percent on Friday. The index has climbed 56 percent from the year's low hit in March.
"The perception is that gas has finally gotten to its lowest point, so people are buying exploration and production stocks," Marshall Adkins, energy analyst at Raymond James, said.
In response to the slide in prices, many exploration and production companies have cut production and are drilling wells but not tapping them for gas.
However these actions will not be enough to rescue the oversupplied gas market this year, Adkins said, estimating that producers will need to shut in as much as 10 percent of U.S. supply to keep storage from overfilling.
His firm expects natural gas prices to fall below $2.50 per thousand cubic feet in the coming months.
Houston-based energy research firm Simmons & Co International sees natural gas prices falling as low as $2.25 to $2.50 per thousand cubic feet, representing the marginal cost to produce natural gas.
Still, most expect the natural gas market to rebalance in 2010 as a result of the steep cuts in production made in 2009.
"By the second quarter of 2010, we expect U.S. production to decline 10 percent year over year and replace the storage overhang as the most important fundamental driver of U.S. natural gas prices," Jason Gammel, oil analyst at Macquarie Research said in a note to clients this week.
Stocks likely to do well when natural gas prices recover include high-growth exploration companies like Chesapeake, XTO and Goodrich Petroleum Corp (GDP.N), Gammel said. (Reporting by Anna Driver in Houston; editing by Gunna Dickson)
Friday, August 21, 2009
Natural Gas Flaring in North Dakota is Pegged at 26 Billion Cubic Feet
By JAMES MacPHERSON (AP) – 5 hours ago
BISMARCK, N.D. — Enough natural gas to heat every home in North Dakota through at least two brutal winters was burned off as an unmarketable byproduct in the state's oil patch in 2008, records obtained by The Associated Press show.
North Dakota produced a record 62.8 million barrels of oil last year, up nearly 18 million barrels from 2007. Natural gas, a byproduct of oil production, was pegged at 86 billion cubic feet — of which 26 billion cubic feet was "flared" because of the lack of collecting systems and pipelines needed to move it to market, said Lynn Helms, director of the state Department of Mineral Resources.
"Although natural gas creates much less revenue than oil, there is still a lot of value there," Helms said. "We don't want to see it go up in smoke."
Helms said "tens of millions of dollars" of natural gas pipelines are being planned for North Dakota, and capacity is being increased at three of the nine processing plants in the state. But it may take up to three years for the infrastructure to be built to process and ship natural gas from wells where it's now being flared, he said.
Flaring natural gas also creates carbon dioxide emissions blamed for global warming.
"This is a waste of a natural resource and it's completely unacceptable," said Wayde Schafer, a North Dakota spokesman for the Sierra Club. "We're getting the pollution without getting the energy."
Less than 1 percent of natural gas is flared from oil fields nationwide, and less than 3 percent worldwide, said Amy Sweeney, a statistician for the Energy Information Administration in Washington, D.C.
North Dakota flaring nearly a third of its natural gas "obviously is an anomaly," she said.
"We are burning a commodity but we really don't have a choice because nobody wants the oil wells to stop producing," said Ron Ness, president of the North Dakota Petroleum Council, a Bismarck-based group that represents about 160 companies.
Ness said the oil boom, led by the Bakken shale formation in western North Dakota, also spurred record natural gas production that was more than the pipeline infrastructure could handle, he said.
"Oil production increased 73 percent last year so there was no way around it," Ness said. "Nobody wants to burn a valuable resource."
North Dakota homes used about 11.5 billion cubic feet of natural gas in 2008, Sweeney said. Industry consumes about two-thirds of natural gas in the state, she said.
Terry O'Clair, the state Health Department's air quality director, said the flare emissions in the state's oil patch are within acceptable air quality guidelines.
Pecan Pipeline North Dakota Inc., a subsidiary of EOG Resources Inc. of Houston, is building a $45 million pipeline that would transport natural gas about 75 miles from Palermo to Towner, where it would hook up with the Alliance pipeline that runs from western Canada to Chicago.
Justin Kringstad, director of the state Pipeline Authority, said the Prairie Rose Pipeline slated to be completed this fall could move about 80 million cubic feet of natural gas daily.
And Bismarck-based Williston Basin Interstate Pipeline Co., a unit of MDU Resources Group Inc., announced last year that it is planning a 100-mile-long pipeline to carry natural gas from the Bakken shale formation. The pipeline would cost between $50 million and $75 million and would initially carry 100 million cubic feet of natural gas daily.
But spokesman Mark Hanson said the project is hampered by a glut in the natural gas market, an ailing economy and low energy demand. Natural gas is fetching just over $3 per 1,000 cubic feet, down from more than $10 a year ago.
"We're still exploring demand and potential customers," Hanson said. "We need customers for the gas to go to."
Copyright © 2009 The Associated Press. All rights reserved.
BISMARCK, N.D. — Enough natural gas to heat every home in North Dakota through at least two brutal winters was burned off as an unmarketable byproduct in the state's oil patch in 2008, records obtained by The Associated Press show.
North Dakota produced a record 62.8 million barrels of oil last year, up nearly 18 million barrels from 2007. Natural gas, a byproduct of oil production, was pegged at 86 billion cubic feet — of which 26 billion cubic feet was "flared" because of the lack of collecting systems and pipelines needed to move it to market, said Lynn Helms, director of the state Department of Mineral Resources.
"Although natural gas creates much less revenue than oil, there is still a lot of value there," Helms said. "We don't want to see it go up in smoke."
Helms said "tens of millions of dollars" of natural gas pipelines are being planned for North Dakota, and capacity is being increased at three of the nine processing plants in the state. But it may take up to three years for the infrastructure to be built to process and ship natural gas from wells where it's now being flared, he said.
Flaring natural gas also creates carbon dioxide emissions blamed for global warming.
"This is a waste of a natural resource and it's completely unacceptable," said Wayde Schafer, a North Dakota spokesman for the Sierra Club. "We're getting the pollution without getting the energy."
Less than 1 percent of natural gas is flared from oil fields nationwide, and less than 3 percent worldwide, said Amy Sweeney, a statistician for the Energy Information Administration in Washington, D.C.
North Dakota flaring nearly a third of its natural gas "obviously is an anomaly," she said.
"We are burning a commodity but we really don't have a choice because nobody wants the oil wells to stop producing," said Ron Ness, president of the North Dakota Petroleum Council, a Bismarck-based group that represents about 160 companies.
Ness said the oil boom, led by the Bakken shale formation in western North Dakota, also spurred record natural gas production that was more than the pipeline infrastructure could handle, he said.
"Oil production increased 73 percent last year so there was no way around it," Ness said. "Nobody wants to burn a valuable resource."
North Dakota homes used about 11.5 billion cubic feet of natural gas in 2008, Sweeney said. Industry consumes about two-thirds of natural gas in the state, she said.
Terry O'Clair, the state Health Department's air quality director, said the flare emissions in the state's oil patch are within acceptable air quality guidelines.
Pecan Pipeline North Dakota Inc., a subsidiary of EOG Resources Inc. of Houston, is building a $45 million pipeline that would transport natural gas about 75 miles from Palermo to Towner, where it would hook up with the Alliance pipeline that runs from western Canada to Chicago.
Justin Kringstad, director of the state Pipeline Authority, said the Prairie Rose Pipeline slated to be completed this fall could move about 80 million cubic feet of natural gas daily.
And Bismarck-based Williston Basin Interstate Pipeline Co., a unit of MDU Resources Group Inc., announced last year that it is planning a 100-mile-long pipeline to carry natural gas from the Bakken shale formation. The pipeline would cost between $50 million and $75 million and would initially carry 100 million cubic feet of natural gas daily.
But spokesman Mark Hanson said the project is hampered by a glut in the natural gas market, an ailing economy and low energy demand. Natural gas is fetching just over $3 per 1,000 cubic feet, down from more than $10 a year ago.
"We're still exploring demand and potential customers," Hanson said. "We need customers for the gas to go to."
Copyright © 2009 The Associated Press. All rights reserved.
Thursday, August 20, 2009
Texas Natural Gas Lease Sales Price Down
http://www.google.com/hostednews/ap/article/ALeqM5gPbHxU8k26od8CNYNT0rOvd-YSkwD9A5HA9G0
By ALAN SAYRE (AP) – 1 day ago
NEW ORLEANS — With natural gas prices down two-thirds or more from a year ago and supplies backlogged, interest in Texas offshore leases has dropped.
The Minerals Management Service said Tuesday that 26 companies submitted 189 bids on 162 federal tracts — down sharply from last year's western Gulf of Mexico sale that attracted 423 bids from 53 companies on 319 tracts. The bids will be opened Wednesday in New Orleans.
Unlike the much-bigger annual central Gulf sale of leases off coastal Louisiana, Mississippi and Alabama — which is oil dominated — the Texas coastal sale is centered on natural gas.
This year's central Gulf sale saw winning bids for drilling rights drop more than 80 percent to $703 million, compared with $3.67 billion in 2007 when oil prices were pushing $100 per barrel.
Analysts said the pre-sale figures are another sign of how energy markets have changed since the recession pulled the plug on sky-high prices of 2008.
A year ago, gas was trading at around $9.50 per thousand cubic feet — compared with about $3.10 currently. In the meantime, sharp drops in industrial demand, especially in the high-using industries of steel and chemical manufacturing, have resulted in a supply backlog of about 500 billion cubic feet, said Stephen Schork, an independent energy trader and analyst based in Villanova, Pa.
Schork said a telling sign of the natural gas bear market was seen after September 2008's hurricanes Gustav and Ike followed paths through the offshore oil and gas production zone similar to Katrina and Rita in 2005. But unlike 2005, energy prices didn't spike.
Last year's storms "did not stem the freefall in prices," Schork said. "We're a year beyond that and supplies have continued to grow and prices have continued to fall."
Phil Flynn, energy analyst with Chicago-based PFGBest Research, said demand is low, supplies are strong and there is little capital for drilling projects that typically cost hundreds of millions of dollars. "There's just not a lot of incentives to make these bets," he said.
Flynn said only an economic turnaround can change the market.
He said major finds in onshore shale formations may shift the gas market's emphasis away from offshore drilling in the long term.
"It's a new world," he said. "We may be getting into a situation where we were years ago where the natural gas market is a very steady situation.
"We may have supplies now to last us for generations," Flynn said.
Copyright © 2009 The Associated Press. All rights reserved.
By ALAN SAYRE (AP) – 1 day ago
NEW ORLEANS — With natural gas prices down two-thirds or more from a year ago and supplies backlogged, interest in Texas offshore leases has dropped.
The Minerals Management Service said Tuesday that 26 companies submitted 189 bids on 162 federal tracts — down sharply from last year's western Gulf of Mexico sale that attracted 423 bids from 53 companies on 319 tracts. The bids will be opened Wednesday in New Orleans.
Unlike the much-bigger annual central Gulf sale of leases off coastal Louisiana, Mississippi and Alabama — which is oil dominated — the Texas coastal sale is centered on natural gas.
This year's central Gulf sale saw winning bids for drilling rights drop more than 80 percent to $703 million, compared with $3.67 billion in 2007 when oil prices were pushing $100 per barrel.
Analysts said the pre-sale figures are another sign of how energy markets have changed since the recession pulled the plug on sky-high prices of 2008.
A year ago, gas was trading at around $9.50 per thousand cubic feet — compared with about $3.10 currently. In the meantime, sharp drops in industrial demand, especially in the high-using industries of steel and chemical manufacturing, have resulted in a supply backlog of about 500 billion cubic feet, said Stephen Schork, an independent energy trader and analyst based in Villanova, Pa.
Schork said a telling sign of the natural gas bear market was seen after September 2008's hurricanes Gustav and Ike followed paths through the offshore oil and gas production zone similar to Katrina and Rita in 2005. But unlike 2005, energy prices didn't spike.
Last year's storms "did not stem the freefall in prices," Schork said. "We're a year beyond that and supplies have continued to grow and prices have continued to fall."
Phil Flynn, energy analyst with Chicago-based PFGBest Research, said demand is low, supplies are strong and there is little capital for drilling projects that typically cost hundreds of millions of dollars. "There's just not a lot of incentives to make these bets," he said.
Flynn said only an economic turnaround can change the market.
He said major finds in onshore shale formations may shift the gas market's emphasis away from offshore drilling in the long term.
"It's a new world," he said. "We may be getting into a situation where we were years ago where the natural gas market is a very steady situation.
"We may have supplies now to last us for generations," Flynn said.
Copyright © 2009 The Associated Press. All rights reserved.
Wednesday, August 19, 2009
Natural Gas Price Never Lower in 2009
http://www.google.com/hostednews/ap/article/ALeqM5jYXbDQZZ8sO2O4lh0t3FSrFlIF_QD9A4PF8G0
By JOHN PORRETTO (AP) – 1 day ago
HOUSTON — The season's first Atlantic hurricane and two other storms have done nothing to spur a rise in energy prices, largely because supplies are high and demand low, but oil companies are keeping close watch on their offshore operations in the Gulf of Mexico.
After a quiet start to the 2009 hurricane season, three storms whipped up in recent days, though none appears to pose a threat to the U.S. Gulf's massive energy complex.
Crude prices fell to new lows for the month Monday, dropping to around $65 a barrel, and natural gas prices slumped to new lows as well.
Pump prices have changed little in the past week. On average, a gallon of regular unleaded was selling for $2.641 on Monday, according to auto club AAA, Wright Express and the Oil Price Information Service. That's less than a penny lower than average price a week ago.
The apparent indifference to storms in the Atlantic stands in stark contrast to last year, when oil prices ticked higher as tropical depressions formed.
Several factors are involved, the biggest of which is a recession that's crushed energy demand at home and abroad. U.S. crude inventories rose again last week and are nearly 20 percent above year-ago levels. Natural-gas supplies also are bloated.
The U.S. Gulf accounts for about one-quarter of domestic oil output, but the nation's reliance on the region for natural gas has lessened in the past few years as producers tap into massive reserves onshore.
Gulf gas production accounts for about 12 percent of total U.S. output, according to the Energy Information Administration, down from roughly 20 percent only four years ago.
So even a significant storm could have little or no impact on natural gas and even crude prices, said trader and analyst Stephen Schork. He noted natural-gas prices failed to jump even when hurricanes Gustav and Ike raked the region a year ago.
"And let's not forget we're still in the midst of a pretty severe economic downturn," Schork said.
Ike and Gustav shut down Gulf production for several weeks in late August and September, and shuttered several refineries. That led to gasoline shortages and price spikes above $4 a gallon throughout the Southeast.
But the storms caused far less damage than Katrina and Rita in 2005, a one-two punch that destroyed 108 production platforms, damaged hundreds of others and shut down production for months, in some cases.
For now, major producers in the Gulf such as Royal Dutch Shell PLC, Chevron Corp. and BP PLC say they're monitoring the systems but are operating normally.
Hurricane Bill picked up strength in the open Atlantic Monday on a path toward Bermuda, while what was left of Tropical Storm Claudette brought rain to the Florida Panhandle and southern Alabama. Elsewhere, Tropical Depression Ana was moving quickly across the northeastern Caribbean Sea. It was expected to reach the coast of the Dominican Republic later Monday.
Copyright © 2009 The Associated Press. All rights reserved.
By JOHN PORRETTO (AP) – 1 day ago
HOUSTON — The season's first Atlantic hurricane and two other storms have done nothing to spur a rise in energy prices, largely because supplies are high and demand low, but oil companies are keeping close watch on their offshore operations in the Gulf of Mexico.
After a quiet start to the 2009 hurricane season, three storms whipped up in recent days, though none appears to pose a threat to the U.S. Gulf's massive energy complex.
Crude prices fell to new lows for the month Monday, dropping to around $65 a barrel, and natural gas prices slumped to new lows as well.
Pump prices have changed little in the past week. On average, a gallon of regular unleaded was selling for $2.641 on Monday, according to auto club AAA, Wright Express and the Oil Price Information Service. That's less than a penny lower than average price a week ago.
The apparent indifference to storms in the Atlantic stands in stark contrast to last year, when oil prices ticked higher as tropical depressions formed.
Several factors are involved, the biggest of which is a recession that's crushed energy demand at home and abroad. U.S. crude inventories rose again last week and are nearly 20 percent above year-ago levels. Natural-gas supplies also are bloated.
The U.S. Gulf accounts for about one-quarter of domestic oil output, but the nation's reliance on the region for natural gas has lessened in the past few years as producers tap into massive reserves onshore.
Gulf gas production accounts for about 12 percent of total U.S. output, according to the Energy Information Administration, down from roughly 20 percent only four years ago.
So even a significant storm could have little or no impact on natural gas and even crude prices, said trader and analyst Stephen Schork. He noted natural-gas prices failed to jump even when hurricanes Gustav and Ike raked the region a year ago.
"And let's not forget we're still in the midst of a pretty severe economic downturn," Schork said.
Ike and Gustav shut down Gulf production for several weeks in late August and September, and shuttered several refineries. That led to gasoline shortages and price spikes above $4 a gallon throughout the Southeast.
But the storms caused far less damage than Katrina and Rita in 2005, a one-two punch that destroyed 108 production platforms, damaged hundreds of others and shut down production for months, in some cases.
For now, major producers in the Gulf such as Royal Dutch Shell PLC, Chevron Corp. and BP PLC say they're monitoring the systems but are operating normally.
Hurricane Bill picked up strength in the open Atlantic Monday on a path toward Bermuda, while what was left of Tropical Storm Claudette brought rain to the Florida Panhandle and southern Alabama. Elsewhere, Tropical Depression Ana was moving quickly across the northeastern Caribbean Sea. It was expected to reach the coast of the Dominican Republic later Monday.
Copyright © 2009 The Associated Press. All rights reserved.
Tuesday, August 18, 2009
Natural Gas Prices Down, but Some Stocks Climbing
NEW YORK (Fortune) -- Something strange has happened to natural gas stocks: They've gone up.
By Mina Kimes, writer-reporter
August 17, 2009: 1:45 PM ET
Despite the fact that gas prices are dirt-cheap and energy demand has fallen off a cliff, shares of gas producers Chesapeake Energy (CHK, Fortune 500), Anadarko Petroleum (APC, Fortune 500), and Southwestern Energy (SWN) have climbed an average of 37% so far this year, compared with the S&P 500's 10% gain.
The upswing in stocks seems illogical given the state of the natural gas market. Prices are the lowest they've been in years, in large part because the supply of gas -- unlike that of oil -- is visibly growing. The Energy Information Administration (EIA) estimates that working gas in storage had climbed to 3,152 billion cubic feet as of August 7, a 2% increase over the previous week. The five-year average is 2,635 Bcf.
Why has supply swelled? Over the last few years, domestic energy producers have unearthed a bounty of natural gas beneath shales in states like Louisiana and Pennsylvania. "There seems to be a new shale discovery every couple of months," says Chris Armbruster, an analyst at Al Frank Asset Management. "It's amazing how many drillable places there are in the U.S." The boom in supply has coincided with a drop in demand. The EIA predicts that natural gas consumption will decline by 2.3% in 2009 and stay flat next year.
Cutting back, boosting production
Gas producers have responded to the imbalance by cutting back on the number of rigs they operate. Oil-services company Baker Hughes (BHI, Fortune 500) recently reported that 688 gas rigs were active in the U.S., down about 56% from one year ago.
Ultimately, the cutback ought to reduce production enough to hamper supply, which would boost prices, says Rich Howard, manager of the Prospector Capital Appreciation fund. "We think the decline curve for production will be fairly steep because of the big drop in drilling," he says.
0:00 /5:42Betting on energy and tech
But while fewer rigs are running, some companies have actually boosted production. The CEOs of Chesapeake, Devon Energy (DVN, Fortune 500), and XTO Energy (XTO, Fortune 500) all announced in recent earnings calls that their output had gone up, but Nick Pope, vice president of equity research at Dahlman Rose & Co., says these producers are the exception, not the rule.
According to Pope, cutbacks are coming from private operators, who are constrained by their cash flow, and integrated oil companies like ConocoPhillips (COP, Fortune 500), which is decreasing natural gas production. "A lot of rigs have come offline -- before, growth was more aggressive," he says.
David Tameron, an analyst at Wells Fargo Securities, says companies like XTO and Devon are hanging on in part to please shareholders. "To an extent, they're continuing to drill because they're public companies," he says. "If their production growth declines, the Street will beat them up." Indeed, the market is responsive to hikes in production: Since Chesapeake announced on August 3 that it intended to boost output this year, gas prices have dropped 12%, but the company's shares have climbed 14%.
Riding on oil
Armbruster points to another factor in the stocks' rise. "A lot of [natural gas producers] belong to indices that move when the price of oil moves, so they get taken for a ride in the rally," he says. While natural gas is dirt-cheap, oil recently topped $70 a barrel, up from $30 last winter.
Eventually, some analysts believe that gas stocks will decouple from their integrated oil brethren, responding more to commodity prices. But speculators are betting that those prices will improve: Gas futures for August 2010 are trading at about $6, which is low compared to 2008, when they topped $10, but nearly twice as high as where they are now.
If prices recover, the companies best equipped to take advantage of the bump will be the ones operating in areas with abundant reserves. John Freeman, an analyst at Raymond James, likes Chesapeake, which is known for its aggressive exploration strategy, for that reason. "There's significant upside to their price because they're in Marcellus and Haynesville," he says, referring to shales in Pennsylvania and Louisiana. Freeman thinks that if gas prices hit $6, Chesapeake's stock will be worth $50, compared with $24 now.
While Wells Fargo's Tameron is skeptical about the likelihood of a spike in gas prices next year, he also likes Chesapeake's stock. Tameron says he initially thought investors would shy away from the company's high debt level, but he changed his mind last week when Chesapeake announced it would receive an early payment on a joint venture.
"Chesapeake has a number of joint ventures -- with Statoil, BP, and Plains. They go out and find the prospects, make the plays commercial, and recover their investment by bringing a partner in," Tameron says. "The model has worked."
Many analysts prefer companies with assets in North American shales, which experts believe have the potential to yield hundreds of trillions of cubic feet of natural gas. But getting natural gas from the rocks is a difficult feat, requiring a complicated and expensive drilling process called hydraulic fracturing.
As a result, says Dahlman Rose's Pope, technological ability is extremely important right now. "You're seeing a shift in structure of these companies," he says. "It's become more of a manufacturing game -- they know the gas is there, and the challenge is getting it out." Pope likes gas producer Southwestern because he admires their its focus on drilling in the Arkansas' Fayetteville Shale.
Tameron says gas producers with concentrated portfolios are better off than those with a string of properties. "Devon is too scattered," he says. "They have a great asset in Barnett, but they don't have a core niche. A good stock in this environment needs to have a niche."
By Mina Kimes, writer-reporter
August 17, 2009: 1:45 PM ET
Despite the fact that gas prices are dirt-cheap and energy demand has fallen off a cliff, shares of gas producers Chesapeake Energy (CHK, Fortune 500), Anadarko Petroleum (APC, Fortune 500), and Southwestern Energy (SWN) have climbed an average of 37% so far this year, compared with the S&P 500's 10% gain.
The upswing in stocks seems illogical given the state of the natural gas market. Prices are the lowest they've been in years, in large part because the supply of gas -- unlike that of oil -- is visibly growing. The Energy Information Administration (EIA) estimates that working gas in storage had climbed to 3,152 billion cubic feet as of August 7, a 2% increase over the previous week. The five-year average is 2,635 Bcf.
Why has supply swelled? Over the last few years, domestic energy producers have unearthed a bounty of natural gas beneath shales in states like Louisiana and Pennsylvania. "There seems to be a new shale discovery every couple of months," says Chris Armbruster, an analyst at Al Frank Asset Management. "It's amazing how many drillable places there are in the U.S." The boom in supply has coincided with a drop in demand. The EIA predicts that natural gas consumption will decline by 2.3% in 2009 and stay flat next year.
Cutting back, boosting production
Gas producers have responded to the imbalance by cutting back on the number of rigs they operate. Oil-services company Baker Hughes (BHI, Fortune 500) recently reported that 688 gas rigs were active in the U.S., down about 56% from one year ago.
Ultimately, the cutback ought to reduce production enough to hamper supply, which would boost prices, says Rich Howard, manager of the Prospector Capital Appreciation fund. "We think the decline curve for production will be fairly steep because of the big drop in drilling," he says.
0:00 /5:42Betting on energy and tech
But while fewer rigs are running, some companies have actually boosted production. The CEOs of Chesapeake, Devon Energy (DVN, Fortune 500), and XTO Energy (XTO, Fortune 500) all announced in recent earnings calls that their output had gone up, but Nick Pope, vice president of equity research at Dahlman Rose & Co., says these producers are the exception, not the rule.
According to Pope, cutbacks are coming from private operators, who are constrained by their cash flow, and integrated oil companies like ConocoPhillips (COP, Fortune 500), which is decreasing natural gas production. "A lot of rigs have come offline -- before, growth was more aggressive," he says.
David Tameron, an analyst at Wells Fargo Securities, says companies like XTO and Devon are hanging on in part to please shareholders. "To an extent, they're continuing to drill because they're public companies," he says. "If their production growth declines, the Street will beat them up." Indeed, the market is responsive to hikes in production: Since Chesapeake announced on August 3 that it intended to boost output this year, gas prices have dropped 12%, but the company's shares have climbed 14%.
Riding on oil
Armbruster points to another factor in the stocks' rise. "A lot of [natural gas producers] belong to indices that move when the price of oil moves, so they get taken for a ride in the rally," he says. While natural gas is dirt-cheap, oil recently topped $70 a barrel, up from $30 last winter.
Eventually, some analysts believe that gas stocks will decouple from their integrated oil brethren, responding more to commodity prices. But speculators are betting that those prices will improve: Gas futures for August 2010 are trading at about $6, which is low compared to 2008, when they topped $10, but nearly twice as high as where they are now.
If prices recover, the companies best equipped to take advantage of the bump will be the ones operating in areas with abundant reserves. John Freeman, an analyst at Raymond James, likes Chesapeake, which is known for its aggressive exploration strategy, for that reason. "There's significant upside to their price because they're in Marcellus and Haynesville," he says, referring to shales in Pennsylvania and Louisiana. Freeman thinks that if gas prices hit $6, Chesapeake's stock will be worth $50, compared with $24 now.
While Wells Fargo's Tameron is skeptical about the likelihood of a spike in gas prices next year, he also likes Chesapeake's stock. Tameron says he initially thought investors would shy away from the company's high debt level, but he changed his mind last week when Chesapeake announced it would receive an early payment on a joint venture.
"Chesapeake has a number of joint ventures -- with Statoil, BP, and Plains. They go out and find the prospects, make the plays commercial, and recover their investment by bringing a partner in," Tameron says. "The model has worked."
Many analysts prefer companies with assets in North American shales, which experts believe have the potential to yield hundreds of trillions of cubic feet of natural gas. But getting natural gas from the rocks is a difficult feat, requiring a complicated and expensive drilling process called hydraulic fracturing.
As a result, says Dahlman Rose's Pope, technological ability is extremely important right now. "You're seeing a shift in structure of these companies," he says. "It's become more of a manufacturing game -- they know the gas is there, and the challenge is getting it out." Pope likes gas producer Southwestern because he admires their its focus on drilling in the Arkansas' Fayetteville Shale.
Tameron says gas producers with concentrated portfolios are better off than those with a string of properties. "Devon is too scattered," he says. "They have a great asset in Barnett, but they don't have a core niche. A good stock in this environment needs to have a niche."
Monday, August 17, 2009
Natural Gas Drilling Fever
By JULIE CARR SMYTH (AP) – 3 hours ago
COLUMBUS, Ohio — State parks aren't just for hiking, camping and other recreation anymore. Increasingly, these lands are being used for oil and gas drilling as budget-strapped states seek new sources of revenue.
As they allow more energy exploration in state parks — in some cases by reversing previous bans — lawmakers are being met with resistance from environmentalists and park officials.
Opponents of the drilling say it raises troubling questions about acceptable uses of publicly shared land — even when new technology allows rigs positioned outside park boundaries to reach petroleum pockets deep beneath the parks by drilling horizontally.
Sean Logan, director of the Ohio Department of Natural Resources, said parks get 40 percent of their money from fees related to camping, boating, beach access and other recreational activities. If drilling affects the panoramas or the noise level, these other revenue sources could start suffering, he said.
Drilling is still barred in national parks. But the reversal of some state bans coincides with efforts to expand exploration in other previously off-limits locations: offshore in coastal states, near Aztec ruins in New Mexico and in some urban parks.
Arkansas has signed a lease allowing drilling to begin under Woolly Hollow State Park. Pennsylvania saw its first drilling on state park property this spring.
In July, a circuit court judge in West Virginia ruled against the state environmental protection agency's attempt to block drilling under Chief Logan State Park. The first well in Living Desert Zoo and Gardens State Park in Carlsbad, N.M., was drilled in 2007.
The U.S. Geologic Survey monitors oil and gas activity nationally, though no organization tracks drilling that falls within the boundary of state parks, or how much oil and gas can be pulled from that land.
In western New York, retiree Jay Wopperer is fighting a proposal to drill in Allegany State Park, 65,000 acres of forested valleys south of Buffalo.
"I don't oppose drilling," said Wopperer, of Clarence, N.Y., who has led the Audubon Society's bird hikes in Allegany for 10 years. "But there are plenty of other places to drill in western New York. This is the people's park."
To drill, roughly two acres are cleared of trees and vegetation. Gravel roads are also required to access drilling masts about 120 feet high. Producers have in some cases put mufflers on machinery and reduced other noises, but there are still trucks and other related sounds.
Backers say that wellheads and nature trails can coexist, in part because of new technology reduces the environmental footprint of drilling operations.
In Ohio's Salt Fork State Park, much of the work would be by directional drilling, a technique that involves entering the surface at one location, making an underground turn and tunneling sometimes for miles underground to reach oil or natural gas pockets.
"You probably wouldn't even notice the drilling rigs. It's very, very environmentally sensitive and, at the same time, would produce a huge amount of revenue," said state Sen. Keith Faber, who is pushing a proposal to allow the first-ever drilling in Ohio state parks.
A state committee puts Ohio's estimated take from new drilling as high as $5 million a year. Ohio, with 11 percent unemployment and among the worst foreclosure rates in the country, needs the cash to offset declining tax revenues.
Ohio is not alone.
According to the latest figures from the nonpartisan Center on Budget and Policy Priorities, state budgets face a combined $163 billion shortfall in fiscal year 2010 even after making billions in cuts.
The money from drilling won't cure state shortfalls, but every office is being asked to find new revenue or face cuts, including parks.
Arkansas parks director Greg Butts said his state received about $200,000 in initial bonus payments by signing the deal allowing natural gas directional drilling under Woolly Hollow, cradled in the Ozark foothills. The lease doesn't allow drilling on park property.
On land sitting above massive natural gas reserves like the Marcellus shale, which spreads over four states including Ohio, new drilling techniques have created a lot more opportunities for companies like Oklahoma City-based Chesapeake Energy Corp.
"In our home state, in fact, one of our larger royalty owners is the Oklahoma Department of Wildlife Conservation," said spokesman Jim Gipson. "Many public entities are seeing that there is significant opportunity to create economic value from natural gas resource development while simultaneously protecting the environment."
Some states have balked, with lawmakers in Kentucky and Ohio allowing state-park drilling proposals to die this year. Looking solely at proceeds from drilling, some say, is missing the bigger picture and the greater harm.
In Pennsylvania, however, a state ban on surface drilling in state parks was unable to thwart private drilling in Goddard State Park because the company, Pittsburgh-based Vista Resources, owns the mineral rights.
Most state park directors still see drilling as contrary to their mission of leaving the land as pristine as possible, said Philip McKnelly, executive director of the National Association of State Park Directors.
Once that line is crossed, park officials say, there is no going back.
Right now, there is a huge glut of natural gas because of the recession and the new drilling techniques. Prices have plunged as a result. There is apprehension from some park directors that with any economic rebound, the pressure to drill on public lands will only grow stronger.
___
Associated Press writers Stephen Majors in Columbus and news researcher Monika Mathur in New York contributed to this report.
___
On The Net:
National Association of State Park Directors: http://www.naspd.org
Interstate Oil and Gas Compact Commission: http://www.iogcc.state.ok.us
Copyright © 2009 The Associated Press. All rights reserved.
COLUMBUS, Ohio — State parks aren't just for hiking, camping and other recreation anymore. Increasingly, these lands are being used for oil and gas drilling as budget-strapped states seek new sources of revenue.
As they allow more energy exploration in state parks — in some cases by reversing previous bans — lawmakers are being met with resistance from environmentalists and park officials.
Opponents of the drilling say it raises troubling questions about acceptable uses of publicly shared land — even when new technology allows rigs positioned outside park boundaries to reach petroleum pockets deep beneath the parks by drilling horizontally.
Sean Logan, director of the Ohio Department of Natural Resources, said parks get 40 percent of their money from fees related to camping, boating, beach access and other recreational activities. If drilling affects the panoramas or the noise level, these other revenue sources could start suffering, he said.
Drilling is still barred in national parks. But the reversal of some state bans coincides with efforts to expand exploration in other previously off-limits locations: offshore in coastal states, near Aztec ruins in New Mexico and in some urban parks.
Arkansas has signed a lease allowing drilling to begin under Woolly Hollow State Park. Pennsylvania saw its first drilling on state park property this spring.
In July, a circuit court judge in West Virginia ruled against the state environmental protection agency's attempt to block drilling under Chief Logan State Park. The first well in Living Desert Zoo and Gardens State Park in Carlsbad, N.M., was drilled in 2007.
The U.S. Geologic Survey monitors oil and gas activity nationally, though no organization tracks drilling that falls within the boundary of state parks, or how much oil and gas can be pulled from that land.
In western New York, retiree Jay Wopperer is fighting a proposal to drill in Allegany State Park, 65,000 acres of forested valleys south of Buffalo.
"I don't oppose drilling," said Wopperer, of Clarence, N.Y., who has led the Audubon Society's bird hikes in Allegany for 10 years. "But there are plenty of other places to drill in western New York. This is the people's park."
To drill, roughly two acres are cleared of trees and vegetation. Gravel roads are also required to access drilling masts about 120 feet high. Producers have in some cases put mufflers on machinery and reduced other noises, but there are still trucks and other related sounds.
Backers say that wellheads and nature trails can coexist, in part because of new technology reduces the environmental footprint of drilling operations.
In Ohio's Salt Fork State Park, much of the work would be by directional drilling, a technique that involves entering the surface at one location, making an underground turn and tunneling sometimes for miles underground to reach oil or natural gas pockets.
"You probably wouldn't even notice the drilling rigs. It's very, very environmentally sensitive and, at the same time, would produce a huge amount of revenue," said state Sen. Keith Faber, who is pushing a proposal to allow the first-ever drilling in Ohio state parks.
A state committee puts Ohio's estimated take from new drilling as high as $5 million a year. Ohio, with 11 percent unemployment and among the worst foreclosure rates in the country, needs the cash to offset declining tax revenues.
Ohio is not alone.
According to the latest figures from the nonpartisan Center on Budget and Policy Priorities, state budgets face a combined $163 billion shortfall in fiscal year 2010 even after making billions in cuts.
The money from drilling won't cure state shortfalls, but every office is being asked to find new revenue or face cuts, including parks.
Arkansas parks director Greg Butts said his state received about $200,000 in initial bonus payments by signing the deal allowing natural gas directional drilling under Woolly Hollow, cradled in the Ozark foothills. The lease doesn't allow drilling on park property.
On land sitting above massive natural gas reserves like the Marcellus shale, which spreads over four states including Ohio, new drilling techniques have created a lot more opportunities for companies like Oklahoma City-based Chesapeake Energy Corp.
"In our home state, in fact, one of our larger royalty owners is the Oklahoma Department of Wildlife Conservation," said spokesman Jim Gipson. "Many public entities are seeing that there is significant opportunity to create economic value from natural gas resource development while simultaneously protecting the environment."
Some states have balked, with lawmakers in Kentucky and Ohio allowing state-park drilling proposals to die this year. Looking solely at proceeds from drilling, some say, is missing the bigger picture and the greater harm.
In Pennsylvania, however, a state ban on surface drilling in state parks was unable to thwart private drilling in Goddard State Park because the company, Pittsburgh-based Vista Resources, owns the mineral rights.
Most state park directors still see drilling as contrary to their mission of leaving the land as pristine as possible, said Philip McKnelly, executive director of the National Association of State Park Directors.
Once that line is crossed, park officials say, there is no going back.
Right now, there is a huge glut of natural gas because of the recession and the new drilling techniques. Prices have plunged as a result. There is apprehension from some park directors that with any economic rebound, the pressure to drill on public lands will only grow stronger.
___
Associated Press writers Stephen Majors in Columbus and news researcher Monika Mathur in New York contributed to this report.
___
On The Net:
National Association of State Park Directors: http://www.naspd.org
Interstate Oil and Gas Compact Commission: http://www.iogcc.state.ok.us
Copyright © 2009 The Associated Press. All rights reserved.
Sunday, August 16, 2009
Natural Gas Rigs 688 and Climbing
NEW YORK, Aug 14 (Reuters) - The number of rigs drilling for natural gas in the United States rose 7 this week to 688, the fourth straight weekly gain after sinking last month to the lowest level in more than seven years, according to a report on Friday by oil services firm Baker Hughes in Houston.
U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 in September, and now stand at 898 rigs, or 57 percent, below the same week last year.
During the week ended July 17, 2009, the natural gas rig count dipped to 665, its lowest level since May 3, 2002, when there were 640 gas rigs operating.
Tighter access to credit and a 70 percent slide in natural gas prices to about $3.50 per mmBtu over the last year have forced many producers to scale back gas drilling operations.
But while the steep decline in drilling this year has started to slow production and tighten supplies, most traders agreed it has not been enough yet to offset recession-related cuts in industrial demand and slight gains in imports of LNG.
The U.S. Energy Information Administration estimates that domestic gas production fell for a fifth straight month in July, with output in June dropping below the same year-ago month for the first time this year. (Reporting by Joe Silha, editing by John Picinich)
U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 in September, and now stand at 898 rigs, or 57 percent, below the same week last year.
During the week ended July 17, 2009, the natural gas rig count dipped to 665, its lowest level since May 3, 2002, when there were 640 gas rigs operating.
Tighter access to credit and a 70 percent slide in natural gas prices to about $3.50 per mmBtu over the last year have forced many producers to scale back gas drilling operations.
But while the steep decline in drilling this year has started to slow production and tighten supplies, most traders agreed it has not been enough yet to offset recession-related cuts in industrial demand and slight gains in imports of LNG.
The U.S. Energy Information Administration estimates that domestic gas production fell for a fifth straight month in July, with output in June dropping below the same year-ago month for the first time this year. (Reporting by Joe Silha, editing by John Picinich)
Saturday, August 15, 2009
Natural Gas Price Down for Week Ending August 14, 2009
13 August 2009 @ 02:20 pm ET
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Overview (For the Week Ending Wednesday, August 12, 2009)
Reversing gains from the previous week, natural gas prices posted declines in both the spot and futures markets, with decreases in the spot markets of up to 48 cents per million Btu (MMBtu). The Henry Hub spot price fell 25 cents, or 7 percent, closing at $3.36 per MMBtu on Wednesday, August 12.
The natural gas futures contract for September 2009 at the New York Mercantile Exchange (NYMEX) fell 56 cents, or 14 percent, on the week, closing at $3.479 on Wednesday. During its tenure as the near-month contract, the price of the September 2009 contract peaked at $4.042 on August 5.
Natural gas in storage increased by 63 billion cubic feet (Bcf) to 3,152 Bcf for the week ending August 7, 2009, according to EIA Weekly Natural Gas Storage Report.
As of August 7, the number of natural gas rotary rigs was 681, an increase of 4 from the previous week, according to Baker Hughes Incorporated data. Following several months of decline, the number of rigs has oscillated in the last several weeks, which could indicate that the rig count has stopped declining. However, natural gas rigs are currently 57 percent lower than year-ago levels, when they were near record highs.
Mirroring natural gas prices, the price of the West Texas Intermediate crude oil contract fell by $1.89, or about 3 percent, closing at $70.08 per barrel, or $12.08 per MMBtu, yesterday.
Print E-Mail
Overview (For the Week Ending Wednesday, August 12, 2009)
Reversing gains from the previous week, natural gas prices posted declines in both the spot and futures markets, with decreases in the spot markets of up to 48 cents per million Btu (MMBtu). The Henry Hub spot price fell 25 cents, or 7 percent, closing at $3.36 per MMBtu on Wednesday, August 12.
The natural gas futures contract for September 2009 at the New York Mercantile Exchange (NYMEX) fell 56 cents, or 14 percent, on the week, closing at $3.479 on Wednesday. During its tenure as the near-month contract, the price of the September 2009 contract peaked at $4.042 on August 5.
Natural gas in storage increased by 63 billion cubic feet (Bcf) to 3,152 Bcf for the week ending August 7, 2009, according to EIA Weekly Natural Gas Storage Report.
As of August 7, the number of natural gas rotary rigs was 681, an increase of 4 from the previous week, according to Baker Hughes Incorporated data. Following several months of decline, the number of rigs has oscillated in the last several weeks, which could indicate that the rig count has stopped declining. However, natural gas rigs are currently 57 percent lower than year-ago levels, when they were near record highs.
Mirroring natural gas prices, the price of the West Texas Intermediate crude oil contract fell by $1.89, or about 3 percent, closing at $70.08 per barrel, or $12.08 per MMBtu, yesterday.
Friday, August 14, 2009
Ghana Natural Gas Open for Business 2011
By Emily Bowers
Aug. 13 (Bloomberg) -- Ghana’s government plans to select an investor for a $1 billion natural-gas processing plant project by “late August or early September,” the Energy Ministry’s head of upstream petroleum said.
The Ghana National Petroleum Corp., a branch of the ministry, invited bids from prospective investors in May. The state-owned company received about 10 applications, Kwaku Boateng said in an interview yesterday in the capital, Accra.
“All were outside though some have local partners,” he said, declining to name any bidders.
Ghana is set to become one of Africa’s newest oil exporters in late 2010 when production begins at the offshore Jubilee field, which was discovered in June 2007 and has potential resources of as much as 1.8 billion barrels, according to Tullow Oil Plc, the biggest investor in the venture.
The West African nation expects to produce about 500,000 barrels of oil a day by 2014. The gas-processing plant, to be built in Ghana’s Western region, will be fed with gas from the Jubilee oil field.
While the government had hoped the plant would be ready by the fourth quarter of 2010 to coincide with the start of oil production, that timeline is “unlikely,” Boateng said.
“Realistically, middle of 2011,” he said.
The Jubilee field’s producers, which also include Ghana National Petroleum, Kosmos Energy LLC and Anadarko Petroleum Corp., plan to invest $3.1 billion in the Jubilee project. In July, Tullow said the field will make Ghana one of the world’s top 50 oil producers.
‘Zero Gas Flaring’
Ghana will adopt “a policy of zero gas flaring,” Boateng said. If the plant isn’t ready by the time oil pumping begins, producers will store the gas until it can be used.
Ghana is also looking at expanding its domestic oil- refining capacity, Boateng said.
The state-owned Tema Oil Refinery Ltd., the country’s only refiner, can produce as much as 45,000 barrels of oil products per day for the domestic market. The government plans to expand that to 145,000 barrels a day by raising cash or bringing in a “strategic investor” for a joint venture, Boateng said.
Ghana may also “build a completely new refinery,” he said, without providing further details.
Separately, two foreign companies have submitted bids to build export-focused refineries in the Western region, Boateng said. He didn’t elaborate.
To contact the reporter on this story: Emily Bowers in Accra at ebowers1@bloomberg.net.
Last Updated: August 13, 2009 03:32 EDT
Aug. 13 (Bloomberg) -- Ghana’s government plans to select an investor for a $1 billion natural-gas processing plant project by “late August or early September,” the Energy Ministry’s head of upstream petroleum said.
The Ghana National Petroleum Corp., a branch of the ministry, invited bids from prospective investors in May. The state-owned company received about 10 applications, Kwaku Boateng said in an interview yesterday in the capital, Accra.
“All were outside though some have local partners,” he said, declining to name any bidders.
Ghana is set to become one of Africa’s newest oil exporters in late 2010 when production begins at the offshore Jubilee field, which was discovered in June 2007 and has potential resources of as much as 1.8 billion barrels, according to Tullow Oil Plc, the biggest investor in the venture.
The West African nation expects to produce about 500,000 barrels of oil a day by 2014. The gas-processing plant, to be built in Ghana’s Western region, will be fed with gas from the Jubilee oil field.
While the government had hoped the plant would be ready by the fourth quarter of 2010 to coincide with the start of oil production, that timeline is “unlikely,” Boateng said.
“Realistically, middle of 2011,” he said.
The Jubilee field’s producers, which also include Ghana National Petroleum, Kosmos Energy LLC and Anadarko Petroleum Corp., plan to invest $3.1 billion in the Jubilee project. In July, Tullow said the field will make Ghana one of the world’s top 50 oil producers.
‘Zero Gas Flaring’
Ghana will adopt “a policy of zero gas flaring,” Boateng said. If the plant isn’t ready by the time oil pumping begins, producers will store the gas until it can be used.
Ghana is also looking at expanding its domestic oil- refining capacity, Boateng said.
The state-owned Tema Oil Refinery Ltd., the country’s only refiner, can produce as much as 45,000 barrels of oil products per day for the domestic market. The government plans to expand that to 145,000 barrels a day by raising cash or bringing in a “strategic investor” for a joint venture, Boateng said.
Ghana may also “build a completely new refinery,” he said, without providing further details.
Separately, two foreign companies have submitted bids to build export-focused refineries in the Western region, Boateng said. He didn’t elaborate.
To contact the reporter on this story: Emily Bowers in Accra at ebowers1@bloomberg.net.
Last Updated: August 13, 2009 03:32 EDT
Thursday, August 13, 2009
Natural Gas Sellers Under Watch
UNG - Natural Gas and Oil ETFs Testify at CFTC
US NAT GAS FD ETF
Rochester, NY 8/12/2009 12:47 PM GMT (TransWorldNews)
US NAT GAS FD ETF, UNG
http://WhisperFromWallStreet.com offers daily stock alerts to subscribers. Scroll to bottom of page to sign up for our free alerts newsletter.
The two major oil and natural gas-tracking ETFs remain under the microscope this week as the CFTC resumes its investigation about their role in the commodities markets run-up and the role speculators had, if any.
Wednesday, the chief investment officer of the popular United States Oil and the United States Natural Gas Fund will testify at a Commodity Futures Trading Commission hearing as part of the agency’s efforts to curb speculation.
About WhisperFromWallStreet.com
WhisperfromWallStreet.com is a FREE award winning newsletter that specializes in sending alerts to our subscribers on stocks we think are going to run, why we think so, as well as teaching you how to become a better trader. We scan hundreds of stocks a day to find those that meet our criteria and when we find one, we send you an alert.
Sign up for our FREE alerts newsletter at WhisperfromWallStreet.com
Disclaimer: Full disclaimer at http://whisperfromwallstreet.com/disclaimer.php
IMPORTANT: Never invest in any stock featured in any press release, email or website unless you can afford the loss of your entire investment. Stocks and particularly penny stocks have the possibility for dramatic gains, and also losses.Neither WhisperFromWallStreet, nor any of its affiliates are registered investment advisors or broker dealers.
http://WhisperFromWallStreet.com offers daily stock alerts to subscribers. Scroll to bottom of page to sign up for our free alerts newsletter.
US NAT GAS FD ETF
Rochester, NY 8/12/2009 12:47 PM GMT (TransWorldNews)
US NAT GAS FD ETF, UNG
http://WhisperFromWallStreet.com offers daily stock alerts to subscribers. Scroll to bottom of page to sign up for our free alerts newsletter.
The two major oil and natural gas-tracking ETFs remain under the microscope this week as the CFTC resumes its investigation about their role in the commodities markets run-up and the role speculators had, if any.
Wednesday, the chief investment officer of the popular United States Oil and the United States Natural Gas Fund will testify at a Commodity Futures Trading Commission hearing as part of the agency’s efforts to curb speculation.
About WhisperFromWallStreet.com
WhisperfromWallStreet.com is a FREE award winning newsletter that specializes in sending alerts to our subscribers on stocks we think are going to run, why we think so, as well as teaching you how to become a better trader. We scan hundreds of stocks a day to find those that meet our criteria and when we find one, we send you an alert.
Sign up for our FREE alerts newsletter at WhisperfromWallStreet.com
Disclaimer: Full disclaimer at http://whisperfromwallstreet.com/disclaimer.php
IMPORTANT: Never invest in any stock featured in any press release, email or website unless you can afford the loss of your entire investment. Stocks and particularly penny stocks have the possibility for dramatic gains, and also losses.Neither WhisperFromWallStreet, nor any of its affiliates are registered investment advisors or broker dealers.
http://WhisperFromWallStreet.com offers daily stock alerts to subscribers. Scroll to bottom of page to sign up for our free alerts newsletter.
Wednesday, August 12, 2009
EIA Predicts Higher Natural Gas Prices for 2010
NEW YORK, Aug 11 (Reuters) - The U.S. Energy Information Administration said Tuesday it expected domestic natural gas consumption in 2009 to drop 2.6 percent from 2008 levels, primarily due to a sharp drop in industrial activity.
In its August Short-Term Energy Outlook, EIA said domestic gas consumption this year will average about 61.76 billion cubic feet per day, down from 63.41 bcf daily in 2008.
EIA said natural gas prices this year have fallen to the point where gas has been competing against coal for a share of baseload generation, leading to an expected 2 percent demand gain this year from the electric power sector,
But the severe economic contraction this year has sharply cut usage in other sectors, primarily from industry where demand is expected to decline 8.6 percent this year.
EIA said improved economic conditions in 2010 should lead to a 0.5 percent increase in overall gas consumption, with the residential, commercial and industrial sectors all gaining.
Higher gas prices in 2010, expected to rise 40 percent to $5.48 per thousand cubic feet, will likely lead to a slight decline in consumption from the electric power sector.
EIA forecast U.S. marketed natural gas production this year will be nearly flat from 2008 at about 58.65 billion cubic feet per day, but that estimate is up from last month's forecast of about 58.23 bcf daily.
EIA said the low price environment has brought about a significant pullback in drilling activity that has slowed marketed gas production in recent months.
EIA also said it expected production to drop in 2010 despite a pickup in drilling, declining 2.8 percent to 56.98 bcf per day. (Reporting by Joe Silha; Editing by Lisa Shumaker)
In its August Short-Term Energy Outlook, EIA said domestic gas consumption this year will average about 61.76 billion cubic feet per day, down from 63.41 bcf daily in 2008.
EIA said natural gas prices this year have fallen to the point where gas has been competing against coal for a share of baseload generation, leading to an expected 2 percent demand gain this year from the electric power sector,
But the severe economic contraction this year has sharply cut usage in other sectors, primarily from industry where demand is expected to decline 8.6 percent this year.
EIA said improved economic conditions in 2010 should lead to a 0.5 percent increase in overall gas consumption, with the residential, commercial and industrial sectors all gaining.
Higher gas prices in 2010, expected to rise 40 percent to $5.48 per thousand cubic feet, will likely lead to a slight decline in consumption from the electric power sector.
EIA forecast U.S. marketed natural gas production this year will be nearly flat from 2008 at about 58.65 billion cubic feet per day, but that estimate is up from last month's forecast of about 58.23 bcf daily.
EIA said the low price environment has brought about a significant pullback in drilling activity that has slowed marketed gas production in recent months.
EIA also said it expected production to drop in 2010 despite a pickup in drilling, declining 2.8 percent to 56.98 bcf per day. (Reporting by Joe Silha; Editing by Lisa Shumaker)
Tuesday, August 11, 2009
Natural Gas & Water for Shale Exploration
http://www.examiner.com/x-2903-Energy-Examiner~y2009m8d10-Natural-gas-not-so-sustainable
August 10, 3:46 PMEnergy ExaminerJohn Guerrerio
Eureka! This is the recent cry of Senators Reid and Pelosi, even Energy Secretary Chu referring to the potential of natural gas to solve America's energy crisis. They are specifically referring to shale-gas, which is stored in shale rock and is extracted using a process called hydraulic fracturing, or fracking. Deposits of the gas are strewn across the U.S., and domestic deposits have the potential to meet demand for the next 100 years.
At a recent clean energy summit in Las Vegas, Senator Reid declared his conversion to T. Boone's camp by saying that natural gas is a sensible alternative to coal for electricity generation. Nancy Pelosi went a step farther by saying natural gas was a practical alternative to fossil fuels; it should be noted that the Energy Information Administration's kid's page defines natural gas as a fossil fuel. Secretary Chu's approach seemed more sensible when he referred to the gas as a transition fuel to a transportation economy based on EVs running on biofuels.
Problem solved! No more oil imports; our cars will run on natural gas. No more dirty coal; we will generate electricity from clean natural gas. Energy independence and lower emissions, what more could we ask for from a natural resource?
John Podesta from the Center for American Progress makes the argument that the Clean Energy and Security Act that the House recently passed does not include enough incentives to expand natural gas use in our energy infrastructure. He outlines ways to expand the gas' use in the electricity and transportation sectors in great detail but only marginally addresses some of the major concerns that people who currently live near natural gas drilling sites experience on an ongoing basis.
Mr. Podesta acknowledges that natural gas drilling:
involves pumping water and other materials under high pressure deep into rock formations that hold gas. The process fractures the rock and holds open the fissures to allow the gas to flow to the surface more efficiently. This process can employ toxic chemicals such as benzene and has the potential to pollute deep aquifers, groundwater, and surface waters. Adjacent communities are concerned about the public health impacts from the use and release of toxic substances, both naturally occurring and those used in the natural gas production process such as benzene, formaldehyde, or radioactive materials. The process also yields significant amounts of air pollution. The gas production from the Barnett Shale in the five counties near Dallas-Fort Worth creates more emissions of smog-forming compounds than motor vehicles.
But his recommendation seems a bit misguided in addressing those issues:
As a first step, the EPA must undertake a comprehensive scientific analysis of the air, land, water, and global warming impacts from natural gas production, including a lifecycle greenhouse gas analysis. It should review the effectiveness of federal and state programs at protecting people, air, land, and water from gas production side effects. The EPA should also review new and emerging technologies to reduce this pollution. Medium and large natural gas producers should also publicly disclose the chemical constituents (but not the proprietary chemical formulas) used in natural gas production. This right to know requirement would enable communities and citizens to better know about the chemicals used and released near their homes.
You should read the full report HERE; I pulled the relevant quotes from the piece for brevity's sake. For a detailed analysis od Colorado's chemical injection status, check HERE. It makes no sense to expand these adverse health effects nationally, especially in light of skyrocketing healthcare costs. Denial of coverage based upon proximity to drill sites may become a possibility.
It does not appear that Mr. Podesta's plan addresses the number one concern regarding the expansion of natural gas drilling domestically, and that is the over 300 compound chemical cocktail that is injected into the ground to force the gas to the surface. (for a list of 54 known chemicals in the fracking fluids and their effects, check HERE). His suggestion of public disclosure by gas producers does not go far enough. So what if gas developers disclose the chemical cocktail that they use; they still inject it into the ground where it seeps into our domestic freshwater supply. Even if the fracking goes on far below the groundwater table level, the tailing ponds on the surface have the potential to leak topdown into the water supply. Look at the map below where they want to drill (click for enlargement):Do we really have the luxury of poisoning this much of our freshwater suply in the name of natural gas development? The question needs to be asked again: What do we value more, energy to run our machines or water to sustain human life?
Fracking processes are improving. There are best practices that use non-toxic cocktails, but these methods are employed in areas few and far between. Perhaps in the future, they will become standard.
What happens when the domestic natural gas wells run dry, though? Won't we simply be in the same position we find ourselves currently today? At least both Podesta and Chu refer to natural gas as a transition fuel (Pickens for that matter too), but our money, time, and effort could be better spent expanding clean energy in the form of wind, solar, biofuels, and geothermal as well as energy efficiency measures.
Drilling for more natural gas simply ruins more landscapes and runs the risk of poisoning our entire domestic freshwater supply. Is this the lowest level of risk our society can muster?
The following video from Investors Business Daily tries to pin the blame squarely on environmentalists for the delays in expansion of the natural gas industry, but the scope of the projects on the drilling bloc ought to give us pause before we run headstrong into converting our entire natural landscape into a natural gas extraction experiment.In addition to the shale gas, the video mentions oil shale. Like its convenient omission of the chemical cocktail (the main source of contention with environmentalists), the video omits the fact that extracting oil from oil shale requires more water than the Colorado River contains. Where will Las Vegas, Phoenix, Tucson, Los Angeles, San Diego, and other cities that rely on the river for drinking water get their life's sustenance? Do we really want to stripmine the Rocky Mountains in the same fashion that we have the Appalachian range?
Like with ethanol, the problem is not necessarily with the fuel itself; rather, it is the indirect effects from scaling up the processes to comercial size that creates side-effects that are detrimental to human existence. We ought to pause and ask ourselves if natural gas is really cleaner than biofuels in their current form.
August 10, 3:46 PMEnergy ExaminerJohn Guerrerio
Eureka! This is the recent cry of Senators Reid and Pelosi, even Energy Secretary Chu referring to the potential of natural gas to solve America's energy crisis. They are specifically referring to shale-gas, which is stored in shale rock and is extracted using a process called hydraulic fracturing, or fracking. Deposits of the gas are strewn across the U.S., and domestic deposits have the potential to meet demand for the next 100 years.
At a recent clean energy summit in Las Vegas, Senator Reid declared his conversion to T. Boone's camp by saying that natural gas is a sensible alternative to coal for electricity generation. Nancy Pelosi went a step farther by saying natural gas was a practical alternative to fossil fuels; it should be noted that the Energy Information Administration's kid's page defines natural gas as a fossil fuel. Secretary Chu's approach seemed more sensible when he referred to the gas as a transition fuel to a transportation economy based on EVs running on biofuels.
Problem solved! No more oil imports; our cars will run on natural gas. No more dirty coal; we will generate electricity from clean natural gas. Energy independence and lower emissions, what more could we ask for from a natural resource?
John Podesta from the Center for American Progress makes the argument that the Clean Energy and Security Act that the House recently passed does not include enough incentives to expand natural gas use in our energy infrastructure. He outlines ways to expand the gas' use in the electricity and transportation sectors in great detail but only marginally addresses some of the major concerns that people who currently live near natural gas drilling sites experience on an ongoing basis.
Mr. Podesta acknowledges that natural gas drilling:
involves pumping water and other materials under high pressure deep into rock formations that hold gas. The process fractures the rock and holds open the fissures to allow the gas to flow to the surface more efficiently. This process can employ toxic chemicals such as benzene and has the potential to pollute deep aquifers, groundwater, and surface waters. Adjacent communities are concerned about the public health impacts from the use and release of toxic substances, both naturally occurring and those used in the natural gas production process such as benzene, formaldehyde, or radioactive materials. The process also yields significant amounts of air pollution. The gas production from the Barnett Shale in the five counties near Dallas-Fort Worth creates more emissions of smog-forming compounds than motor vehicles.
But his recommendation seems a bit misguided in addressing those issues:
As a first step, the EPA must undertake a comprehensive scientific analysis of the air, land, water, and global warming impacts from natural gas production, including a lifecycle greenhouse gas analysis. It should review the effectiveness of federal and state programs at protecting people, air, land, and water from gas production side effects. The EPA should also review new and emerging technologies to reduce this pollution. Medium and large natural gas producers should also publicly disclose the chemical constituents (but not the proprietary chemical formulas) used in natural gas production. This right to know requirement would enable communities and citizens to better know about the chemicals used and released near their homes.
You should read the full report HERE; I pulled the relevant quotes from the piece for brevity's sake. For a detailed analysis od Colorado's chemical injection status, check HERE. It makes no sense to expand these adverse health effects nationally, especially in light of skyrocketing healthcare costs. Denial of coverage based upon proximity to drill sites may become a possibility.
It does not appear that Mr. Podesta's plan addresses the number one concern regarding the expansion of natural gas drilling domestically, and that is the over 300 compound chemical cocktail that is injected into the ground to force the gas to the surface. (for a list of 54 known chemicals in the fracking fluids and their effects, check HERE). His suggestion of public disclosure by gas producers does not go far enough. So what if gas developers disclose the chemical cocktail that they use; they still inject it into the ground where it seeps into our domestic freshwater supply. Even if the fracking goes on far below the groundwater table level, the tailing ponds on the surface have the potential to leak topdown into the water supply. Look at the map below where they want to drill (click for enlargement):Do we really have the luxury of poisoning this much of our freshwater suply in the name of natural gas development? The question needs to be asked again: What do we value more, energy to run our machines or water to sustain human life?
Fracking processes are improving. There are best practices that use non-toxic cocktails, but these methods are employed in areas few and far between. Perhaps in the future, they will become standard.
What happens when the domestic natural gas wells run dry, though? Won't we simply be in the same position we find ourselves currently today? At least both Podesta and Chu refer to natural gas as a transition fuel (Pickens for that matter too), but our money, time, and effort could be better spent expanding clean energy in the form of wind, solar, biofuels, and geothermal as well as energy efficiency measures.
Drilling for more natural gas simply ruins more landscapes and runs the risk of poisoning our entire domestic freshwater supply. Is this the lowest level of risk our society can muster?
The following video from Investors Business Daily tries to pin the blame squarely on environmentalists for the delays in expansion of the natural gas industry, but the scope of the projects on the drilling bloc ought to give us pause before we run headstrong into converting our entire natural landscape into a natural gas extraction experiment.In addition to the shale gas, the video mentions oil shale. Like its convenient omission of the chemical cocktail (the main source of contention with environmentalists), the video omits the fact that extracting oil from oil shale requires more water than the Colorado River contains. Where will Las Vegas, Phoenix, Tucson, Los Angeles, San Diego, and other cities that rely on the river for drinking water get their life's sustenance? Do we really want to stripmine the Rocky Mountains in the same fashion that we have the Appalachian range?
Like with ethanol, the problem is not necessarily with the fuel itself; rather, it is the indirect effects from scaling up the processes to comercial size that creates side-effects that are detrimental to human existence. We ought to pause and ask ourselves if natural gas is really cleaner than biofuels in their current form.
Monday, August 10, 2009
Liquid Natural Gas to China
http://www.rttnews.com/ArticleView.aspx?Id=1033465
(RTTNews) - Sunday, according to The Wall Street Journal, oil and gas company Apache Corp. (APA: News ) has agreed to provide natural gas to Canadian firm Kitimat LNG Inc. for export to Asia through Kitimat's proposed liquefied-natural-gas or LNG export terminal in Kitimat, British Columbia. The construction of the $3-billion LNG export facility is set to begin in late 2009 or early 2010, with the LNG facility coming into operation 36 to 40 months later by 2013 or 2014. The companies are expected to announce an agreement on Monday.
Privately-owned Calgary-based Kitimat LNG is committed to build a state-of-the-art LNG terminal in Kitimat that would transport natural gas via a pipeline from the Western Canadian Sedimentary Basin to the Kitimat LNG Terminal, where the natural gas will be cooled to -160 degrees centigrade, condensed and liquefied in preparation for export via ship to Asian markets. In Asia, the LNG will undergo a regasification process and be transported through pipelines to its final destination.
Pursuant to an agreement, Kitimat LNG and Houston, Texas-based Apache would negotiate a definitive agreement under which Apache would supply specific quantities of the LNG facility's 700 million cubic feet per day of natural gas feedstock. In mid-July, EOG Resources, Inc. (EOG) also signed a memorandum of understanding or MOU, to supply natural gas to Kitimat LNG's proposed LNG export terminal.
In a statement while signing the EOG agreement, President of Kitimat LNG Rosemary Boulton said, "Kitimat LNG presents a compelling opportunity for producers to leverage growing natural gas reserves in Western Canada and sell into significant new international markets such as Asia."
(RTTNews) - Sunday, according to The Wall Street Journal, oil and gas company Apache Corp. (APA: News ) has agreed to provide natural gas to Canadian firm Kitimat LNG Inc. for export to Asia through Kitimat's proposed liquefied-natural-gas or LNG export terminal in Kitimat, British Columbia. The construction of the $3-billion LNG export facility is set to begin in late 2009 or early 2010, with the LNG facility coming into operation 36 to 40 months later by 2013 or 2014. The companies are expected to announce an agreement on Monday.
Privately-owned Calgary-based Kitimat LNG is committed to build a state-of-the-art LNG terminal in Kitimat that would transport natural gas via a pipeline from the Western Canadian Sedimentary Basin to the Kitimat LNG Terminal, where the natural gas will be cooled to -160 degrees centigrade, condensed and liquefied in preparation for export via ship to Asian markets. In Asia, the LNG will undergo a regasification process and be transported through pipelines to its final destination.
Pursuant to an agreement, Kitimat LNG and Houston, Texas-based Apache would negotiate a definitive agreement under which Apache would supply specific quantities of the LNG facility's 700 million cubic feet per day of natural gas feedstock. In mid-July, EOG Resources, Inc. (EOG) also signed a memorandum of understanding or MOU, to supply natural gas to Kitimat LNG's proposed LNG export terminal.
In a statement while signing the EOG agreement, President of Kitimat LNG Rosemary Boulton said, "Kitimat LNG presents a compelling opportunity for producers to leverage growing natural gas reserves in Western Canada and sell into significant new international markets such as Asia."
Sunday, August 9, 2009
Marcellus Shale Natural Gas Coming from EOG
HOUSTON (Dow Jones)--Although EOG Resources Inc. (EOG) is increasingly seeking opportunities in oil, the company still believes that the North American natural gas market, hard-hit by low demand, has a profitable future, Chief Executive officer Mark Papa said Friday.
"We're making this shift because of the unique early mover opportunities" Papa said during an earnings conference call with analysts. "Not because we're running away from natural gas."
"We're bullish regarding 2010 and 2011 North American gas," Papa added.
Papa said that he expects the gas market to turn sometime in early 2010, regardless of what happens to the supply of liquefied natural gas, as production from vertical gas wells in Texas drops. Prices, however, will remain "quite low" through the end of 2009, he said.
The Houston-based independent oil and gas producer expects to begin its first gas sales from the Marcellus shale to begin in the fourth quarter, Papa said. The company added 1 rig to its operations there. The Marcellus shale is a gas-rich rock formation in the eastern U.S.
-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214;angel.gonzalez@dowjones.com
"We're making this shift because of the unique early mover opportunities" Papa said during an earnings conference call with analysts. "Not because we're running away from natural gas."
"We're bullish regarding 2010 and 2011 North American gas," Papa added.
Papa said that he expects the gas market to turn sometime in early 2010, regardless of what happens to the supply of liquefied natural gas, as production from vertical gas wells in Texas drops. Prices, however, will remain "quite low" through the end of 2009, he said.
The Houston-based independent oil and gas producer expects to begin its first gas sales from the Marcellus shale to begin in the fourth quarter, Papa said. The company added 1 rig to its operations there. The Marcellus shale is a gas-rich rock formation in the eastern U.S.
-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214;angel.gonzalez@dowjones.com
Saturday, August 8, 2009
India Natural Gas Looking for Partners in New Bids
By Paresh Jatakia
Aug. 8 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest state-run explorer, is looking for strategic partners to bid for the country’s biggest auction of oil and gas fields, Chairman R.S. Sharma said.
The company “looks forward” to partnering with other companies, Sharma said at an event organized in Mumbai today by the Petroleum Ministry to attract bidders for the 70 oil and gas areas it is offering to domestic and overseas companies to help increase local output and reduce dependence on imports.
To contact the reporter on this story: Paresh Jatakia in Mumbai at pareshj@bloomberg.net
Aug. 8 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest state-run explorer, is looking for strategic partners to bid for the country’s biggest auction of oil and gas fields, Chairman R.S. Sharma said.
The company “looks forward” to partnering with other companies, Sharma said at an event organized in Mumbai today by the Petroleum Ministry to attract bidders for the 70 oil and gas areas it is offering to domestic and overseas companies to help increase local output and reduce dependence on imports.
To contact the reporter on this story: Paresh Jatakia in Mumbai at pareshj@bloomberg.net
Natural Gas Find in Angola
http://www.reuters.com/article/OILPRD/idUSN0738791020090807
Test well located near Cabinda coastline
* Well flows at 11.6 mln cf of gas, 2,550 bpd oil
* Chevron shares dip
(Adds background on Angola, share price)
NEW YORK, Aug 7 (Reuters) - Chevron Corp (CVX.N) said on Friday it made an oil and natural gas discovery near the Cabinda coast of Angola, expanding its portfolio in the West African nation.
Chevron, which pumps more than 500,000 barrels of oil per day from Angola, said the discovery, in Block 0, was drilled in March in 397 feet (120 meters) of water to a total vertical depth of 13,000 feet (3965 meters). It encountered over 225 feet of net hydrocarbon pay in the Upper Pinda formation, Chevron said.
It said the 79-3XST1 discovery well had a flow rate of 11.6 million cubic feet of natural gas and 2,550 barrels of liquid hydrocarbons per day.
Chevron, through its local affiliate Cabinda Gulf Oil Co Ltd (CABGOC), has a 39.2 percent interest and is the operator of the Block 0 contractor group. Angolan state oil company Sonangol has a 41 percent stake, and affiliates of France's Total SA (TOTF.PA) and Italy's ENI SpA (ENI.MI) have 10 percent and 9.8 percent respectively.
Last month, Chevron said CABGOC had begun production at the Mafumerira Norte project ahead of schedule in the same production block. That project will eventually consist of 14 wells and reach a total production of 30,000 barrels per day of crude and 30 million cubic feet of natural gas per day in 2011.
Chevron is also drilling in the Banzala Field in the block, as well as the Nemba and Kokongo fields.
The San Ramon, California-based company is also 31 percent owner and the operator of a deepwater concession which produced a total of 168,000 barrels of crude liquids last year.
It is expecting first oil from its Tombua-Landana development in Angola in the third quarter, and is also drilling at fields in the Benguela Belize-Lobito Tomboco project.
Shares in Chevron dipped 5 cents to $69.20 per share in morning trade on the New York Stock Exchange. (Reporting by Steve James, editing by Gerald E. McCormick)
Test well located near Cabinda coastline
* Well flows at 11.6 mln cf of gas, 2,550 bpd oil
* Chevron shares dip
(Adds background on Angola, share price)
NEW YORK, Aug 7 (Reuters) - Chevron Corp (CVX.N) said on Friday it made an oil and natural gas discovery near the Cabinda coast of Angola, expanding its portfolio in the West African nation.
Chevron, which pumps more than 500,000 barrels of oil per day from Angola, said the discovery, in Block 0, was drilled in March in 397 feet (120 meters) of water to a total vertical depth of 13,000 feet (3965 meters). It encountered over 225 feet of net hydrocarbon pay in the Upper Pinda formation, Chevron said.
It said the 79-3XST1 discovery well had a flow rate of 11.6 million cubic feet of natural gas and 2,550 barrels of liquid hydrocarbons per day.
Chevron, through its local affiliate Cabinda Gulf Oil Co Ltd (CABGOC), has a 39.2 percent interest and is the operator of the Block 0 contractor group. Angolan state oil company Sonangol has a 41 percent stake, and affiliates of France's Total SA (TOTF.PA) and Italy's ENI SpA (ENI.MI) have 10 percent and 9.8 percent respectively.
Last month, Chevron said CABGOC had begun production at the Mafumerira Norte project ahead of schedule in the same production block. That project will eventually consist of 14 wells and reach a total production of 30,000 barrels per day of crude and 30 million cubic feet of natural gas per day in 2011.
Chevron is also drilling in the Banzala Field in the block, as well as the Nemba and Kokongo fields.
The San Ramon, California-based company is also 31 percent owner and the operator of a deepwater concession which produced a total of 168,000 barrels of crude liquids last year.
It is expecting first oil from its Tombua-Landana development in Angola in the third quarter, and is also drilling at fields in the Benguela Belize-Lobito Tomboco project.
Shares in Chevron dipped 5 cents to $69.20 per share in morning trade on the New York Stock Exchange. (Reporting by Steve James, editing by Gerald E. McCormick)
Friday, August 7, 2009
Natural Gas Down Again Tday
By Reg Curren
Aug. 6 (Bloomberg) -- Natural gas futures fell the most in two months after a government report showed a bigger-than- estimated increase in U.S. stockpiles.
Supplies in storage gained 66 billion cubic feet in the week ended July 31 to 3.089 trillion cubic feet, the Energy Department said. Analysts forecast a gain of 61 billion. The total was a record for late July, based on weekly department data going back to 1994.
“We have a lot of supply and it really weighs on the market,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is also a little firmer, so with the bearish storage report, natural gas is having a tough time hanging on.”
Natural gas for September delivery fell 29.9 cents, or 7.4 percent, to settle at $3.743 per million British thermal units at 2:58 p.m. on the New York Mercantile Exchange, the biggest one-day decline since June 3. Gas has dropped 33 percent this year.
A stronger dollar makes commodities less attractive to some investors, prompting them to sell holdings of natural gas, oil and metals.
Stockpiles were 19 percent higher than the five-year average last week. The average supply increase for the week over the past five years is 48 billion cubic feet, according to department data.
The shutting of a Gulf of Mexico pipeline by Enterprise Products Partners LP propelled prices higher yesterday, Flynn said. Gas has risen 2.5 percent this week.
“Even with these outages, it’s just another reminder that we have a lot of supply,” he said.
Stockpile Glut
A glut of gas in storage may persist longer than anticipated as some of the largest U.S. natural gas producers increase output.
XTO Energy Inc. and Devon Energy Corp., two of the five largest producers of U.S. gas, yesterday reported record output and smaller declines in earnings than analysts estimated. Anadarko Petroleum Corp., London-based BP Plc and Chesapeake Energy Corp. previously reported second-quarter output gains that helped them beat estimates.
“Collectively, we are seeing signs of production declining, but it’s very surprising it’s not coming down as fast as people thought it would,” said Fadel Gheit, director of oil and gas research at Oppenheimer & Co. in New York. “There is light at the end of the tunnel, though this tunnel isn’t a week long or a month long, it’s six months or it could be longer.”
A possible surge in imports of liquefied natural gas, or LNG, later this summer is also weighing on New York futures, Gheit said. Lower demand for the liquefied fuel in Asia, combined with increased output from the Middle East, may push shipments to the U.S., he said.
LNG Imports
LNG imports may rise 44 percent this year to 506 billion cubic feet as world production climbs, the Energy Department said in a forecast last month.
The National Oceanic and Atmospheric Administration today cut the number of Atlantic hurricanes it expects this year to a range of three to six of the storms.
In May, NOAA predicted a “near-normal” 2009 Atlantic season, with four to seven hurricanes, out of a range of nine to 14 named Atlantic storms it expected at the time. The agency now forecasts seven to 11 named storms.
The Atlantic has yet to produce a named storm this season, which runs from June 1 to Nov. 30. This is the longest the Atlantic has gone without a named storm since 1988.
A reduced risk of hurricanes lessens the chance that oil and gas production will be disrupted at offshore platforms in the Gulf of Mexico.
Demand Outlook
Demand for natural gas may lag behind the overall recovery in the U.S. economy next year, Biliana Pehlivanova and Michael Zenker, analysts at Barclays Capital said in a report on Aug. 4.
Barclays Capital forecasts the U.S. economy will expand 2.9 percent next year. Prospects for gas-intensive industries of chemicals, petroleum, coal products, primary metals and food industries, which account for 65 percent of demand, “are more muted,” the report said.
Industrial demand should rise 1.9 percent to 16.9 billion cubic feet a day in 2010, the analysts said.
Overall U.S. gas consumption may contract by 2.3 percent this year as the recession that began in December 2007 cuts demand, the Energy Department said on July 7. Gas demand at factories is forecast to tumble 8.2 percent.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Aug. 6 (Bloomberg) -- Natural gas futures fell the most in two months after a government report showed a bigger-than- estimated increase in U.S. stockpiles.
Supplies in storage gained 66 billion cubic feet in the week ended July 31 to 3.089 trillion cubic feet, the Energy Department said. Analysts forecast a gain of 61 billion. The total was a record for late July, based on weekly department data going back to 1994.
“We have a lot of supply and it really weighs on the market,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is also a little firmer, so with the bearish storage report, natural gas is having a tough time hanging on.”
Natural gas for September delivery fell 29.9 cents, or 7.4 percent, to settle at $3.743 per million British thermal units at 2:58 p.m. on the New York Mercantile Exchange, the biggest one-day decline since June 3. Gas has dropped 33 percent this year.
A stronger dollar makes commodities less attractive to some investors, prompting them to sell holdings of natural gas, oil and metals.
Stockpiles were 19 percent higher than the five-year average last week. The average supply increase for the week over the past five years is 48 billion cubic feet, according to department data.
The shutting of a Gulf of Mexico pipeline by Enterprise Products Partners LP propelled prices higher yesterday, Flynn said. Gas has risen 2.5 percent this week.
“Even with these outages, it’s just another reminder that we have a lot of supply,” he said.
Stockpile Glut
A glut of gas in storage may persist longer than anticipated as some of the largest U.S. natural gas producers increase output.
XTO Energy Inc. and Devon Energy Corp., two of the five largest producers of U.S. gas, yesterday reported record output and smaller declines in earnings than analysts estimated. Anadarko Petroleum Corp., London-based BP Plc and Chesapeake Energy Corp. previously reported second-quarter output gains that helped them beat estimates.
“Collectively, we are seeing signs of production declining, but it’s very surprising it’s not coming down as fast as people thought it would,” said Fadel Gheit, director of oil and gas research at Oppenheimer & Co. in New York. “There is light at the end of the tunnel, though this tunnel isn’t a week long or a month long, it’s six months or it could be longer.”
A possible surge in imports of liquefied natural gas, or LNG, later this summer is also weighing on New York futures, Gheit said. Lower demand for the liquefied fuel in Asia, combined with increased output from the Middle East, may push shipments to the U.S., he said.
LNG Imports
LNG imports may rise 44 percent this year to 506 billion cubic feet as world production climbs, the Energy Department said in a forecast last month.
The National Oceanic and Atmospheric Administration today cut the number of Atlantic hurricanes it expects this year to a range of three to six of the storms.
In May, NOAA predicted a “near-normal” 2009 Atlantic season, with four to seven hurricanes, out of a range of nine to 14 named Atlantic storms it expected at the time. The agency now forecasts seven to 11 named storms.
The Atlantic has yet to produce a named storm this season, which runs from June 1 to Nov. 30. This is the longest the Atlantic has gone without a named storm since 1988.
A reduced risk of hurricanes lessens the chance that oil and gas production will be disrupted at offshore platforms in the Gulf of Mexico.
Demand Outlook
Demand for natural gas may lag behind the overall recovery in the U.S. economy next year, Biliana Pehlivanova and Michael Zenker, analysts at Barclays Capital said in a report on Aug. 4.
Barclays Capital forecasts the U.S. economy will expand 2.9 percent next year. Prospects for gas-intensive industries of chemicals, petroleum, coal products, primary metals and food industries, which account for 65 percent of demand, “are more muted,” the report said.
Industrial demand should rise 1.9 percent to 16.9 billion cubic feet a day in 2010, the analysts said.
Overall U.S. gas consumption may contract by 2.3 percent this year as the recession that began in December 2007 cuts demand, the Energy Department said on July 7. Gas demand at factories is forecast to tumble 8.2 percent.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Thursday, August 6, 2009
Natural Gas Cost of Operations Down
http://www.reuters.com/article/marketsNews/idUSBNG49811120090805
BANGALORE, Aug 5 (Reuters) - Oil and gas companies Goodrich Petroleum Corp (GDP.N), Brigham Exploration and Production Co (BEXP.O) and Penn Virginia Corp (PVA.N) reported quarterly losses, as commodity prices fell, but forecast a strong second half citing lower costs and rising production.
Demand for oil and natural gas has been hurt by the global economic slowdown. Growing stockpiles pulled down crude prices more than 50 percent in the second quarter from year-ago levels, while natural gas prices fell 65 percent.
Lower commodity prices have also brought down the cost to drill wells, allowing producers to get more for their money, boosting many exploration and production companies' quarterly results.
Earlier on Wednesday, Petroquest Energy Corp (PQ.N), Devon Energy Corp (DVN.N) and XTO Energy Inc (XTO.N) reported better-than-expected results and said they benefited from lower costs.
"One of the overarching themes that we have seen pretty much across the board as companies have reported is that they are simply getting more for less," Natixis Bleichroeder analyst Curtis Trimble said.
"Not only do you have a cost function that's stretching your dollars further, but also on the production side, the companies are simply getting more out of their wells due to refined completion programs, as compared to previous periods," he added.
Trimble said costs would decline further and might not pick up with the increased drilling activity.
"Outside a couple of localised instances, we won't see increases in service or equipment costs anytime soon," he said.
PRODUCTION VOLUMES UP
Penn Virginia, which reported an adjusted loss of 14 cents a share, compared with analysts' view of a loss of 13 cents a share, said its quarterly expenses fell 21 percent to $200.4 million. Net production volumes increased by 19 percent. [ID:nWNBB9962]
"As a result of our strong second quarter and first half results, we have kept our production guidance unchanged, with slight year-over-year production growth in 2009," company Chief Executive James Dearlove said in a statement. Goodrich Petroleum posted a narrower second quarter loss of $1.02 per share, as production volumes rose 22 percent and lease operating expenses per thousand cubic feet equivalent (mcfe) fell 25 percent. [ID:nWNBB9989].
The company forecast third-quarter average daily production of between 78,000 and 82,000 mcfe.
Brigham Exploration forecast third-quarter average production of 4,667 barrels of oil equivalent per day (boed) to 5,167 boed.
The company, which reported a 28 percent rise in quarterly oil production, expects oil to comprise about half of total third-quarter production.
For the latest second quarter, the company posted an adjusted loss of 5 cents a share, a cent narrower than Street estimates. [ID:nWNBB0104]
Shares of Brigham Exploration closed down 3 percent at $5.28 Wednesday on Nasdaq. Goodrich shares closed down 4 percent at $26.38, while Penn Virginia stock closed down 14 cents at $20.27 on the New York Stock Exchange. (Editing by Pradeep Kurup)
BANGALORE, Aug 5 (Reuters) - Oil and gas companies Goodrich Petroleum Corp (GDP.N), Brigham Exploration and Production Co (BEXP.O) and Penn Virginia Corp (PVA.N) reported quarterly losses, as commodity prices fell, but forecast a strong second half citing lower costs and rising production.
Demand for oil and natural gas has been hurt by the global economic slowdown. Growing stockpiles pulled down crude prices more than 50 percent in the second quarter from year-ago levels, while natural gas prices fell 65 percent.
Lower commodity prices have also brought down the cost to drill wells, allowing producers to get more for their money, boosting many exploration and production companies' quarterly results.
Earlier on Wednesday, Petroquest Energy Corp (PQ.N), Devon Energy Corp (DVN.N) and XTO Energy Inc (XTO.N) reported better-than-expected results and said they benefited from lower costs.
"One of the overarching themes that we have seen pretty much across the board as companies have reported is that they are simply getting more for less," Natixis Bleichroeder analyst Curtis Trimble said.
"Not only do you have a cost function that's stretching your dollars further, but also on the production side, the companies are simply getting more out of their wells due to refined completion programs, as compared to previous periods," he added.
Trimble said costs would decline further and might not pick up with the increased drilling activity.
"Outside a couple of localised instances, we won't see increases in service or equipment costs anytime soon," he said.
PRODUCTION VOLUMES UP
Penn Virginia, which reported an adjusted loss of 14 cents a share, compared with analysts' view of a loss of 13 cents a share, said its quarterly expenses fell 21 percent to $200.4 million. Net production volumes increased by 19 percent. [ID:nWNBB9962]
"As a result of our strong second quarter and first half results, we have kept our production guidance unchanged, with slight year-over-year production growth in 2009," company Chief Executive James Dearlove said in a statement. Goodrich Petroleum posted a narrower second quarter loss of $1.02 per share, as production volumes rose 22 percent and lease operating expenses per thousand cubic feet equivalent (mcfe) fell 25 percent. [ID:nWNBB9989].
The company forecast third-quarter average daily production of between 78,000 and 82,000 mcfe.
Brigham Exploration forecast third-quarter average production of 4,667 barrels of oil equivalent per day (boed) to 5,167 boed.
The company, which reported a 28 percent rise in quarterly oil production, expects oil to comprise about half of total third-quarter production.
For the latest second quarter, the company posted an adjusted loss of 5 cents a share, a cent narrower than Street estimates. [ID:nWNBB0104]
Shares of Brigham Exploration closed down 3 percent at $5.28 Wednesday on Nasdaq. Goodrich shares closed down 4 percent at $26.38, while Penn Virginia stock closed down 14 cents at $20.27 on the New York Stock Exchange. (Editing by Pradeep Kurup)
Wednesday, August 5, 2009
Marcellus Shale Natural Gas Profitable at $2.50/MMBTU
http://www.reuters.com/article/rbssEnergyNews/idUSN0411864720090804
By Anna Driver
HOUSTON, Aug 4 (Reuters) - The global recession and low energy prices put the brakes on a lot natural gas exploration, but Anadarko Petroleum Corp (APC.N) and Chesapeake Energy Corp (CHK.N) are sinking dollars into the Marcellus shale, the companies said on Tuesday.
The Marcellus shale, located in the northeastern U.S. in parts of Pennsylvania, New York and West Virginia, is said to contain enough natural gas trapped in rock to meet U.S. needs for a decade or more.
"Early success from our Marcellus activities indicates this play possesses some of the most compelling economics in our onshore portfolio," Anadarko Chief Executive Jim Hackett told investors on the company's second-quarter earnings conference call.
At a time when U.S. rig counts have dropped near seven-year lows as weak demand depresses gas prices, Anadarko said it expected to have an interest in as many as 14 rigs in the Marcellus by the end of 2009.
Anadarko estimates each Marcellus well holds 3 billion to 6 billion cubic feet of recoverable natural gas that can be produced, even with New York Mercantile Exchange gas futures prices as low as $2.50 per million British thermal units.
Shale gas once was too expensive to produce, but advances in technology and last year's record natural gas prices prompted exploration and production companies, both large and small, to lock up as much acreage as possible.
Chesapeake, a natural gas producer based in Oklahoma City, said it was hiking its 2009 drilling budget by $300 million to as much as $3.2 billion, and some of that money is earmarked for its acreage in the Marcellus.
Chesapeake has about 1.3 million acres in the Marcellus, where it has a joint venture with Norway's StatoilHydro (STL.OL).
U.S. oil major Exxon Mobil Corp (XOM.N) has about 20,000 acres in the Marcellus. The company told investors on its earnings call that it was evaluating new areas in the field.
Both Chesapeake and Anadarko reported better-than-expected results on Monday after the close of regular trading.
On Tuesday, shares of Chesapeake climbed 5.1 percent to $23.49 on the New York Stock Exchange, while Anadarko rose 2.2 percent to $50.71. (Reporting by Anna Driver; Editing by Lisa Von Ahn)
By Anna Driver
HOUSTON, Aug 4 (Reuters) - The global recession and low energy prices put the brakes on a lot natural gas exploration, but Anadarko Petroleum Corp (APC.N) and Chesapeake Energy Corp (CHK.N) are sinking dollars into the Marcellus shale, the companies said on Tuesday.
The Marcellus shale, located in the northeastern U.S. in parts of Pennsylvania, New York and West Virginia, is said to contain enough natural gas trapped in rock to meet U.S. needs for a decade or more.
"Early success from our Marcellus activities indicates this play possesses some of the most compelling economics in our onshore portfolio," Anadarko Chief Executive Jim Hackett told investors on the company's second-quarter earnings conference call.
At a time when U.S. rig counts have dropped near seven-year lows as weak demand depresses gas prices, Anadarko said it expected to have an interest in as many as 14 rigs in the Marcellus by the end of 2009.
Anadarko estimates each Marcellus well holds 3 billion to 6 billion cubic feet of recoverable natural gas that can be produced, even with New York Mercantile Exchange gas futures prices as low as $2.50 per million British thermal units.
Shale gas once was too expensive to produce, but advances in technology and last year's record natural gas prices prompted exploration and production companies, both large and small, to lock up as much acreage as possible.
Chesapeake, a natural gas producer based in Oklahoma City, said it was hiking its 2009 drilling budget by $300 million to as much as $3.2 billion, and some of that money is earmarked for its acreage in the Marcellus.
Chesapeake has about 1.3 million acres in the Marcellus, where it has a joint venture with Norway's StatoilHydro (STL.OL).
U.S. oil major Exxon Mobil Corp (XOM.N) has about 20,000 acres in the Marcellus. The company told investors on its earnings call that it was evaluating new areas in the field.
Both Chesapeake and Anadarko reported better-than-expected results on Monday after the close of regular trading.
On Tuesday, shares of Chesapeake climbed 5.1 percent to $23.49 on the New York Stock Exchange, while Anadarko rose 2.2 percent to $50.71. (Reporting by Anna Driver; Editing by Lisa Von Ahn)
Tuesday, August 4, 2009
Ukraine Natural Gas Gets Loan from EBRD Investment Bank
http://www.upi.com/Energy_Resources/2009/08/03/Global-funds-set-to-aid-Ukraines-gas-debt/UPI-23171249320108/
KIEV, Ukraine, Aug. 3 (UPI) -- Ukraine will receive $1.7 billion in international loans to help finance reforms for its national gas sector while covering natural gas purchases from Russia.
The European Commission reached an agreement on Friday with Kiev to move forward with an economic rescue package to help the country cover its natural gas debt in exchange for a variety of reforms.
The European Bank for Reconstruction and Development, the European Investment Bank and the World Bank agreed to disburse the loans, with at least $300 million set aside for natural gas payments to Russia, RIA Novosti reports.
Last week, the executive board of the International Monetary Fund approved the immediate release of more than $3 billion in response to a financial crisis in Ukraine, hit particularly hard by the global economic recession.
As much as 80 percent of all Russian gas bound for Europe travels through Soviet-era pipelines in Ukraine, prompting Europe to push Kiev to modernize its national infrastructure.
A January row between Kiev and Moscow over gas debts and contracts prompted Russian energy giant Gazprom to cut supplies to Ukraine, leaving European customers in the cold for weeks.
The contract settling that dispute obligates Ukraine to a set volume of gas purchases and payment of gas debts to Russia by the seventh of each month.
Ukraine has struggled with its monthly gas payments nearly every month since January, putting Europe on edge.
KIEV, Ukraine, Aug. 3 (UPI) -- Ukraine will receive $1.7 billion in international loans to help finance reforms for its national gas sector while covering natural gas purchases from Russia.
The European Commission reached an agreement on Friday with Kiev to move forward with an economic rescue package to help the country cover its natural gas debt in exchange for a variety of reforms.
The European Bank for Reconstruction and Development, the European Investment Bank and the World Bank agreed to disburse the loans, with at least $300 million set aside for natural gas payments to Russia, RIA Novosti reports.
Last week, the executive board of the International Monetary Fund approved the immediate release of more than $3 billion in response to a financial crisis in Ukraine, hit particularly hard by the global economic recession.
As much as 80 percent of all Russian gas bound for Europe travels through Soviet-era pipelines in Ukraine, prompting Europe to push Kiev to modernize its national infrastructure.
A January row between Kiev and Moscow over gas debts and contracts prompted Russian energy giant Gazprom to cut supplies to Ukraine, leaving European customers in the cold for weeks.
The contract settling that dispute obligates Ukraine to a set volume of gas purchases and payment of gas debts to Russia by the seventh of each month.
Ukraine has struggled with its monthly gas payments nearly every month since January, putting Europe on edge.
Monday, August 3, 2009
Natural Gas Plant for the East Coast
http://www.boston.com/business/articles/2009/07/31/natural_gas_plant_gets_initial_approval/
A state board yesterday approved plans to build a natural gas plant in Brockton, but left local officials with the power to veto the plant’s construction by choosing whether to grant the zoning exemptions needed to build the 350-megawatt facility.
The state Energy Facilities Siting Board, a division of the Massachusetts Department of Public Utilities, did not grant the exemptions because it “concluded that the proposed project’s environmental and energy supply benefits do not outweigh expected local impacts,’’ according to a statement.
The $350 million plant, which would be fueled with natural gas and ultra-low sulfur diesel, has been under fire from some residents concerned about health and safety.
If approved by Brockton officials, the plant’s developer would still need to take several steps required by the state, including drawing up a plan to conserve water resources and limiting weekend construction hours.
The plant is expected to generate 25 permanent jobs and 300 construction jobs over two years.
Seth Kaplan, an environmental advocate with the nonprofit Conservation Law Foundation, said the state’s decision emphasizes the Commonwealth’s commitment to promoting renewable energy. “They said, ‘Listen, if you’re going to build a fossil fuel power plant, this is the best kind you can build,’ ’’ Kaplan explained, “ ‘but we’re not going to give it the extra oomph that we would give something that is renewable or zero-carbon.’ ’’
A state board yesterday approved plans to build a natural gas plant in Brockton, but left local officials with the power to veto the plant’s construction by choosing whether to grant the zoning exemptions needed to build the 350-megawatt facility.
The state Energy Facilities Siting Board, a division of the Massachusetts Department of Public Utilities, did not grant the exemptions because it “concluded that the proposed project’s environmental and energy supply benefits do not outweigh expected local impacts,’’ according to a statement.
The $350 million plant, which would be fueled with natural gas and ultra-low sulfur diesel, has been under fire from some residents concerned about health and safety.
If approved by Brockton officials, the plant’s developer would still need to take several steps required by the state, including drawing up a plan to conserve water resources and limiting weekend construction hours.
The plant is expected to generate 25 permanent jobs and 300 construction jobs over two years.
Seth Kaplan, an environmental advocate with the nonprofit Conservation Law Foundation, said the state’s decision emphasizes the Commonwealth’s commitment to promoting renewable energy. “They said, ‘Listen, if you’re going to build a fossil fuel power plant, this is the best kind you can build,’ ’’ Kaplan explained, “ ‘but we’re not going to give it the extra oomph that we would give something that is renewable or zero-carbon.’ ’’
Sunday, August 2, 2009
Natural Gas Rig Count Stands at 948
http://money.cnn.com/news/newsfeeds/articles/djf500/200907311401DOWJONESDJONLINE000809_FORTUNE5.htm
HOUSTON -(Dow Jones)- The number of rigs drilling for oil and natural gas in the U.S. rose this week as the brisk decline in U.S. drilling activity showed some signs of stabilizing.
The number of oil and gas rigs climbed to 948, up five rigs from the previous week, according to data from oil-field services company Baker Hughes Inc (BHI). The number of gas rigs was 677, an increase of two rigs from last week, while the oil rig count rose to 261, an increase of four rigs. The number of miscellaneous rigs was 10, a decrease of one rig.
The number of gas rigs in use peaked at 1,606 in September.
Friday's report marked the second consecutive weekly increase, but analysts were hesitant to say that the uptick was part of a larger trend.
"The recent moves don't really indicate a bottoming," said Pax Saunders, an analyst with Houston-based Gelber & Associates.
In response to falling energy prices over the past several months, natural gas producers have sharply reduced their spending plans and rig counts to limit the flow of new gas supplies into the market.
Natural gas prices have plunged about 74% from last summer's highs amid robust production from U.S. onshore natural gas fields and slumping demand. Large industrial consumers have curbed gas use to cut costs during the recession.
Analysts anticipate that the sharp decline in natural gas drilling activity will eventually bring supply back in line with demand and help bolster gas prices.
Gas for September delivery on the New York Mercantile Exchange was recently down 14.1 cents, or 3.77%, at $3.602 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
(END) Dow Jones Newswires
07-31-09 1401ET
Copyright (c) 2009 Dow Jones & Company, Inc.
HOUSTON -(Dow Jones)- The number of rigs drilling for oil and natural gas in the U.S. rose this week as the brisk decline in U.S. drilling activity showed some signs of stabilizing.
The number of oil and gas rigs climbed to 948, up five rigs from the previous week, according to data from oil-field services company Baker Hughes Inc (BHI). The number of gas rigs was 677, an increase of two rigs from last week, while the oil rig count rose to 261, an increase of four rigs. The number of miscellaneous rigs was 10, a decrease of one rig.
The number of gas rigs in use peaked at 1,606 in September.
Friday's report marked the second consecutive weekly increase, but analysts were hesitant to say that the uptick was part of a larger trend.
"The recent moves don't really indicate a bottoming," said Pax Saunders, an analyst with Houston-based Gelber & Associates.
In response to falling energy prices over the past several months, natural gas producers have sharply reduced their spending plans and rig counts to limit the flow of new gas supplies into the market.
Natural gas prices have plunged about 74% from last summer's highs amid robust production from U.S. onshore natural gas fields and slumping demand. Large industrial consumers have curbed gas use to cut costs during the recession.
Analysts anticipate that the sharp decline in natural gas drilling activity will eventually bring supply back in line with demand and help bolster gas prices.
Gas for September delivery on the New York Mercantile Exchange was recently down 14.1 cents, or 3.77%, at $3.602 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
(END) Dow Jones Newswires
07-31-09 1401ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Saturday, August 1, 2009
Liquid Natural Gas Tankers Loading in the UK
http://www.bloomberg.com/apps/news?pid=20602099&sid=a2iO0U1vFres
By Ben Farey
July 31 (Bloomberg) -- The number of liquefied natural gas tankers sailing to the U.K. increased in the last week before an intensification of North Sea field maintenance in August, ship-tracking data show.
Tankers sailing to Britain, Europe’s biggest gas market, climbed to four from three a week ago, according to AISLive data compiled by Bloomberg.
There may be as many as six LNG carriers heading to the U.K. now. One of them, the Arctic Princess, does not show the U.K. as its destination. Another, the Umm Slal, gives an arrival date of July 7.
OAO Gazprom bought a cargo of LNG from StatoilHydro ASA and sold it to Petroliam Nasional Bhd. of Malaysia to import into the Dragon LNG terminal in south Wales. The cargo is loaded on the Arctic Princess, Frederic Barnaud, LNG director at the U.K.- based unit Gazprom Global LNG, said over the phone.
Kuwait is to receive its first delivery of LNG next week at an import facility built by Excelerate Energy LLC.
The tanker Sohar LNG will arrive in the Gulf state on Aug. 4. A second ship, the Grand Elena, is scheduled to arrive on Aug. 9 from OAO Gazprom and Royal Dutch Shell Plc’s Sakhalin-2 plant off Russia’s east coast.
Exxon Mobil Corp.’s Italian LNG terminal will receive its first cargo next week, according to partner Edison SpA.
“It’s the first time, the first cargo,” Stefano Amoroso, a spokesman for Milan-based Edison SpA, said today by telephone.
Signals today were captured from 148 vessels, 2 fewer than on July 24. That’s 48 percent of the global fleet of 310 LNG carriers.
The following table lists by country of destination all the LNG tankers that have transmitted a time of arrival within the next three months, including today. LNG is natural gas that’s cooled to a liquid for transport.
July 31 July 24
Tankers Share Tankers Share
(Number) (%) (Number) (%)
Japan 25 17 25 17
Qatar 11 7 11 7
U.A.E. 10 7 14 9
South Korea 9 6 5 3
Spain 9 6 5 3
Malaysia 8 5 10 7
Australia 7 5 6 4
Egypt 6 4 8 5
Indonesia 6 4 4 3
Nigeria 6 4 5 3
Algeria 5 3 5 3
Singapore 4 3 1 1
Trinidad 4 3 3 2
U.K. 4 3 3 2
Suez 3 2 4 3
U.S. 3 2 2 1
Atlantic 2 1 4 3
France 2 1 1 1
Gibraltar 2 1 2 1
India 2 1 3 2
Indian Ocean 2 1 0 0
Kuwait 2 1 0 0
Unspecified 2 1 2 1
Africa 1 1 1 1
Argentina 1 1 0 0
Belgium 1 1 2 1
Equatorial Guinea 1 1 1 1
Far East 1 1 1 1
Italy 1 1 1 1
Netherlands Antilles 1 1 0 0
Norway 1 1 3 2
Oman 1 1 2 1
Portugal 1 1 1 1
Russia 1 1 4 3
South China Sea 1 1 2 1
Taiwan 1 1 0 0
West Africa 1 1 1 1
Mediterranean 0 0 1 1
Mexico 0 0 1 1
Libya 0 0 1 1
China 0 0 1 1
Asia 0 0 1 1
Greece 0 0 2 1
Pacific Basin 0 0 1 1
148 150
To contact the reporter on this story: Ben Farey in London at bfarey@bloomberg.net
By Ben Farey
July 31 (Bloomberg) -- The number of liquefied natural gas tankers sailing to the U.K. increased in the last week before an intensification of North Sea field maintenance in August, ship-tracking data show.
Tankers sailing to Britain, Europe’s biggest gas market, climbed to four from three a week ago, according to AISLive data compiled by Bloomberg.
There may be as many as six LNG carriers heading to the U.K. now. One of them, the Arctic Princess, does not show the U.K. as its destination. Another, the Umm Slal, gives an arrival date of July 7.
OAO Gazprom bought a cargo of LNG from StatoilHydro ASA and sold it to Petroliam Nasional Bhd. of Malaysia to import into the Dragon LNG terminal in south Wales. The cargo is loaded on the Arctic Princess, Frederic Barnaud, LNG director at the U.K.- based unit Gazprom Global LNG, said over the phone.
Kuwait is to receive its first delivery of LNG next week at an import facility built by Excelerate Energy LLC.
The tanker Sohar LNG will arrive in the Gulf state on Aug. 4. A second ship, the Grand Elena, is scheduled to arrive on Aug. 9 from OAO Gazprom and Royal Dutch Shell Plc’s Sakhalin-2 plant off Russia’s east coast.
Exxon Mobil Corp.’s Italian LNG terminal will receive its first cargo next week, according to partner Edison SpA.
“It’s the first time, the first cargo,” Stefano Amoroso, a spokesman for Milan-based Edison SpA, said today by telephone.
Signals today were captured from 148 vessels, 2 fewer than on July 24. That’s 48 percent of the global fleet of 310 LNG carriers.
The following table lists by country of destination all the LNG tankers that have transmitted a time of arrival within the next three months, including today. LNG is natural gas that’s cooled to a liquid for transport.
July 31 July 24
Tankers Share Tankers Share
(Number) (%) (Number) (%)
Japan 25 17 25 17
Qatar 11 7 11 7
U.A.E. 10 7 14 9
South Korea 9 6 5 3
Spain 9 6 5 3
Malaysia 8 5 10 7
Australia 7 5 6 4
Egypt 6 4 8 5
Indonesia 6 4 4 3
Nigeria 6 4 5 3
Algeria 5 3 5 3
Singapore 4 3 1 1
Trinidad 4 3 3 2
U.K. 4 3 3 2
Suez 3 2 4 3
U.S. 3 2 2 1
Atlantic 2 1 4 3
France 2 1 1 1
Gibraltar 2 1 2 1
India 2 1 3 2
Indian Ocean 2 1 0 0
Kuwait 2 1 0 0
Unspecified 2 1 2 1
Africa 1 1 1 1
Argentina 1 1 0 0
Belgium 1 1 2 1
Equatorial Guinea 1 1 1 1
Far East 1 1 1 1
Italy 1 1 1 1
Netherlands Antilles 1 1 0 0
Norway 1 1 3 2
Oman 1 1 2 1
Portugal 1 1 1 1
Russia 1 1 4 3
South China Sea 1 1 2 1
Taiwan 1 1 0 0
West Africa 1 1 1 1
Mediterranean 0 0 1 1
Mexico 0 0 1 1
Libya 0 0 1 1
China 0 0 1 1
Asia 0 0 1 1
Greece 0 0 2 1
Pacific Basin 0 0 1 1
148 150
To contact the reporter on this story: Ben Farey in London at bfarey@bloomberg.net
Chevron Land Based Natural Gas off til 2010
http://www.google.com/hostednews/ap/article/ALeqM5jz-XifwAgT0nwFDoDtgGnD0MLQgQD99PIH9G1
By CHRIS KAHN (AP) – 4 hours ago
NEW YORK — Chevron on Friday said that its second-quarter profits fell 71 percent and the second-largest U.S. oil company put its entire land-based natural gas drilling operation on hold, citing dismal demand.
"By the end of the year, we will not have a single gas land-rig running," George Kirkland, Chevron's executive vice president for global upstream and gas said in a conference call.
With natural gas plunging to about a quarter of its value last year, "it really doesn't make sense right now to be drilling those gas wells," he said.
Chevron said its net income amounted to $1.75 billion, or 87 cents per share, for the three-month period that ended June 30. That compared with $5.98 billion, or $2.90 per share, in the same period last year.
The company said its net income suffered from a weak U.S. dollar, amounting to $453 million in reduced earnings. That compares with an income benefit of $126 million in the same period last year.
Analysts surveyed by Thomson Reuters expected earnings of 95 cents per share. Those estimates typically exclude one-time items.
San Ramon, Calif.-based Chevron says total revenue fell 51 percent to $40 billion from $81 billion a year ago.
"The demand for refined products remained generally weak," Chairman and CEO Dave O'Reilly said in a statement.
Raymond James analyst Pavel Molchanov said he still considers Chevron stock a strong buy despite the weak earnings report. Like Exxon Mobil, Chevron has spread its refining operations around the world and doesn't depend on American consumers to make money.
"Petroleum demand in the United States is the weakest of any major economy," Molchanov said. "They're particularly focused in Asia where the economy is relatively decent."
The company said a barrel for crude oil and natural gas liquids fetched $53 in the second quarter, compared with $110 in the second quarter of 2008.
Chevron's production numbers, however, stood out when compared with other major oil companies reporting earnings this week.
Chevron boosted net oil-equivalent production by 5 percent. On Thursday, Royal Dutch Shell, Europe's biggest oil company, said its production dipped 6 percent. Exxon Mobil, the world's biggest publicly traded oil company, said its production fell 3 percent.
During the quarter, Chevron's subsidiaries started drawing crude and natural gas from deepwater production facilities in the Gulf of Mexico and off the coasts of Angola and Brazil.
The company also boosted capital and exploratory operations, spending $11.4 billion in the first half of the year, compared with $10.3 billion in the first six months of 2008.
Company shares rose $1.06 to $68.76 Friday.
Copyright © 2009 The Associated Press. All rights reserved.
By CHRIS KAHN (AP) – 4 hours ago
NEW YORK — Chevron on Friday said that its second-quarter profits fell 71 percent and the second-largest U.S. oil company put its entire land-based natural gas drilling operation on hold, citing dismal demand.
"By the end of the year, we will not have a single gas land-rig running," George Kirkland, Chevron's executive vice president for global upstream and gas said in a conference call.
With natural gas plunging to about a quarter of its value last year, "it really doesn't make sense right now to be drilling those gas wells," he said.
Chevron said its net income amounted to $1.75 billion, or 87 cents per share, for the three-month period that ended June 30. That compared with $5.98 billion, or $2.90 per share, in the same period last year.
The company said its net income suffered from a weak U.S. dollar, amounting to $453 million in reduced earnings. That compares with an income benefit of $126 million in the same period last year.
Analysts surveyed by Thomson Reuters expected earnings of 95 cents per share. Those estimates typically exclude one-time items.
San Ramon, Calif.-based Chevron says total revenue fell 51 percent to $40 billion from $81 billion a year ago.
"The demand for refined products remained generally weak," Chairman and CEO Dave O'Reilly said in a statement.
Raymond James analyst Pavel Molchanov said he still considers Chevron stock a strong buy despite the weak earnings report. Like Exxon Mobil, Chevron has spread its refining operations around the world and doesn't depend on American consumers to make money.
"Petroleum demand in the United States is the weakest of any major economy," Molchanov said. "They're particularly focused in Asia where the economy is relatively decent."
The company said a barrel for crude oil and natural gas liquids fetched $53 in the second quarter, compared with $110 in the second quarter of 2008.
Chevron's production numbers, however, stood out when compared with other major oil companies reporting earnings this week.
Chevron boosted net oil-equivalent production by 5 percent. On Thursday, Royal Dutch Shell, Europe's biggest oil company, said its production dipped 6 percent. Exxon Mobil, the world's biggest publicly traded oil company, said its production fell 3 percent.
During the quarter, Chevron's subsidiaries started drawing crude and natural gas from deepwater production facilities in the Gulf of Mexico and off the coasts of Angola and Brazil.
The company also boosted capital and exploratory operations, spending $11.4 billion in the first half of the year, compared with $10.3 billion in the first six months of 2008.
Company shares rose $1.06 to $68.76 Friday.
Copyright © 2009 The Associated Press. All rights reserved.
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