Gas Price Futures Up by Speculators

By Reg Curren

March 30 (Bloomberg) -- Natural gas futures advanced in New York on speculation a recovery in the economy will lift demand for the industrial and power-plant fuel.

“This is a great area to nibble because of the upside potential based on the positive outlooks for the future,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “Natural gas is a longer-term story.”

Natural gas for May delivery gained 5.7 cents, or 1.5 percent, to settle at $3.973 per million British thermal units on the New York Mercantile Exchange. Gas futures have declined 29 percent this year.

Prices may advance over the next couple of weeks as speculators exit short positions, or bets that prices will fall, said George Ellis, a director in the energy derivatives group at BMO Capital Markets in New York.

“The market seems poised to make a decent move to the upside,” he said in a telephone interview. “Everything has been working technically so well for so long you have to think everyone is in on the trade, so now there’s a greater risk of that trade reversing.”

Short Positions

Speculators in New York futures held 185,973 more short futures positions, or bets on price declines, than long positions in the week ended March 23, according to Commodity Futures Trading Commission data. Prices have declined this year on signs that stockpiles and production were adequate to meet U.S. demand.

The end of winter and heating-fuel consumption has turned attention to the economic recovery, Rose said.

The government is scheduled to release a report tomorrow on factory orders and another on April 2, when commodity markets are closed, covering the March unemployment rate.

“The unemployment report on Friday means a lot because either we’re going to base gas prices here and work our way higher, or base and meander lower,” Rose said. “The downside is kind of capped, the upside is limited, but expandable to $5” per million Btu.

Industrial demand for gas dropped 7.7 percent in 2009 during the worst recession since the 1930s.

Growing Economy

Prices will rebound as the economic expansion stretches out this year and into 2011, said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. The economy is forecast to expand 3 percent this year and next year, according to 53 responses to a Bloomberg survey.

“You do have the longer-term people looking at this market and saying: ‘A year from now we’re not going to be anywhere near here,’” Beutel said in a telephone interview. “And ultimately these lower prices will have an impact on the rig count” to reduce exploration and eventually lower production.

The number of gas rigs operating in the U.S. has been rising since touching a seven-year low in July. There were 941 gas rigs working last week, according to Baker Hughes Inc.

Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 4.61 cents, or 1.2 percent, to $3.7848 per million Btu, according to data compiled by Bloomberg.

Gas futures volume in electronic trading on the Nymex was 148,755 contracts as of 2:52 p.m., compared with a three-month daily average of 223,000. Volume totaled 193,635 yesterday. Open interest was 814,092 contracts, compared with the three-month average of 795,000. The exchange has a one-business-day delay in reporting open interest and full volume data.

--Editors: Bill Banker, Charlotte Porter
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net
To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

Energy Companies Still Spending Money

By David Wethe

March 29 (Bloomberg) -- Southwestern Energy Co., the largest natural-gas producer in the Fayetteville Shale in Arkansas, rose 8 percent after announcing its first venture outside the United States.

Southwestern, based in Houston, advanced $3.03 to $40.73 at 4:03 p.m. in composite trading on the New York Stock Exchange. The company climbed to as much as $40.95, or 8.6 percent, during the day. Before today, the stock had fallen 22 percent this year.

Southwestern said yesterday it will spend about $47 million during the next three years to search for oil and gas across 2.5 million acres in the Maritimes Basin in New Brunswick, Canada. The company, which got 81 percent of its production last year from the Fayetteville Shale, bid for and won exclusive licenses to explore from the Department of Natural Resources in the province of New Brunswick.

“Overall, this should be received positively,” Bill Herbert, an analyst at Simmons & Co. in Houston, wrote today in a note to investors. The producer “is getting exclusive entry into a very large land base with minimal capital requirements and a low long-term entry cost if they convert to a lease.”

The New Brunswick exploration licenses can be converted to a five-year lease anytime during the three-year agreement, according to Herbert. The move is the “first step in potentially identifying an asset which will be able to replace the Fayetteville Shale,” he wrote.

--Editors: Tina Davis, Susan Warren
To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.n

Will Congress Kill Natural Gas Before Its Time?

By Sheila McNulty in Houston
Published: March 29 2010 00:32 | Last updated: March 29 2010 00:32

Even as the oil and gas industries band together to promote natural gas as the fuel of the future, questions are emerging about whether US regulations will limit its potential.
A way has been found of combining the technologies of “horizontal drilling” and “hydraulic fracturing” to extract gas from tightly packed shale rock, raising estimates of US supplies, at current usage rates, from 30 to 100 years.
To the gas industry, the benefit is clear: energy security and via the least polluting of the fossil fuels. Natural gas is about 50 per cent less carbon-intensive than coal and 30 per cent less than oil. Infrastructure exists to carry it throughout the country, which gives it an edge over renewables.
Andrew Clyde, partner at Booz & Company, the consultancy, says natural gas will enable the US to shift away from coal to help it meet greenhouse gas targets and lessen national energy security concerns.
But while coal seems to have secured its future in bills under consideration in Congress, the gas industry was not well prepared to lobby when climate legislation talks began.
Producers have since worked to correct this and have made inroads, with the formation of the 70-plus-member Congressional Natural Gas Caucus, a bipartisan effort to educate, promote awareness on the importance of natural gas in the nation’s energy portfolio and develop policy.
Remarks by Steven Chu, the energy secretary, to the IHS Cera energy conference in Houston this month, that gas produces fewer emissions than other fossil fuels, has given the industry hope.
He also said natural gas was important for enabling renewable energy, as it can provide power when sun or wind are unavailable.
Jim Hackett, chief executive of Anadarko, the oil and gas producer, and chairman of America’s Natural Gas Alliance, says the fact Mr Chu spoke up for natural gas showed that some parts of the administration understand its benefits.
But, he cautions: “We still need to have a statement from the president that national policy includes natural gas.’’ While he waits, other efforts, to ensure the role of natural gas in energy policy, continue.
Oil and gas companies are facing scrutiny on Capitol Hill about the impact of shale gas, as concerns grow about the potential impact on the environment and human health.
The process involves drilling down for up to 20,000 feet and sideways for up to 4,500 feet. Water laced with chemicals and fine sand is pumped through, fracturing the shale rock. The sand remains propping it up so the gas can escape.
“‘Fracking’ is controversial and is likely to be so over the next few years,’’ says Joseph Coote, head of the Global Energy Practice at consultancy Arthur D Little. “It is suggested that the US may contain upward of 100 years of supply, but this may come at a significant cost and create public uproar challenging the pursuit of these reserves.”
Henry Waxman, Democrat chairman of the House energy committee, has sent eight companies information requests about the chemicals they use and the Environmental Protection Agency announced in March that it will investigate the potential adverse impact that hydraulic fracturing may have on water quality and public health.
Noting the trend, ExxonMobil, when it agreed in December to buy shale specialist XTO Energy for $41bn, included a clause allowing it to walk away if regulation makes extraction uneconomical.
Still, Exxon says it expects the deal to close in the second quarter. Royal Dutch Shell, too, continues to make shale gas a priority. According to Russ Ford, executive vice-president for Onshore Gas, “Shell has placed a big emphasis on North American gas; it’s an area of growth for us. We've invested about $15bn since 2004 in the onshore.”
Spectra Energy, a natural gas infrastructure company, is also betting its future on shale. “I don’t think gas is going away. We now have more than 100 years supply,’’ says Dorothy Ables, chief administrative officer.
Individual state governments in places benefiting most from shale gas, such as Louisiana, are firmly behind the industry.
Scott Angelle, Louisiana secretary of natural resources says: “I believe there is an agenda to move us off fossil fuels prematurely. But we do have this natural gas resource. It is clean. It is abundant. It is cheap. The conversation must be real. There is no panacea. We cannot go to renewables overnight.’’

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Marcellus Shale Talk Some More

Source: The Blairsville Dispatch)By Jeff Himler, The Blairsville Dispatch, Pa. Mar. 26--INDIANA -- It's been estimated that companies moving into or expanding in the region to tap Marcellus Shale natural gas deposits could create nearly 200,000 jobs and generate more than $13 billion in Pennsylvania over the next decade.
In the past few years, techniques for drilling vertically and then horizontally have made it feasible for operators to profitably unlock the Marcellus Shale gas deposits located thousands of feet underground in Appalachia -- including under large sections of Western Pennsylvania.
Through Nov. 30 of last year, 594 Marcellus Shale gas wells were drilled in Pennsylvania, mostly in the western part of the state. That activity was expected to produce more than $3.8 billion in economic impact while creating more than 48,000 jobs, according to a report from Penn State University.
Indiana County, with its history of developing natural gas resources, has seen an initial share of what many predict will be a Marcellus-driven "boomlet."
In addition to the financial rewards awaiting companies that drill for and produce natural gas, pursuit of the area's Marcellus Shale deposits has had a positive spin-off effect on other firms that serve and supply the industry.
Among the new businesses that have been attracted by Marcellus Shale opportunities is Aztec Well Servicing, located on Airport Road in White Township.
Headquartered in New Mexico, Aztec was founded in 1963.
"The opportunity that is available due to the technological advances in securing natural gas from the shale was most definitely the reason we moved to Pennsylvania," said Jason Sandel, executive vice president of the company that has been under his family's management for three generations.
Sandel indicated Aztec was drawn to the Marcellus Shale region as were other companies it serves in the gas well industry.
"The shale play gets our customers involved, and then we want to service their needs," he said. "We see Pennsylvania as a long-term investment for our company."
Employing a total of more than 500 people, the company services wells and also drills them. Sister operations include rental of tools and sales of items such as safety supplies and hauling of both equipment and water to and from drilling sites.
After drills have penetrated to the deep pockets of Marcellus Shale gas, large amounts of water are needed for the fracturing process. Water is pumped down the well in combination with sand to create openings in the rock structure that will allow the gas-bearing material to flow to the surface.
Once production is under way, wastewater that results from the process must be trucked away for proper treatment.
In addition to 13 drilling rigs, Aztec operates 33 service completion rigs, according to Barry Wieland, director of corporate relations and engineering manager. He explained the latter rigs, brought to a well site after other companies have completed the drilling and fracturing processes, perform such clean-up tasks as drilling out plugs that initially are placed until the well is ready for production.
Aztec also can install wellheads and can remove pumps from producing wells if needed to repair the well's inner tubing.
"Oftentimes, that tubing will become corroded," Sandel explained. "We address those problems on behalf of our customers."
Wieland noted Aztec mobilized its first two service completion rigs from its new Indiana location in February, for work at Marcellus Shale sites in Westmoreland County and near Williamsport, and is planning to transfer two more rigs to Indiana County next month.
He said the company additionally is considering moving some of its water-hauling trucks to Indiana County.
In support of its new operations, Wieland has been spending three weeks at a time in Pennsylvania. Other company personnel have relocated to Indiana County on a long-term basis.
"We have 10 people on the ground there now," he said. "They're Pennsylvania residents living in Blairsville and Indiana."
"We're also looking to bring a drilling rig to the area sometime by mid-summer," Sandel said. "Our employee count will triple almost overnight."
At the Airport Road site, Wieland said, the company has developed a gravel yard and is converting an existing house into offices. Once sufficient income has been generated at the new location, "We'll erect an office and a shop," he added.
Factors that prompted Aztec to settle on Indiana as its base for Marcellus operations include the town's central location, its amenities and the receptive attitude of local officials.

Rig Count Up and Price is Down

By Asjylyn Loder

March 26 (Bloomberg) -- Natural gas fell to a six-month low in New York on surplus fuel inventories, a rising rig count and mild weather that is expected to cut demand.
The U.S. added two natural gas rigs, bringing the count to 941, up 16 percent from a year earlier, Baker Hughes Inc. said today on its Web site. The increase in gas rigs was the 13th in a row. During that time, 190 rigs have been added.
“We’ve had all these stops and starts, with good news, bad news, good news, bad news,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “That’s not enough to get natural gas out of the trend that it’s in.”
Natural gas for April delivery fell 10.9 cents, or 2.7 percent, to settle at $3.872 per million British thermal units on the New York Mercantile Exchange, the lowest closing price since Sept. 28. Natural gas has dropped 31 percent this year.
The market is now in a “holding pattern” around $4 as traders wait for any economic news that will support a move in the fuel, Rose said. “I’m a reluctant buyer at $4.”
The heating and power-plant fuel dropped below $4 yesterday for the first time in six months after a report from the Energy Department that inventories gained 11 billion cubic feet in the week ended March 19 to 1.626 trillion.
“We’ve broken below a significant level at $4,” said Teri Viswanath, director of commodities research with Credit Suisse Securities USA in Houston. “Now that we’re below $4, you’re seeing structural changes. Coal generators at $4 gas will not recapture market share, and sub-$4 pricing is not a siren call for LNG cargoes to head this way.”
Imports May Rise
U.S. imports of liquefied natural gas may rise 45 percent in 2010 to approximately 1.8 billion cubic feet per day, the Energy Department forecast March 9 in its monthly Short-Term Energy Outlook. The estimate for 2010 imports was 1.6 percent lower than the February forecast.
Traders are not yet convinced that the structural changes have wiped out weakness in price and may wait for prices to fall further before buying, Viswanath said. At a seminar with investors this week, about 60 percent thought prices still had further to fall.
“There’s a saying, ‘Don’t catch a falling knife,’” she said. “That’s what’s happening here.”
Surplus Grows
The storage surplus compared with the five-year average widened to 8 percent from 4.7 percent in the previous report, according to department data.
Deliveries of gas to industrial consumers fell 512 billion cubic feet, or 7.7 percent, in 2009 from the previous year, according to the Energy Department.
“You’ve got crummy weather, a crummy economy, a growing source of supply and an economy that is constricting demand,” said Mike Fitzpatrick, vice president of energy at MF Global in New York.
U.S. production reached an all-time high of 26.3 trillion cubic feet in 2009, up 2.2 percent from the previous year, Energy Department data show.
“Now that you’re below $4, that’s well below the break- even point for bringing new facilities online, so that’s going to eat into supply,” Fitzpatrick said. “Not today or tomorrow but over time.”
Heating use will be below normal in most of the U.S. through April 2, said David Salmon, a meteorologist with Weather Derivatives of Belton, Missouri, in his daily report.
“Some early spring chills hang over the eastern U.S. for a time next week, but eventually a big warmup in the middle of the country spills eastward to gobble up all the big cities, driving the population weighted heating demand to well below normal,” Salmon said in his report.
ETF Slips
Falling natural gas prices have driven the $2.9 billion U.S. Natural Gas Fund to new lows. The exchange-traded fund fell 16 cents, or 2.2 percent, to settle at $7 on the New York Stock Exchange. The fund is down 31 percent this year and 86 percent since it began trading in April 2007.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, fell 8.82 cents, or 2.2 percent, to $3.9226 per million Btu, according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 156,120 contracts as of 2:43 p.m., compared with a three-month daily average total of 221,000. Volume was 257,648 yesterday. Open interest was 837,152 contracts, compared with the three- month average of 791,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net.
Last Updated: March 26, 2010 16:21 EDT

Gas Low at $3.91/MMBtu

By CHRIS KAHN (AP) – 6 hours ago

NEW YORK — The futures contract for natural gas tumbled 3 percent Thursday after the government reported that supplies grew for the first time this year, adding to already bloated reserves.
The country had been burning large volumes of natural gas to heat homes and run power generators this winter as heavy snowstorms blanketed parts of the country. But the drawdown wasn't enough to erase huge surpluses built up during the past few years.
The Energy Information Administration said that at 1.63 trillion cubic feet, natural gas levels are 8 percent higher than the five-year average.
Natural gas for April delivery dropped 12.4 cents to settle at $3.981 per 1,000 cubic feet on the New York Mercantile Exchange. Prices fell as low as $3.94 earlier in the day, the lowest for the April contract.
Natural gas prices have gone through large fluctuations in the past few years. A contract for 1,000 cubic feet jumped above $13 in the summer of 2008 before plunging below $4 last summer. Natural gas prices started rising again as consumers cranked up the heat this winter, but they've since dropped off as the weather got warmer.
Thursday's settlement price was the lowest since September, according to the Energy Information Administration.
Oil prices also slipped as the dollar rose against other major currencies. Crude, which is priced in dollars, tends to fall in price as the greenback rises and makes oil barrels tougher to buy with foreign currency.
Benchmark crude for May delivery fell 8 cents to settle at $80.53 a barrel on the Nymex.
The Labor Department reported earlier in the day that jobless benefits dropped more than expected last week, before falling back later in the day. Gasoline demand should rise as more workers get back into the daily commute, but some analysts worry that it won't happen soon.
"It's reasonable to assume the unemployment rate in the U.S. will remain stubbornly high for at least the next two years," energy analyst Stephen Schork said in a report. "The table appears set for further demand destruction for gasoline, not just in the U.S., but in Europe as well."
Retail prices dipped less than a penny overnight to a new national average of $2.813 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 15.3 cents more expensive than it was a month ago and 82.7 cents more expensive than the same time last year.
In other Nymex trading in April contracts, heating oil fell less than a penny to settle at $2.0693 a gallon, and gasoline lost less than a penny to settle at $2.2177 a gallon.
In London, Brent crude slid a penny to settle at $79.61 on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.

Copyright © 2010 The Associated Press. All rights reserved.

BP Talks Natural Gas with Congress

By Jim Snyder - 03/23/10 07:13 PM ET

The chief executive of oil giant BP said Tuesday that Congress needs to find a better way of maintaining jobs than “preserving them in the coal industry.”
Tony Hayward, BP’s chief executive officer since 2007, said in a speech on energy security and climate change at the Peterson Institute for International Economics that it was “somewhat surprising” that coal plants were being built in the United States, given concerns about climate change.
Hayward said Congress instead should be promoting natural gas, which emits as little as half the carbon emissions that coal does. He said the effort in the Senate to write new climate legislation appeared to be more equitable to the natural-gas industry.

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• Browner: WH seeking climate action this year, demurs on gas

BP has significant natural-gas resources, and would likely stand to benefit from climate legislation that encouraged more gas use. Natural gas makes up more than half of BP’s total energy production, according to the company’s website.
Lisa Camooso Miller, a spokeswoman for the American Coalition for Clean Coal Electricity, a group that includes coal producers and users, said Hayward’s comments were “no surprise,” given the importance of natural gas to BP’s business.
She said coal is three times less expensive than natural gas and was an abundant and “increasingly clean” resource that should continue to be the mainstay source of electricity generation.
Coal now accounts for around 50 percent of the power generated in the United States, but emits about one-third of the country’s total carbon dioxide emissions.
Echoing a complaint common in the natural-gas industry, Hayward said the coal industry was “disproportionately favored” in the House climate legislation passed in June. But he said he was encouraged by the direction of climate talks in the Senate.
BP recently dropped out of the United States Climate Action Partnership, a coalition of companies and environmental groups that developed a framework the House climate legislation built upon.
Despite that decision, Hayward says his company continues to support “cap and trade” legislation as a way to lower carbon dioxide emissions and also spur investment in cleaner sources of power.
He indicated he was encouraged by the effort by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) to write bipartisan climate legislation.
Their bill may only apply a firm cap on the electric power sector initially, with large manufacturers having to comply later. Utilities and manufacturers would, however, be part of a market in which allowances are bought and sold as needed to meet reduction targets.
Fewer and fewer allowances would be available each year, forcing companies to cut their carbon emissions.
The three senators are reportedly considering putting the transportation sector, which is responsible for about 40 percent of the emissions in the country, outside that carbon market. Oil refiners would not have to buy allowances. Instead, a fee would be imposed on gasoline linked to the market price of carbon to discourage consumption as a means of reducing tailpipe emissions.
Hayward praised the cap-and-trade approach to forcing emissions cuts rather than the imposition of a carbon tax. He said it would be unlikely that a tax could be set high enough to change people’s behavior.
Later, however, he said that the fee applied to oil companies could be a more “equitable” means of forcing emissions reductions in the transportation sector than the allowance allocation structure in the House climate legislation. He did not endorse that approach.
Oil lobbyists have said the House legislation did not provide their industry with enough free emissions allowances.
To lower emissions, Hayward said, the U.S. should focus on conserving energy, promoting natural gas production, building lighter and more fuel-efficient cars and advancing the production of biofuels with a lower carbon footprint than traditional gasoline.
He said the development of offshore wind and carbon capture and sequestration technologies for coal would be too expensive in the near term to rely upon for cutting emissions.

Alaska Natural Gas Pipeline Discussion Continues

JUNEAU, Alaska
House Speaker Mike Chenault says involving the Alaska Railroad Corp. in an in-state natural gas pipeline is a good idea.
But the Nikiski Republican says in-state gas must be addressed urgently and he worries that the pending departure of railroad President Pat Gamble, picked to lead the University of Alaska, could affect that.
Chenault expects Gamble's departure to lead to a monthslong search for a replacement. And he says it could take time to get Gamble's replacement up to speed on railroad work.
A bill by Chenault would have an in-state natural gas team, which includes the railroad head or a designee, getting a project plan to lawmakers by July 2011.
The plan would have to show how a small natural gas pipeline could be financed and built by the end of 2015.

Another Opinion About Marcellus Shale

New BENTEK Energy "Beast in the East™" study indicates rapid growth in Marcellus production. Added pipeline capacity for the Appalachian Basin will displace traditional Canadian, Southeast/Gulf, Rocky Mountain and Midcontinent supplies, with significant gas flow and pricing implications

EVERGREEN, Colo.--(BUSINESS WIRE)--According to a new Market Alert just released from BENTEK Energy, LLC, growth in natural gas production from the Marcellus Shale in the Appalachian Basin will result in widespread disruption to regional flow patterns and downward pressure on prices in the Northeast region.
“The North American natural gas market has been transformed in the last three years by the tremendous growth in shale gas production, and the addition of new west-to-east pipeline capacity to move that gas to market,” noted E. Russell (Rusty) Braziel, BENTEK Energy Managing Director. “Recent pipeline projects such as the Rockies Express, Gulf Crossing, Midcontinent Express and others, have helped alleviate the long-standing pipeline capacity constraints and have worked to reduce price differentials by increasing relative prices in the West while reducing prices in eastern markets.”
“Now the Marcellus – the Beast in the East – is poised to create further market disruptions as natural gas production from the Appalachian Basin expands from 2.2 Bcf/d last year to somewhere between 4.0 and 6.0 Bcf/d by 2014,” Braziel said. “More than 30 gas pipeline expansion projects have been announced to support this growth in the Northeast, representing the addition of more than 12 Bcf/d of new gathering, short-haul and long-haul pipeline transportation capacity and pipeline interconnections in the region.”
Braziel emphasized that even if only a few of these projects are completed, Marcellus production is expected to displace traditional gas supplies serving the Northeast – from Canada, the Southeast/Gulf, the Rocky Mountains and Midcontinent producing areas. “Gas flowing on long-haul pipeline transportation capacity into the Northeast from these traditional supply regions is expected to decline as Northeast utilities and end-users shift to Appalachian supplies,” he said.
Northeast price premiums – one of the last bastions of relatively high prices – are expected to shrink as multiple new pipelines relieve regional transportation constraints. Price spreads to the Northeast from western Canada, the Rocky Mountains and the Southeast/Gulf are expected to tighten. “As a result, natural gas markets will be on a more level playing field from coast to coast,” Braziel said.
The BENTEK "Beast in the East™" Market Alert concludes that not only will there be an impact on U.S. markets, but international markets will feel the pinch as continued growth in domestic shale gas production can be expected to significantly reduce the need for Canadian and LNG imports.
In addition to its "Beast in the East™" Market Alert, BENTEK offers the Northeast Observer™ to provide daily updates, a weekly summary of market developments and a comprehensive analysis of all market factors pertinent to the Northeast region. For more information about BENTEK’s "Beast in the East™" Market Alert or Northeast Observer™, visit www.bentekenergy.com or call BENTEK at 888-251-1264.
About BENTEK Energy, LLC
BENTEK Energy, LLC, is the leading energy markets information company. Based in Evergreen, Colorado, BENTEK brings customers the analytical tools and competitive intelligence needed to make time-critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com.

Natural Gas Price is 4.17/MMBtu

http://www.thedigitalnewspaper.com/natural-gas-price/748352/
Sunday, March 21st, 2010

If you’re looking for the latest Natural Gas price then you’ve come to right place. Whether you’re trading or spot buying and selling Natural Gas commodities, we will have all the information you might need on Natural Gas, including trading guide, commodity info, and up to date prices.

Natural Gas Price

Natural Gas current price is 4.17$ / million BTUs. Natural Gas commodity price changed by 0.084 which represents a 0.0206 percentage shift from the previous trading day’s closing price.
Natural gas is a gas, not to be confused with oil, which is a liquid used to produce gasoline, which is also called “gas” in some parts of the world. The main component of natural gas is methane, a chemical that can be burned to produce energy. Natural gas is fairly difficult to transport, and usually requires a pipeline because it is difficult to transport it by tanker truck. Once harvested, natural gas must be heavily refined to remove many chemicals. Through the process, natural gas refineries can produce the by-products of butane, propane, ethane, pentanes, sulfur, carbon dioxide, water vapor, and several more. Natural gas has a variety of uses, most notably as power for turbines in electricity in power plants. It is also used in homes for such things as cooking gas, water heaters, and central heating. Other uses of natural gas include as fuel for cars and trucks and it is also used in factories to produce many different products.
The Natural Gas price today stands as 4.17 and falls in a 52 week range of 2.56 and 6. Good luck in your trading.

Tags: commodity price, commodity trading, Natural Gas, Natural Gas charts, Natural Gas commidity, Natural Gas price forecast, Natural Gas prices, Natural Gas spot price

Gas Supply Holds High for the Week

By DEBORAH JIAN LEE (AP) – 2 days ago

NEW YORK — The nation's natural gas stockpiles fell less than expected last week, the government said Thursday.
The Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states dropped by 11 billion cubic feet to about 1.62 trillion cubic feet for the week ended March 12.
Analysts expected a draw of between 27 billion and 31 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The inventory level was 4.7 percent above the five-year average of about 1.54 trillion cubic feet, and 2.4 percent below last year's storage level of about 1.66 trillion cubic feet, according to the government data.
Natural gas lost 16.3 cents at $4.140 per 1,000 cubic feet on the New York Mercantile Exchange. Earlier, gas hit a new 52-week low at $4.121.

Copyright © 2010 The Associated Press. All rights reserved.

U.S. EPA Wants a Piece of Fracking Natural Gas

By Juliet Eilperin

Washington Post Staff Writer
Friday, March 19, 2010 
The Environmental Protection Agency announced Thursday that it will launch a $1.9 million study into how drinking-water supplies are affected by hydraulic fracturing, a method used to turn shale rock into natural gas wells.
The practice, which has been used for decades, unlocks natural gas by shattering shale rock with high-pressure blasts of water, chemicals and sand. Starting a well requires millions of gallons of water and results in some leftover water that is contaminated; drilling companies say it can be safely contained, but environmentalists argue that this residue could endanger public drinking supplies.
Paul T. Anastas, assistant administrator for the EPA's Office of Research and Development, said EPA "research will be designed to answer questions about the potential impact of hydraulic fracturing on human health and the environment."
Natural gas companies and environmental advocates said they welcomed the study. William F. Whitsitt, executive vice president for public affairs at Devon Energy Corp., which engages in hydraulic fracturing, said he hoped that the EPA would reach out to state officials who have overseen the activity.
"When there are concerns about hydraulic fracturing, we take them very seriously," he said.
PennEnvironment Director David Masur said that while research is welcome, his group expected the federal government to take a precautionary approach when it comes to having contaminated water stored beneath drinking-water supplies. "We want the facts, and this is the start of getting that," he said.

Mining Down Under Tied to Natural Gas

By Rebecca Keenan and Jason Scott

March 19 (Bloomberg) -- Australia is attracting more than $130 billion of investment in some of the world’s richest natural gas fields to supply buyers in Japan and China. Domestic customers, including Alcoa Inc., will have to wait.
Alcoa’s stalled alumina refinery expansion in Western Australia “will not be back on the agenda until we can secure long-term competitive gas supply,” Michaela Southby, a Perth- based spokeswoman for the biggest U.S. aluminum producer, said in an e-mailed response to questions. The project may cost $4 billion, according to a 2008 estimate by ABN Amro Holding NV.
Royal Dutch Shell Plc plans to deploy a production vessel larger than an aircraft carrier off the coast of Western Australia to feed the liquefied natural gas boom that may see annual exports hit almost A$40 billion ($37 billion) by mid- decade. The state’s gas shortage will last to at least 2020, hindering mine projects, according to the DomGas Alliance.
“You have all this energy and gas but most of it’s exported,” said Peter Arden, a Melbourne-based mining analyst at Ord Minnett Ltd., a JPMorgan Chase & Co. affiliate. “It’s going to be a really big cost input for the whole of Western Australia, especially the miners who rely on it for power.”
Alcoa, the biggest user of gas in Western Australia, gained 4.8 percent to close yesterday at $14.46 in New York Stock Exchange composite trading. The stock has dropped 10 percent this year. Alumina is used to make aluminum. LNG is gas chilled to liquid form for shipping.
Fourfold Jump
New York-based Alcoa suspended a plan to double capacity at the Wagerup refinery more than a year ago because of the financial crisis and gas supply constraints. Gas prices in the state, the source of half Australia’s commodity exports, rose almost fourfold in the past decade and may keep rising until supply becomes available, said consultant ACIL Tasman Pty.
“The prices that are being asked will certainly preclude the development of a lot of future projects,” Tony Petersen, chairman of DomGas, a user’s group that includes Newmont Mining Corp. and Fortescue Metals Group Ltd., said in an interview.
More than 1,000 mine sites operate in Western Australia, which generates 70 percent of the nation’s exports to China, the biggest buyer of raw materials. The nation is the largest shipper of iron ore, alumina, lead, zinc and coal. It ranked sixth among LNG exporters in 2008.
Mining magnate Clive Palmer’s Australasian Resources Ltd. and Atlas Iron Ltd. and are among companies planning at least A$50 billion of projects and expansions in Western Australia and will be competing for gas.
Apache Explosion
Atlas’s power requirements after 2014 “are a real issue,” David Flanagan, managing director of the Perth-based company, said in a response to e-mailed questions.
An explosion at Apache Corp.’s Varanus Island gas plant cut almost a third of the state’s supply in June 2008, closing mines, refineries and processing plants. Apache and the A$27 billion North West Shelf gas fields, in which Shell is a partner, account for about 90 percent of the state’s supplies.
“This is the irony: Australia has only got less than 2 percent of the world’s gas reserves, yet we are striving to be one of the world’s biggest LNG exporters,” Mike Shaw, energy manager of Alcoa’s Australian unit, said in an interview. “There is very little happening on the domestic gas front.”
Alcoa is spending as much as A$140 million to find new gas supplies, according to its Web site. It owns 20 percent of the 1,600-kilometer (994-mile) Dampier to Bunbury gas pipeline.
‘Plenty of Gas’
There are some “serious issues in trying to manage gas supply,” Premier Colin Barnett said March 8. “If we were to have a very rapid increase in demand, it would be tight.”
To be sure, more domestic gas will become available from the projects being built because Western Australia’s government has mandated that the equivalent of 15 percent of LNG from export projects be reserved for domestic use.
“There is plenty of gas out there and where there is firm demand from credible customers, it will be delivered,” Tom Baddeley, director of the West Australian unit of the Australian Petroleum Production and Exploration Association, said in a March 17 statement.
Citic Pacific Ltd., an arm of China’s biggest state-owned company, signed a supply contract last year with Apache and Santos Ltd. for its $4 billion iron ore project at Cape Preston. Apache and Santos last year won a four-year extension to their contract with Newmont Mining Corp.
“Every change in gas price will affect the cost of producing whatever commodity is being mined,” Andrew Caruso, managing director of Australasian Resources, which is seeking to develop a A$3 billion iron ore mine, said in an e-mail.
To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net; Jason Scott in Perth at jscott14@bloomberg.net
Last Updated: March 18, 2010 09:00 EDT

China Natural Gas Research Papers Available

http://www.officialwire.com/main.php?action=posted_news&rid=114208&catid=637

China is one of the fastest growing economies in the Asia Pacific region. Alongside this economic growth, the demand for energy is increasing continuously. At present, China has natural gas reserves of 80tcf and the majority of its gas fields are located in the western and north-central parts of the country.
South Korea is the world's largest liquiefied natural gas (LNG) buyer after Japan and largely relies on gas imports to meet its domestic demand. The country has relied on LNG imports for its natural gas supply since 1986, but started producing 0.54bcm of natural gas from its Donghae-1 field in 2004. Major LNG exporters to South Korea are Qatar, Indonesia, Malaysia, Oman, Australia and Brunei and more recently Sakhalin. South Korea, in September 2008, signed a deal with Russian major gas supplier Gazprom to import 10bcm of natural gas annually starting from 2015. A natural gas pipeline via North Korea is proposed to import the gas, although the option of importing the gas as LNG is also possible if North Korea pulls out of the project. South Korea is also considering a major pipeline from the Kovytinkskye gas fields in Russia via China to supply 0.028 bcm of natural gas.


Key features of this report


Profiles of each country's gas infrastructure including transit and distribution pipelines and their ownership, storage capacities and full colour maps of gas grids.
An understanding of Asia Pacific gas regulation, including local legislation, competitive conditions and market reforms.
Gas supply data in billion cubic metres as well as production, pipeline imports and exports by country and LNG imports.
Gas demand data by consumer type divided into residential, non-residential and power generation in billion cubic metres.
Key findings from this report
1. China distributes natural gas through a 28,000km network of natural gas pipelines that carries 45bcm of natural gas per year. The West-East pipeline is China's largest pipeline. It stretches 3,900km and has a capacity of 12bcm per year. Meanwhile, the 775km Yacheng-Hong Kong pipeline, which serves Hong Kong, is the longest underground pipeline in Asia and the second largest in the world.
2. At present, the Yacheng gas field in the South China Sea is the only source of gas supply to Hong Kong. The main limiting factor to the use of natural gas in Hong Kong's energy mix is the unavailability of indigenous resources and the resultant need for significant investment in importation infrastructure.
3. India's natural gas reserves are currently estimated at 822-907bcm, or about 0.5% of the world total of 181,518bcm.
4. Japan is an important natural gas consumer, and the world's largest importer of natural gas. With minimal reserves of just 21bcm, Japan's indigenous production will remain limited. It imports LNG from Malaysia, Indonesia, Qatar and Australia.
The Asia Pacific Gas Market Outlook: Country profiles of supply, demand, regulation and infrastructure: http://www.companiesandmarkets.com/r.ashx?id=02R512UFI275188&prk=303d81ccbb2a7a175702ea4ca158c291

Canada Full Steam Ahead with Natural Gas Production

By Scott Haggett
CALGARY, Alberta, March 16 (Reuters) - EnCana Corp (ECA.TO), Canada's No. 1 natural gas producer, said on Tuesday it will boost its 2010 capital budget by 20 percent to $4.5 billion as it takes step to double production over the next five years, despite low prices for the fuel.
The company, which spun off its northern Alberta oil sands operations last year into Cenovus Energy Inc (CVE.TO) to concentrate on natural gas, is ramping up spending to develop its massive shale gas holdings in Western Canada and the United States.
EnCana's plans will see it pumping more than 6 billion cubic feet of gas per day by the end of 2015, giving it about 8.6 percent of the current North American market, keeping it as one of North America's largest natural gas producers and squeezing out less efficient companies that have higher costs.
"We should be forcing out the higher-cost producers," Randy Eresman, EnCana's chief executive, told reporters. "And we've already been doing that. In the last couple of years there was a lot of natural gas production being developed in North America that required $8, $9, $10 prices in order to be developed."
EnCana expects prices, with the benchmark futures contract currently at about $4.35 per million British thermal units, to average between $6 and $7 per thousand cubic feet long-term. It said it can produce gas for under $4 per mcf.
It's also expecting demand for the clean-burning fuel to grow as it supplants coal in power generation and producers lobby for more use of natural gas in transportation.
New uses for gas will be critical to EnCana and its peers as output rises from low-cost shale gas reserves. Gas from shale deposits like the Haynesville in Louisiana, the massive Marcellus region centered in Pennsylvania or the Horn River region of British Columbia is pushing up supplies after years of declining production.
Much of EnCana's planned production growth will come from its holdings in the Haynesville and Horn River shales, along with output from the Montney sands of northeastern British Columbia.
Indeed, much of its $750 million capital spending boost will be directed to its Haynesville holdings, where it needs to ramp up drilling in order to ensure it holds onto its leased properties.
However, Eresman said that spending will have to be raised further if it's to meet its goal of doubling production in five years - essentially boosting its growth targets from 10 percent per year to more than 14 percent.
EnCana will need to spend about $6 billion annually, drilling 2,500 wells a year, in order to meet its revamped targets. The company had, in the past, limited its growth in order to avoid causing higher prices for drilling and other services and Eresman said EnCana will try to not spur higher prices as it ramps up activity, counting on what it calls its "gas factory" strategy to keep a lid on costs.
"We'll have to be careful," Eresman said. "But we think the cost are going to go down ... but if we start to see industry inflation creep in we'll back off."
EnCana's manufacturing approach to gas production sees the company drilling large numbers of wells from a single location and repeating that formula over its shale properties.
PRODUCTION RISING
In its 2010 guidance, EnCana said it expects its production at the end of 2010 to be between 3.4 billion and 3.5 billion cubic feet of natural gas per day. That's up from the 3.1 bcf a day it averaged at the end of January.
The company, which operates exclusively in North America, said it has proved reserves of 12.8 trillion cubic feet of gas on its 12.7 million acres of exploration lands, and could have another 16 tcf recoverable on its holdings.
In its 2010 forecast released on Tuesday, the company said it expects cash flow per share of between $5.85 and $6.40 this year.
EnCana shares were down 30 Canadian cents, or 0.9 percent, at C$33.65 at midafternoon on Tuesday on the Toronto Stock Exchange.
($1=$1.01 Canadian) (Editing by Rob Wilson)

Australian Natural Gas Company Still Under Evaluation

by Rob McKay — last modified Mar 16, 2010 12:19 PM

Uncertainty has begun to hover over the Gladstone liquefied natural gas (LNG) terminal project, with the possibility raised today of other firms gaining involvement and the expiry of the Golar LNG sale and purchase heads of agreement (HOA) for export of the gas.

With the direction of the Shell/PetroChina bid for parts of Arrow Energy unclear, it and joint venture partner Liquefied Natural Gas Ltd have extended to June 30 an HOA on the sale of the project to Arrow.

"The non-exclusive nature of the Arrow HOA extension means that the company can freely explore all gas supply opportunities and project structure options with other parties, some of whom have previously expressed interest in the Gladstone LNG Project," LNG Ltd said.

However, work on the project remained on hold in favour of LNG Ltd's ownership and opportunities review process.

On Golar LNG, LNG Ltd said it would continue to work with the gas tanker firm "in relation to the identification and pursuit of mid scale LNG project opportunities". 

The Western Australian firm currently retains ownership and is confident in its advanced state, given that "all key environmental, development and license approvals have either been received, or are expected to be received, within the next four weeks".

3.15 - Natural Gas $4.36/MMBtu

By Reg Curren

March 12 (Bloomberg) -- Natural gas futures fell to the lowest price in 16 weeks in New York as milder-than-normal weather was expected to limit demand and ample supplies were left in storage.
Above-normal temperatures are forecast to stretch from the Midwest and into New York through March 21, according to Commodity Weather Group of Bethesda, Maryland. About 52 percent of U.S. households rely on natural gas for heating. A government report yesterday showed stockpiles above the five-year average.
“We’re in a new era for natural gas,” said Phil Flynn, vice president of research at PFGBest in Chicago. “We’ve found all this new, unconventional gas, and proven reserves are on the rise. We’ll probably get to full storage sooner than ever.”
Natural gas for April delivery fell 4 cents, or 0.9 percent, to settle at $4.40 per million British thermal units on the New York Mercantile Exchange, the lowest closing price since Nov. 19. The contract has declined 21 percent this year.
An Energy Department report yesterday showed stockpiles were 1.2 percent above the five-year average level for last week, signaling there will be sufficient supplies of the fuel to meet demand.
Inventories were pushed to a record 3.837 trillion cubic feet last November on higher U.S. production and weak demand because of the recession. Frigid weather in December and early January helped to soak up excess supply. The declines have slowed with March weather milder than previously forecast.
Slowing Withdrawals
“Withdrawals might not have much longer to live as the spring could bring an injection as early as the third week of March,” Biliana Pehlivanova, an analyst at Barclays Capital in New York, said in a note to clients. “Time appears to have run out to meaningfully work off inventories.”
She forecast supplies in storage at the end of March will be about 1.6 trillion cubic feet, above the five-year average level of 1.489 trillion.
Natural gas futures will probably decline next week, according to a Bloomberg News survey. Seven of 14 analysts, or 50 percent, predicted prices will fall through March 19.
Utilities and other large users of gas typically begin rebuilding inventories in early April as cold-weather demand dissipates. Stockpiles typically gain until the end of October and the return of lower temperatures in the U.S.
The number of gas drilling rigs rose by one to 927 this week, up 39 percent from a seven-year low reached in July, according to Baker Hughes Inc. data. Increased exploration may boost gas production later this year.
Moving Averages
Technical indicators suggest natural gas prices are at inflection point as the futures trade near the 200-day moving average, Michael Fitzpatrick, vice president of energy at MF Global in New York, said in a telephone interview.
“It’s an important milestone,” he said. “If it holds, we’ll have a full-blown reversal. If it goes through and it settles down below the 200-day tonight, we might get a push to $4 pretty quick.”
The 200-day moving average was $4.4056 per million Btu at the settle, according to Bloomberg data.
Moving averages are watched by some technical traders who monitor patterns for clues to price direction and may sell or buy based on those signals.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana fell 12.73 cents, or 2.9 percent, to $4.3448 per million Btu, according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 120,908 contracts as of 3:15 p.m., compared with a three-month daily average of 227,000. Volume totaled 239,223 yesterday. Open interest was 866,906 contracts, compared with the three-month average of 771,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net
Last Updated: March 12, 2010 16:01 EST

Alaskan Former Senator Talking Trash

By Sean Cockerham

Anchorage Daily News

Former U.S. Sen. Ted Stevens said Friday there's not enough market for Alaska natural gas in the Lower 48 to justify a pipeline through Canada, and that the state should instead pursue construction of pipelines to Kenai and Valdez to export gas to Asia.
Stevens, giving an Anchorage speech before the public policy group Commonweath North, called for the state to invest half the money it would take to build a multi-billion dollar natural gas pipeline from the North Slope to the Kenai Peninsula. Gas not needed for use in Alaska could be liquefied at an existing plant there, Stevens said, shipped in tankers to countries such as Japan, China, India and South Korea, where he said there's a better market than in the U.S.
Stevens said a bigger pipeline should go to Valdez, long promoted as a potential port for export of liquefied natural gas to Asia. He called on the state to give "emergency power" to an official dedicated to work on making it happen.
The 86-year-old Stevens has made few public appearances since he lost his re-election bid in 2008, shortly after his conviction on federal charges of not properly reporting gifts. The conviction was subsequently overturned by a federal judge.
Stevens told the Commonwealth North luncheon crowd that he asked to come and talk about why he's changed his mind on the gas pipeline project. While in office, he championed the proposed gas pipeline through Canada and helped pass $20 billion in federal loan guarantees meant to help bring Alaska gas to the Lower 48.
"It's only in the last six months that the realization has come about that's not the market our gas can take," Stevens said.
He spoke of the large new supplies of natural gas in shale rocks in the Lower 48, and said demand there isn't rising as much as previously predicted. The supply will likely more than meet demand through 2030, Stevens said. But forecasts show the natural gas demand in Asia badly outstripping supply in three years, Stevens said, giving Alaska a short window to come in and meet the demand.
Stevens called it a magnificent opportunity and said "this is something we should put every talent we've got in the state on." Stevens refused to answer when a reporter after his speech attempted to ask him about the details of his proposal, and the economics of building gas pipelines to both Kenai and Valdez.
Larry Persily, confirmed by the U.S. Senate this week as the federal coordinator for the Alaska gas pipeline project, said there's a lot of competition to supply natural gas to Asia.
"I respect his knowledge and experience, I just disagree," he said. "I think there's still a way to make it work to serve the North America market, which is a much larger market in terms of how much gas they consume every day."

New Mexico Representatives have Natural Gas Power

By Matthew Reichbach 3/12/10 5:03 PM 

Members of the natural gas industry have sent a letter to both New Mexico senators asking that natural gas be added to any clean energy mandate that passes Congress, according to The Hill.
In January, then-President of the New Mexico Oil and Gas Association Bob Gallagher told New Mexico Business Weekly, that while things looked better for the oil industry in New Mexico, “the situation is still pretty glum for natural gas production.”
The letter is addressed to Sen. Jeff Bingaman, D-N.M., the chair of the Senate Energy and Natural Resources committee. Sen. Tom Udall, D-N.M. and four other Senators were also sent the letter.
“We agree that natural gas will be essential to meeting the nation’s greenhouse gas reduction goals, and therefore, should a CES be adopted, it should be crafted so that utilities have the option of using natural gas to comply with the generation portfolio requirements,” the letter from four natural gas industry executives states.
The letter was sent from the Natural Gas Supply Association, the Interstate Natural Gas Association of America, the Independent Petroleum Association of America, and the American Gas Association.
The letter was also sent to Senators John Kerry, D-Mass., Lindsey Graham, R-S.C., and Richard Lugar, R-Ind., and Joseph Lieberman, I-Conn.
Senators are attempting to craft a compromise clean energy bill to pass the Senate; a clean energy bill passed the House in June.
According to the Pew Center on Global Climate Change, the House version of clean energy legislation, the American Clean Energy and Security (ACES) Act reserved a large amount of allowances, or emission permits for natural gas. Those with an allowance in the ACES Act would be allowed to “legally emit one ton of carbon dioxide (or its equivalent for other greenhouse gases) into the atmosphere.”
Pew wrote, “About 23 percent of allowances are given to local electricity and natural gas distribution companies, primarily in the early years of the program, with the stipulation that the value is passed on to consumers to offset higher energy prices.”
According to the New Mexico Oil Conservation Division of the New Mexico Energy, Minerals and Natural Resources department, production of natural gas has dropped since a peak in 2000. Oil production in the state has dropped since a peak in 1970.
In his career, Bingaman has received the fifth most money in campaign donations from the oil and gas industry since 1989 according to the Center for Responsive Politics’ Web site Open Secrets. For Udall, the oil and gas industry is his 19th highest contributor. There is no breakdown between the oil industry and the gas industry.

Exxon Bullish on Natural Gas

(AP) – 9 hours ago

NEW YORK — Exxon Mobil said Thursday it will boost spending this year on new and existing projects even as some rivals pull back because of weak global demand for energy.
Chairman and CEO Rex W. Tillerson told analysts during a meeting in New York that the world's largest publicly traded oil company intends to boost capital spending by 3 percent to about $28 billion. Spending should range between $25 billion and $30 billion a year on average through 2014.
Tillerson said global energy demand is expected to grow nearly 35 percent by 2030 with fossil fuels remaining the dominant source, although natural gas will outpace coal "We are executing a large inventory of projects and many others are under development," he said.
In 2009, Exxon Mobil's capital expenditures totaled $27.1 billion. Many of the company's rivals have cut spending to match declining use of oil, gasoline and other products.
Marathon Oil Corp. plans to cut capital spending by 17 percent this year to $5.1 billion, slashing its budget for refineries by more than half.
Chevron Corp. said it will cut spending by $1 billion this year on downstream businesses, which includes refining, marketing and transportation.
Exxon Mobil's earnings fell by more than half to $19.3 billion in 2009 as its refining business struggled with a plunge in global fuel consumption.
The company, based in Irving, Texas, is expanding natural gas operations. It plans to buy XTO Energy in a deal that was worth about $29 billion when it was announced in December. Tillerson said he expect the transaction to close in the second quarter.
XTO is a major holder of natural gas assets in the U.S., and Exxon Mobil would become a major player in what is expected to be a robust market for the cleaner-burning fuel.
Tillerson said the natural gas market will grow over the next 20 years as more power plants shift from coal to natural gas. He does not believe natural gas will become a popular fuel for vehicles because of the challenges in converting it for that use.
He also said refueling stations for natural gas would be expensive to build, and it would take longer for consumers to fill their tanks with natural gas than with gasoline or diesel.
"We just don't see natural gas as a viable transportation fuel," he said. "We don't think the consumer is going to be particularly pleased with what they have to do."
Shares of Exxon fell 9 cents to $67.13 in afternoon trading.

Copyright © 2010 The Associated Press. All rights reserved.

Natural Gas Study Says NG Power Generation to Double

10 March 2010-- A study, Fueling North America's Energy Future: The Unconventional Natural Gas Revolution and the Carbon Agenda, says that shale gas, the expansion of natural gas resources, could augment natural gas supply and open competition among different energy sources. The report comes from IHS Cambridge Energy Research Associates (IHS CERA) and more than 100 U.S. and Canadian stakeholders and government officials participated in the study.
The report said potential growth in power demand will likely lead natural gas demand for power generation to double to 38 billion cubic feet per day by 2030. Substituting coal-fired generation with natural gas-fired generation will result in short-term greenhouse gas (GHG) reductions but there is a limited pool of leftover gas-fired capacity, which prevents wholesale fuel switching, according to the study. Also, replacing coal-fired generation with natural gas-fired units outright will not help meet the target GHG reduction of 80 percent by 2050. To meet that goal would require more nuclear and renewable power as well as significant advances in carbon capture and storage (CCS).
The report also said the uncertainty of carbon reduction legislation and the viability of CCS are two major uncertainties facing natural gas' future in the power generation fuel mix.

U.S. Government in the Way to Develop Natural Gas

By Anna Driver
HOUSTON, March 9 (Reuters) - The U.S. has vast supplies of natural gas locked tight in shale that could offer a long-term energy solution, but the government is ignoring the resource's potential, Jim Mulva, the chief executive officer of ConocoPhillips (COP.N), said on Tuesday.
Shale formations across North America are said to hold enough gas to meet domestic demand for a hundred years. Historically, those resources have been out of reach, but technology like horizontal drilling now allows energy companies to tap natural gas trapped in rock.
U.S. policies and proposals are an impediment and are overly favorable to development of renewable sources of energy, Mulva said..
"Unfortunately, (the U.S. government) also proposes higher taxes on the natural gas industry, and is tightening resource access, Mulva said in the text of a speech to be delivered at the IHS CERAWEEK conference. "Perhaps it has not yet learned that if you tax something, you get less of it."
While shale drilling techniques were pioneered in the United States, the country will fall behind others like China unless more is done to produce shale acreage, Mulva said.
"The shale gas revolution here occurred on private and state land, not federal land," the CEO of the third largest U.S. oil company said. "Think of the economic development and job creation potential if more land was opened and if less red tape tied up the acreage that is leased."
Last month, Conoco and BP Plc (BP.L) said they would drop out of a group lobbying for the U.S. Climate bill because proposed legislation would hurt the motor fuels and natural gas industries.
The U.S. Climate Action Partnership, was a coalition of companies and moderate environmental groups that created a blueprint for legislation aimed at cutting greenhouse gas emissions.
At the time, Mulva said the organization's plan did not do enough to recognize the role natural gas could play in reducing emissions.

Australian Natural Gas in Demand

By Angus Whitley
March 9 (Bloomberg) -- Royal Dutch Shell Plc and PetroChina Co.’s joint bid for Arrow Energy Ltd. may have removed the potential for a Chinese group or any state-owned Chinese companies to make a rival bid, the Australian Financial Review reported in its Street Talk column. Shell, PetroChina and Arrow are still discussing a possible agreement and the value of Arrow’s international business, the newspaper said.
To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

Last Updated: March 8, 2010 15:19 EST

Natural Gas Find in Egypt

By Ayesha Daya

March 7 (Bloomberg) -- Dana Gas PJSC, a United Arab Emirates-based explorer and producer, made two natural gas discoveries in the Nile Delta, Egypt, that may add an estimated 35-70 billion cubic feet of reserves.

The first discovery was at ‘El Panseiya-1’ in the West El Manzala concession, with an estimated 8-13 billion cubic feet of recoverable gas, the company said in a statement to the Abu Dhabi bourse. The second discovery, ‘South Faraskour-1,’ also in the West El Manzala concession, is estimated to hold recoverable reserves of 27-57 billion cubic feet of gas with associated condensate.

The El Panseiya-1 and South Faraskour-1 discoveries are expected to be tied in to Dana’s El Wastani gas processing plant by the end of 2010, it said.

Link to Company News:{DANA UH CN }
To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net
To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

Natural Gas May Prove Alternate Energy Killer

By Llewellyn King

Hearst Newspapers

Updated: 03/05/2010 06:10:04 PM MST

"When an irresistible force such as you

"Meets and old immovable object like me

"You can bet just as sure as you live

"Something's got to give ..."

-- Johnny Mercer

WASHINGTON -- When Johnny Mercer penned those words, he was speaking of love not politics, and not the politics of energy. But he could have been.

In energy, there are two great forces that collide: public policy and the market. Despite the love affair of recent decades with markets, neither is always right.

Consider the struggle between old energy --market-tested and with a mature infrastructure -- and new, alternative energy.

Public policy, under Republicans and Democrats, has sought to discourage the nation's ever-greater dependence on imported oil (about 60 percent). But the market has sung a siren song, tempting us to more oil consumption.

Back in the 1970s, when we imported only 30 percent of our oil, the country was frightened into making great efforts in research and development to find alternatives to oil. Most of those concentrated on oil substitution and new ways of making electricity. None of the new ideas penetrated the market in any serious way, with the possible exception of wind, and that took many years to gain general acceptance and to overcome institutional and technical issues.

The Big Enchilada, oil, proved to be recalcitrant. President Jimmy Carter wanted to make it from coal; and a

---

nascent ethanol industry was tentatively testing the forbearance of government in seeking tax breaks and subsidies.

The search for a way out began after the Arab oil embargo of 1973-74, and reached a zenith with the Iranian Revolution of 1979. Many well-intentioned programs were undertaken, concentrating primarily on coal -- coal as a gas, coal as a fluid and the improved combustion of coal.

But it was then, as it is now, a wild time for new entrants. Dozens of projects were funded including magneto-hydrodynamics, in situ coal gasification, garbage to electricity, battery research, cryogenic transmission research and energy storage in fly wheels.

Some, if not a majority, of the projects were pure science fiction.

The energy establishment favored not so much the new as the duplicative. Its members leaned to coal, oil shale, more oil and gas leasing and more nuclear. The old Mobil Oil Company paid a whopping $212 million for a Colorado oil shale lease without regard to how it could be worked.

Across the Southwest, banks lent to every energy project that came through the door. Natural gas got short shrift because it was wrongly thought to be a depleted resource.

Then in the mid-1980s, Saudi Arabia opened its oil spigot all the way (10 million barrels a day) and the market annihilated expensive energy from new sources. With gasoline cheap again, SUVs hit the roads in giant numbers; a string of Southwest banks collapsed; and the energy debate turned not to changing consumption but to deregulation, facilitating profligate use across the board.

The market spoke and it shouted down concerns about national security or technological substitution. Public policy surrendered to the market. Despite fine speeches from secretaries of energy on the danger of exporting our security and our money, the market continued its advocacy of excess.

The George W. Bush administration identified our vulnerability in oil and identified a looming crisis in electricity. But it faltered when it came to government coercion of markets; for example, getting more nuclear plants built.

Bush himself fell for the temptations of ethanol from corn and the possibility of switch grass. Now these are under threat from new discoveries of oil off Brazil and far greater estimates of oil production from Iraq. In fact, Iraq is being touted as a rival to Saudi Arabia with Brazil right behind it.

The Obama administration is hell-bent on getting off old energy. It loves "alternatives" and it's committed to doing something about global warming.

But in research, money does not equal results. While the Department of Energy is chock full of money for new energy research and development, cheap natural gas and new potential oil from unexpected quarters may do to Obama's new energy hopes what it did to Carter's: undermine and expose them to ridicule.

Public policy may again be pushed around by the irresistible force of the market, even if it is not serving the national interest.

--

Llewellyn King is host of television's "White House Chronicle" on PBS.

Rig Counts Up to 23 this Week

HOUSTON (Dow Jones)--The number of rigs drilling for natural gas climbed this week as producers boosted activity in response to higher commodity prices.

The number of oil and gas rigs climbed to 1,396, up 23 from the previous week, according to data from oil field services company Baker Hughes Inc. (BHI). The number of gas rigs was 926, an increase of 21 rigs from last week, while the oil rig count was unchanged at 456. The number of miscellaneous rigs was 14, an increase of two rigs.
The number of gas rigs in use peaked at 1,606 in September 2008. Producers scaled back natural gas drilling sharply last year in response to low prices amid a flood of supply from shale-rock formations. But the rig count has steadily climbed over the last several weeks, as producers locked in prices on future output and frigid winter weather boosted gas demand.
However, some traders and analysts see the rising rig count as a sign that supply will outstrip demand as winter heating use subsides and more gas is injected into underground storage.
In September, natural gas prices reached their lowest level in more than seven years, but prices recently have bounced back somewhat from that low. Winter weather has spurred significant demand for gas heating, putting a dent in inventories and paring them back to near-average levels.
Total gas in U.S. storage for the week ended Feb. 26 was 1.737 trillion cubic feet--about 4% below last year's level and 1.2% above the five-year average.
Natural gas for April delivery on the New York Mercantile Exchange recently traded less than a penny lower at $4.567 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com

Natural Gas Price is $4.575/MMBtu

By CHRIS KAHN (AP) – 8 hours ago
NEW YORK — Natural gas prices tumbled Thursday after the government said supplies dropped less than expected last week.

Natural gas, which is used to heat homes and power energy generators, has been in heavy use most of the winter as storms covered much of the Midwest and Northeast with snow. But the U.S. is consuming less as the weather warms, and the Energy Information Administration said the nation's storage level is still higher than the five-year average.

Inventories held in underground storage dropped by 116 billion cubic feet last week. Analysts expected a drop of between 128 billion and 132 billion cubic feet.

Natural gas prices fell after the report. The contract for April delivery lost 18.2 cents, nearly 4 percent, to settle at $4.575 per 1,000 cubic feet on the New York Mercantile Exchange. Prices dropped as low as $4.556 earlier in the day, the lowest ever for the April contract.

Elsewhere, oil prices fell as the dollar increased against other major currencies. Oil, which is priced in dollars, tends to drop as the dollar rises and makes crude barrels tougher to buy for investors holding foreign money.

Benchmark crude for April delivery fell 66 cents to settle at $80.21 a barrel on the Nymex as the U.S. Dollar Index gained 0.83 percent.

At the pump, retail gas prices ticked higher overnight to a new national average of $2.706 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 4.5 cents more expensive than it was a month ago and 77.3 cents more expensive than last year.

In other Nymex trading in April contracts, heating oil fell 2.5 cents to settle at $2.0687 a gallon, and gasoline lost 1.39 cents to settle at $2.2337 a gallon. In London, Brent crude gave up 71 cents to settle at $78.54 a barrel on the ICE futures exchange.

Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.



Copyright © 2010 The Associated Press. All rights reserved.

Spain Delivering Natural Gas to Italy

MILAN, March 3 (Reuters) - Spain's Gas Natural (GAS.MC: Quote, Profile, Research) has imported 280,000 cubic metres of liquefied natural gas (LNG) to Italy this winter and plans more deliveries in a bid to boost its market share, the company said on Wednesday.


Gas Natural's deliveries to Panigaglia LNG terminal in central Italy, controlled by Italy's oil and gas major Eni (ENI.MI: Quote, Profile, Research), have come in four 70,000 cubic metre shipments and more deliveries are expected soon, it said in a statement.

Increasing delivery frequency "clearly shows that Gas Natural is betting on the Italian market which, due to its strategic location and energy needs, is an important opportunity for the company to boost its presence in the country," it said.

Gas Natural said it was going ahead with its plan to build an 8-billion-cubic-metre terminal at the northern Italian port of Trieste, but gave no further details. (Reporting by Svetlana Kovalyova, editing by Anthony Barker and Daniel Fineren)

Natural Gas Field Nearly Developed for Israel

By KAROUN DEMIRJIAN (AP) – 11 hours ago

TEL AVIV, Israel — A U.S. energy company announced Tuesday that a project it is developing off the Israeli coast could soon end the country's longtime dependence on natural gas imports.
Noble Energy Chief Executive Charles D. Davidson said the Tamar gas field — set to become operational in 2012 — will allow Israel to meet its own energy needs, and potentially even become an exporter of fuel.
"Our thoughts are that will exceed what the market will need," Davidson said. "It's significant to Israel and what it can do for this country in terms of lowering energy costs."
Tamar's five wells are each expected to pump 150 million cubic feet of natural gas per day — a pace on par with the Houston company's other wells operating in places like the Gulf of Mexico, he said. The company hopes to open operations in a second Israeli field, called Dalit, at a later time.
The possibility of exporting fuel would mark a dramatic turnaround for Israel, a country in an oil-rich region that is notoriously empty of natural resources and has always relied heavily on fuel imports. The late Prime Minister Golda Meir famously lamented that Moses could have picked somewhere other than "the one spot in the Middle East that has no oil" as a Jewish homeland.
A national supply of natural gas could mean major energy savings for Israeli citizens, as well as revenue for the government from corporate taxes and profit royalties, Davidson said.
Tamar is a significant project for the developers too. When complete, it will account for one-third of Noble's proven reserves, he said. He gave no forecast for profits from the expected $2.5 billion to $3 billion investment.
Two wells are already in place in the Tamar field, where Noble announced it discovered significant deep water natural gas deposits in early 2009. The company plans to break ground on additional wells later this year, and is awarding contracts to build undersea pipelines in the coming months.
Despite the rosy outlook, several hurdles remain. Most important, the company is waiting for the government to designate a termination point for the pipeline. Without that, the company won't be able to deliver the gas.
Israeli officials expect demand for natural gas to more than double over the next decade, fueled by economic growth and a shift away from coal — which currently powers about 60 percent of electricity production. That makes some Israeli officials skeptical that Tamar will produce enough natural gas to meet the country's needs.
Egyptian company East Mediterranean Gas started exporting natural gas to Israel in 2008, under a 20-year agreement at a fixed price. Earlier this week, an Egyptian high court ruled that the company must price the gas to reflect international market rates.
"If the Egyptians provide us with reliable and relatively cheap gas, I can't see how the Israeli market or our ministries would reject it," said Constantine Blyuz, chief economist for the natural gas authority at the Ministry of National Infrastructures. "It's not the government's decision, it's the individual consumers."

Copyright © 2010 The Associated Press. All rights reserved.