Friday, December 29, 2006

Working gas in storage was 3,121 Bcf as of Friday, December 22, 2006, according to EIA estimates. This represents a net decline of 46 Bcf from the previous week. Stocks were 458 Bcf higher than last year at this time and 355 Bcf above the 5-year average of 2,766 Bcf. In the East Region, stocks were 165 Bcf above the 5-year average following net withdrawals of 28 Bcf. Stocks in the Producing Region were 154 Bcf above the 5-year average of 793 Bcf after a net injection of 6 Bcf. Stocks in the West Region were 36 Bcf above the 5-year average after a net drawdown of 24 Bcf. At 3,121 Bcf, total working gas is above the 5-year historical range.

Tuesday, December 26, 2006

Anadarko Petroleum Corp., the U.S. oil and natural-gas producer that bought Kerr-McGee Corp. earlier this year, sold fields in Louisiana to Exco Resources Inc. for $1.6 billion to help cut debt.

Exco, which went public in February with billionaire hedge fund manager T. Boone Pickens as its largest shareholder, will almost double its oil and gas reserves. Anadarko is selling assets to pay off debt after buying Kerr-McGee and Western Gas Resources Inc. in August for a combined $22.5 billion.

Anadarko, based in The Woodlands, Texas, is selling the fields to focus on projects that are more attractive, Chief Executive Officer Jim Hackett said in a statement today. The fields are tapped by about 350 wells, and 96 percent of the proved reserves on the properties are in production, Exco said.

``Hackett wants Anadarko to be the fastest-growing production company and is trying to improve his hand,'' said Fadel Gheit, an analyst at Oppenheimer & Co. in New York who rates Anadarko shares ``neutral'' and owns none. ``He's not willing to keep any asset that doesn't have enough growth potential.''

Shares of Anadarko rose 56 cents, or 1.3 percent, to $42.70 in New York Stock Exchange composite trading. The stock has fallen 9.9 percent this year. Shares of Dallas-based Exco jumped $1.06, or 6.3 percent, to $17.90 and have gained 37 percent since the initial offering on Feb 8.

Thursday, December 21, 2006

Working gas in storage was 3,167 Bcf as of Friday, December 15, 2006, according to EIA estimates. This represents a net decline of 71 Bcf from the previous week. Stocks were 342 Bcf higher than last year at this time and 274 Bcf above the 5-year average of 2,893 Bcf. In the East Region, stocks were 110 Bcf above the 5-year average following net withdrawals of 52 Bcf. Stocks in the Producing Region were 117 Bcf above the 5-year average of 824 Bcf after a net withdrawal of 14 Bcf. Stocks in the West Region were 47 Bcf above the 5-year average after a net drawdown of 5 Bcf. At 3,167 Bcf, total working gas is within the 5-year historical range.

Monday, December 18, 2006

Nigeria's total Liquefied Natural Gas (LNG) output will hit a record 52 million metric tones per annum (52MPTA) by 2009, Edmund Daukoru, Minister of state for Petroleum Resources has said.

The Minister who disclosed this recently explained that the Nigerian Liquefied Natural Gas (LNG)experiment spearheaded by the Nigerian National Petroleum Corporation {NNPC} has been successfully pushing the LNG to Europe, while its first cargo to the United States of America was recorded in January this year.

According to him, "shipment to the United States is expected to increase with the addition of a sixth train which will increase the annual output to 22mtpa is in response to the ever increasing global energy demand that the two additional LNG projects namely Brass LNG and Olokola LNG were launched. These two LNG projects will be fully operational from 2009".

The minister said the 22mtpa capacity of the NLNG will combine with the 30 mtpa output of the Brass LNG to push national output to 52 mtpa by 2009.

He also spoke on the gas monetization projects of the Federal Government saying that the development has brought about other projects utilizing gas to produce energy based derivatives such as the 34,000 barrels per day Escravos Gas to Liquids (EGTL) and the Natural Gas Liquids (NGL) projects 1 and 2 operated by Chevron Nigeria Limited and Mobil Producing Nigeria Unlimited respectively.

He further charged the Nigerian National Petroleum Corporation (NNPC) and the operators in the sector to channel more investments and needed technology in the current quest to develop the nation's vast gas resources.

He explained that the development will boost the optimization of the nation's share and global competitiveness in the high gas export market. According to him,the era of seaching for oil alone has been displaced by oil and gas exploration for maximum economic benefits for the nation.

Friday, December 15, 2006

EnCana Corp., Canada's largest natural-gas producer, plans to spend $5.8 billion on oil and gas projects in 2007, a 6.5 percent drop from this year as it focuses on less-costly wells.

Combined production of oil and gas in 2007 will be little changed at an estimated 4.28 billion cubic feet of gas equivalent, compared with 4.3 billion this year, EnCana said in a statement today. The Calgary-based company will double its quarterly dividend to 20 cents a share and extend its stock- buyback program.

EnCana Chief Executive Officer Randy Eresman is slowing gas exploration in Texas and other areas as a boom in drilling increases demand for labor and boosts costs. Other energy companies including ConocoPhillips, Devon Energy Corp. and Nexen Inc. also announced reduced capital budgets for next year.

Drilling costs are expected to rise 5 percent to 10 percent in 2007, Eresman, 48, told analysts and investors on a conference call today.

The company said it expects to drill 4,260 wells in 2007, a 17 percent increase from this year. A larger percentage of the wells will be shallow ones that are less costly to drill, company spokesman Al Boras said in a telephone interview.

Shares of EnCana fell 30 cents to C$60.69 on the Toronto Stock Exchange. The stock has risen 15 percent this year.

Production

Production of gas, which accounts for about 80 percent of EnCana's output, is expected to rise 2.7 percent to 3.46 billion cubic feet, the company said.

About $700 million will be used to increase output from Alberta's oil-sands deposits, EnCana said. Oil-sands production will drop 28 percent to an estimated 31,000 barrels a day as the company begins to share output with ConocoPhillips of Houston, its partner in a joint venture that begins operating in January.

The partners agreed in October to spend $10.7 billion over 10 years to boost output from Alberta's oil-soaked sand and refine the heavy crude into fuels such as gasoline and diesel.

EnCana said it plans to complete its planned buyback of 10 percent its outstanding shares by year-end, having repurchased 9.4 percent so far. An additional 3 percent to 5 percent of outstanding shares will be bought back next year, the company said.

Thursday, December 14, 2006

Working gas in storage was 3,238 Bcf as of Friday, December 8, 2006, according to EIA estimates. This represents a net decline of 168 Bcf from the previous week. Stocks were 245 Bcf higher than last year at this time and 225 Bcf above the 5-year average of 3,013 Bcf. In the East Region, stocks were 84 Bcf above the 5-year average following net withdrawals of 93 Bcf. Stocks in the Producing Region were 101 Bcf above the 5-year average of 854 Bcf after a net withdrawal of 55 Bcf. Stocks in the West Region were 40 Bcf above the 5-year average after a net drawdown of 20 Bcf. At 3,238 Bcf, total working gas is above the 5-year historical range.

Wednesday, December 13, 2006

Balmy November weather on the East Coast kept the pressure off natural gas prices last month, but a forecast for colder winter temperatures may nudge prices higher in 2007, according to a government report.

The number of days in which temperatures dropped to heating-degree level were nearly 30 percent below normal in the Northeast and Mid-Atlantic in November, according to the Energy Information Administration's monthly short-term energy outlook.

Natural gas prices averaged $7.63 per thousand cubic feet during the month, well below the price spikes seen last year in the wake of a destructive hurricane season. But prices then fizzled as winter 2006 temperatures were warmer than usual.

In 2007, the National Oceanic and Atmospheric Administration expects a colder winter compared with last year _ but temperatures will likely trend above normal. Natural gas prices are expected to hover below $9 per thousand cubic feet as a result, the EIA said.

Natural gas settled at $7.43 per thousand cubic feet Tuesday on the New York Mercantile Exchange.

Tuesday, December 12, 2006

A proposed natural gas terminal in Long Beach Harbor is in jeopardy as officials in that city express growing doubts about safety and other issues surrounding the $700-million project.

The facility, one of several liquefied natural gas processing plants proposed for the West Coast, would be built in the harbor — the only such project to be situated so close to a major urban center.

The location so complicates an ongoing review that harbor officials suggest halting the environmental impact report before it is complete, effectively putting an end to the proposal.

Harbor Commission President James C. Hankla, in a Dec. 4 letter to the Long Beach mayor and City Council, questioned whether city officials still want the gas terminal. He said his staff has been working to move the project forward while the city has failed to negotiate a deal with the energy company for lower-cost natural gas for Long Beach residents.

Monday, December 11, 2006

Oil and gas producer Devon Energy Corp. on Monday said Chief Financial Officer Brian J. Jennings will step down.

Jennings, 46, spent seven years with the company and is leaving "to pursue other interests," Devon said.

Danny Heatly, vice president of accounting, will continue to fulfill the responsibilities of principal accounting officer.

In November, Devon posted a 5 percent drop in third-quarter earnings due to lower natural gas prices and increased operating costs.

Friday, December 08, 2006

Natural gas futures fell fractionally to $7.668 per 1,000 cubic feet on the Nymex, unleaded gasoline rose 1.1 cent to $1.6385 and heating oil prices were up 1.82 cents to $1.7970 a gallon.

Thursday, December 07, 2006

Natural-gas futures closed at their lowest level in 10 weeks Thursday after a government report showed that supplies of the fuel fell generally within market expectations, but overall inventories remained more than 7% above that of a year ago.

January natural-gas futures closed down 5.6 cents to $7.671 per million British thermal units on the New York Mercantile Exchange after a low of $7.58. The contract has traded or closed at levels this low since Sept. 28.
O
n Wednesday, the price fell to a low of $7.60, but recovered to post a gain and halt a four-session losing streak.

Natural-gas inventories fell 11 billion cubic feet for the week ended Dec. 1, the Energy Department reported Thursday.

Global Insight was looking for a bigger decline of 25 billion. But Analysts at Strategic Energy & Economic Research expected the report to show a decline of 8 billion cubic feet.

The data compares with a fall of 58 billion last year and a five-year average decline of 63 billion, according to SEER.

"This is a very light draw from storage for this time of year, and is a direct reflection of how light weather-driven demand has been this fall and early winter," said Ben Smith, a managing partner at First Enercast Financial.

"At least the reduction in natural-gas price this week shows the market is finally responding to all this warm weather we've experienced over the past month," he said, noting that "even this last winter storm that swept the Midwest was quick and is again being replaced with warmer than average temperatures."

Total stocks now stand at 3.406 trillion cubic feet, up 232 billion cubic feet from the year-ago level, and 282 billion cubic feet above the five-year average, the government data said.

"The only support for gas is the anticipation for next weeks' numbers, which should be more normal because of the cold front that moved through the U.S," said James Williams, an economist at WTRG Economics.

But "weather forecasts for the next few weeks are for warmer-than-normal temperatures, which should feed a generally bearish sentiment," he said.
Working gas in storage was 3,406 Bcf as of Friday, December 1, 2006, according to EIA estimates. This represents a net decline of 11 Bcf from the previous week. Stocks were 232 Bcf higher than last year at this time and 282 Bcf above the 5-year average of 3,124 Bcf. In the East Region, stocks were 109 Bcf above the 5-year average following net injections of 10 Bcf. Stocks in the Producing Region were 129 Bcf above the 5-year average of 881 Bcf after no net change in stock levels. Stocks in the West Region were 45 Bcf above the 5-year average after a net drawdown of 21 Bcf. At 3,406 Bcf, total working gas is above the 5-year historical range.
January natural-gas futures edged up 2.9 cents to $7.756 per million British thermal units ahead of weekly gas-supply data.

The price hit its lowest level since late September in intraday trading, but recovered to post a gain and halt a four-session losing streak.

Analysts at Strategic Energy & Economic Research expect the Energy Department to report a decline of 8 billion cubic feet of gas supplies for the week ended Dec. 1.

Wednesday, December 06, 2006

Bolivia's natural gas exports to Brazil and Argentina are back to normal following planned repairs to a pipeline that was damaged by flooding in April, state oil company YPFB said on Tuesday.

Due to the repair work on the pipeline in the southern Bolivian province of Tarija, natural gas shipments to Brazil and Argentina had been reduced since early November.

"From today onward the exports of (natural) gas to Brazil and Argentina are back to normal," a YPFB statement said.

The flood damaged pipelines operated by Brazilian state oil company Petrobras and a Bolivian pipeline that supplies natural gas for the local market.

Brazil has a contract to buy up to 30 million cubic meters per day of natural gas from Bolivia, while Argentina buys a maximum of 7.7 million cubic meters per day.

Bolivia has the second biggest natural gas reserves in South America after Venezuela and the leftist government of President Evo Morales has taken greater control of the energy industry in a nationalization process.

Tuesday, December 05, 2006

January crude closed nearly unchanged at $62.43 a barrel, down a penny for the session as traders gauged the likelihood that key oil producers will agree to cut output when they meet next week.

January natural gas fell 12.1 cents to $7.685 per million British thermal units, marking its lowest closing level since late September. The contract has tallied a loss of 13.3% in four sessions.
Oil prices edged higher Tuesday as traders weighed forecasts calling for mild U.S. weather next week against anticipated further production cuts by OPEC.

Light sweet crude for January delivery rose 21 cents to $62.65 a barrel on the New York Mercantile Exchange. January Brent crude at London's ICE Futures exchange was up 40 cents at $63.85 a barrel.

Also on Tuesday, the U.S. Energy Department released its annual long-term world energy forecast. The agency predicted that the price of oil, when adjusted for inflation, would decline between 2007 and 2015 as investments made in recent years of historically high prices bring new supplies to the market.

After that, the Energy Department said it expects prices to resume an upward trend, bringing average real prices (in 2005 dollars) by 2030 to more than $59 a barrel. In nominal terms, that would be equivalent to about $95 a barrel. The agency said it expects OPEC to adjust its output over the next 25 years to try to keep average prices between $50 and $60 _ a range it is already trying to achieve.

In the very short-term, energy analyst Victor Shum said he expects the oil market to strengthen further as demand increases during the Northern Hemisphere winter. He predicted that $60 a barrel was the new price floor.

"In the short-term future, what's still going to move the market is the weather," said Shum, of Purvin & Gertz in Singapore.

At the moment, however, the U.S. autumn has been marked by relatively mild weather. Nymex natural gas fugures fell 7 cents to $7.73 per 1,000 cubic feet, while heating oil futures were steady at $1.809 a gallon. Unleaded gasoline futures were flat at $1.6674 per gallon.

Monday, December 04, 2006

The UAE is planning to increase its production of natural gas by 33 per cent by the end of 2008, Energy Minister Mohammed bin Dhaen al Hamili said here today.

Attributing the planned increase to the fast development taking place in the country, growing population and industrialisation, all of which requires substantial quantities of power, he said the UAE's proven reserve base of natural gas is estimated at over six trillion cubic metres, thus placing it fourth in the region and fifth in the world.

Oil and natural gas reserves were sufficient "because production is entirely compensated for by additions of new proven reserves. There is certainly no danger of constraints in natural gas reserves in the near to medium terms," he said.

He said proven natural gas reserves today were estimated at 180 trillion cubic metres, which would suffice world demand for another 65 years at the current production levels.

Al Hamili said the rate of estimated growth of natural gas demand varies from 1.8 to 3.1 per year until 2020, adding that the growth in world demand of LNG is expected to reach 12 per cent per year by 2015.

Friday, December 01, 2006

Natural gas at Canada's biggest trading point may fall, ending a 10 percent rally in the past four sessions, on forecasts for a return to mild weather in the northern U.S. next week.

Heating demand in the U.S. Midwest will return to normal Dec. 6 after peaking at 25 percent above normal Dec. 4, Belton, Missouri-based Weather Derivatives said. Temperatures in the region will be as much as 8 degrees Fahrenheit above normal Dec. 10 to Dec. 14, MDA Federal's EarthSat Energy said.

Spot gas at EnCana Corp.'s AECO C hub in Alberta, the nation's largest trading point, gained 27 cents to C$8.22 per gigajoule ($7.60 per million British thermal units) yesterday, according to data compiled by Bloomberg. It was the first time gas at Canada's benchmark hub closed above $8 per gigajoule since Feb. 1.

On Calgary-based Natural Gas Exchange Inc.'s NGX electronic energy market, spot gas at AECO gained 7 cents to C$8.22 per gigajoule.

Thursday, November 30, 2006

The Energy Department said natural-gas inventories fell 32 billion cubic feet for the week ended Nov. 24. Global Insight expected a decline of 18 billion. Total stocks now stand at 3.417 trillion cubic feet, up 185 billion cubic feet from the year-ago level, and 230 billion cubic feet above the five-year average, the government data said. January natural gas rose 12.9 cents to $8.99 per million British thermal units after reaching an over two-month high of $9.05 before pulling back to $8.86 in mid-day trading.
Working gas in storage was 3,417 Bcf as of Friday, November 24, 2006, according to EIA estimates. This represents a net decline of 32 Bcf from the previous week. Stocks were 185 Bcf higher than last year at this time and 230 Bcf above the 5-year average of 3,187 Bcf. In the East Region, stocks were 62 Bcf above the 5-year average following net withdrawals of 28 Bcf. Stocks in the Producing Region were 113 Bcf above the 5-year average of 897 Bcf after a net withdrawal of 5 Bcf. Stocks in the West Region were 55 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,417 Bcf, total working gas is above the 5-year historical range.

Wednesday, November 29, 2006

Pengrowth Corporation, administrator of Pengrowth Energy Trust, (collectively, "Pengrowth") is pleased to announce that it has entered into a definitive agreement to acquire Canadian oil and natural gas producing properties and undeveloped lands (the "CP Properties") through the acquisition of the shares of four subsidiaries of Burlington Resources Limited, a subsidiary of ConocoPhillips, for a purchase price of $1.0375 billion, subject to customary adjustments.

The CP Properties are high working interest, largely operated interests, similar to those that Pengrowth has extensive experience in managing. These properties currently produce approximately 21,625 barrels of oil equivalent (boe) per day (before royalties), comprised of 42 percent crude oil, 52 percent natural gas and six percent natural gas liquids. The transaction is expected to be strongly accretive to the unitholders of Pengrowth on a per unit basis in terms of distributable cash flow, production and reserves.

Based upon an independent evaluation by GLJ Petroleum Consultants Ltd. (GLJ) dated November 1, 2006, the CP Properties have proved plus probable reserves of 65.8 million boe and proved reserves of 51.4 million boe (on a company interest before royalties basis using escalated prices). The purchase price of $1.0375 billion represents attractive transaction metrics of $47,975 per boe per day based on current levels of production, $15.77 per boe of proved plus probable reserves and $20.17 per boe of proved reserves.

The CP Properties are expected to provide Pengrowth with a wide range of opportunities to add value through effective deployment of capital, including opportunities identified by Pengrowth on developed lands and approximately 375,000 additional net acres of undeveloped land.

Following completion of the recent business combination with Esprit Energy Trust and the acquisition of the Carson Creek property from ExxonMobil Canada Energy, Pengrowth had unused credit capacity of over $500 million on a syndicated bank credit facility of $950 million. The material terms and conditions of Pengrowth's bank credit facility remain unchanged.

The acquisition will be supported by a committed senior bank facility fully underwritten by the Royal Bank of Canada in the full amount of the purchase price with a term of 12 months commencing on the scheduled closing of the transaction on or about January 18, 2007.

The acquisition is effective as of November 1, 2006, and is subject to customary conditions and regulatory approvals. Pengrowth was advised in respect to the transaction by RBC Capital Markets and Scotia Waterous.

The transaction also provides Pengrowth with an opportunity to optimize the value of its core holdings through selective property sales. Pengrowth expects to pursue a comprehensive asset rationalization program on its entire portfolio of oil and natural gas properties through independent industry agents. In total, Pengrowth expects to divest of assets producing approximately 7,700 boe per day (before royalties) with proved plus probable reserves of 25 million boe (on a company interest before royalties basis using escalated prices). This includes properties Pengrowth currently has listed for sale through a third party sales agent. The terms of reference in respect to this disposition process have been established and several initial expressions of interest have been received representing approximately 4,300 boe per day of production (before royalties) and 17 million boe of proven plus probable reserves (on a company interest before royalties basis using escalated prices). The assets marked for divestiture are located in non-core areas or tend to have higher operating costs or a shorter reserve life and total proceeds from asset divestments are expected to be approximately $300 to $400 million.

The purchase of the CP Properties is the largest property acquisition made to date by a Canadian energy royalty trust. The agreement followed a competitive bidding process and close cooperation with management of ConocoPhillips. Pengrowth has an established history of completing transactions with major oil and gas companies based upon its long-term relationships, financial strength and experience in effective negotiations.

Tuesday, November 28, 2006

Natural-gas futures touched their highest levels in over a week ahead of the expiration of the December contracts, while growing expectations that key oil producers will agree to further cut output at a meeting next month helped lift crude prices closer to $61 a barrel.

Natural-gas for December delivery rose 12.2 cents to $8.22 per million British thermal units on the New York Mercantile Exchange after a high of $8.14, its strongest intraday level since Nov. 17.
January natural gas, which will become the lead-month contract at the session's end, was at $8.57, up 21.3 cents.

January crude was last up 53 cents at $60.85 a barrel in New York, after earlier climbing as much as 1% to $60.90.

"Some forecasters are making the daring prediction that it might actually get cold in December," said Phil Flynn, a senior analyst at Alaron Trading, in e-mailed commentary.

"Though the eastern third of the country is enjoying an atypical warm spell for this time of year ... change is on the way in the form of an Arctic air mass currently chilling the Northwest and Rocky Mountains," said John Kilduff, an analyst at Fimat USA.

Still, "winter readings don't appear to have much staying power and should diminish by the middle of next week," he said. "Until cold with some longevity blankets the high consumption regions, prices will have difficulty over $8," he said, adding that "right now, the coming cold just doesn't seem severe enough to eat up much storage."

Early estimates for Thursday's weekly Energy Department update on natural-gas supplies calls for a decline between 5 billion and 40 billion cubic feet, according to Fimat.
Oil prices rose toward $61 a barrel Tuesday on concerns about winter weather, a December OPEC meeting and violence in Iraq.

Accuweather.com is calling for wintry U.S. weather in the West to gradually move to the East. On Monday, oil prices were lifted by more than $1 a barrel after an attack on an Iraqi oil facility and comments from Saudi Arabia's oil minister suggesting further production cuts by the Organization of Petroleum Exporting Countries, which meets in Nigeria next month.

Light, sweet crude for January delivery rose 60 cents to $60.92 a barrel on the New York Mercantile Exchange. January Brent crude at London's ICE Futures exchange rose 58 cents to $61.02 a barrel.

Nymex heating oil futures gained 1.12 cent to $1.7164 per gallon, unleaded gasoline fell less than a penny to $1.59 a gallon and natural gas futures rose 21.1 cents to $8.209 per 1,000 cubic feet.

Natural gas futures reversed three days of losses Monday on forecasts calling for colder weather across the U.S. over the next two weeks.

London-based newspaper Al-Hayat reported Monday that Saudi Oil Minister Ali al-Naimi had indicated that OPEC would evaluate the effect of October's decision to cut output when it meets next month in Abuja, Nigeria, and if necessary authorize another cut.

"We think that as the meeting's date closes in, the cartel will close ranks and coalesce around a position of supporting a cut," said Edward Meir at Man Financial. "If members leave the meeting without cutting, prices could sink even further."

Oil prices have fallen by about 23 percent since hitting an all-time trading high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1, despite the OPEC's announcement in mid-October that it would reduce output by 1.2 million barrels a day.

Skepticism that OPEC members are committed to production cuts, as well as milder-than-normal U.S. temperatures this fall, have moderated prices.

Monday, November 27, 2006

Apache Corp. has received necessary approvals to build a fourth processing unit and increase output at its Salam natural gas plant in Egypt's Western Desert.

The Houston-based independent oil and gas producer said in a statement today that the Egyptian General Petroleum Corp. and the Egyptian Natural Gas Holding Co. have approved construction of a so-called processing train. Combined with another recently approved third train, the additions will increase gas processing capacity to 710 million cubic feet per day from current production of 512 million cubic feet per day.

The expansions, slated to be finished before the end of 2008, also will increase capacity to process condensate, or natural gas liquids, to 66,000 barrels a day from 18,200 barrels a day.

Apache has awarded $375 million in contracts to Petrofac Limited to build the third and fourth trains. Each of the units will be able to process 100 million cubic feet per day of sales gas and 14,000 barrels of sales condensate per day.

Production of natural gas in Russia in January-October 2006 increased 2.6% year-on-year to 538.444 billion cubic meters, a source in the Industry and Energy Ministry told Interfax.

Gas production at gas and gas condensate fields amounted to about 502.28 bcm (up 2.6%), and at oil fields - 36.163 bcm of associated gas (up 3.2%).

According to the statistics, Gazprom companies in January-October 2006 produced 443.351 billion cubic meters of crude oil, or 88.3% of total production at gas fields.

Friday, November 24, 2006

The first electronic natural-gas trading session was held in Moscow on November 22 by decision of the government.

The event marked the beginning of an experiment that will last through 2006 and 2007. At first, trading will take place once a month, and later, every ten days.

Gas exchanges operate in the United States, the United Kingdom and Belgium. To be fair, it should be mentioned that several years ago Russia did try to sell gas at free prices. In 2003, for example, it offered 40 million cubic meters for sale. A volume 250 times bigger (10 billion cu m) was allocated for the latest experiment.

Half of it will come from Gazprom and the other half from independent producers. Hence the 5 + 5 trading formula. If all goes well, then next year the Industry and Energy Ministry will increase sales to 30 bcm, or 10% of all gas supplied to the domestic market. Among the mandatory government conditions is that Gazprom's sales must not exceed independent sales.

What is new compared to the earlier auctions? Incidentally, it would be an exaggeration to describe them as such - then, a buyer was invited either to agree or disagree with the seller's price. Vyacheslav Kravchenko, head of the gas department at the Ministry of Industry and Energy, said prior to the sales that Gazprom has liberalized information about available pumping capacities, because without giving independent producers access to pipes, free trade is nonsense. This time the gas concern guaranteed delivery in December of all the gas purchased on the exchange, regardless of who sold it. Perhaps spot deliveries will be made within several days in the future. The system of bidding has also been made transparent and easy to understand. Another important point is that Gazprom and independent producers now enjoy full parity, with no distinction made in values depending on the supplier.

Trading was done via central compression stations on long-distance gas pipelines covering the principal consumer areas. Buyers included mainly energy and metals companies, firms selling gas in the regions and Mezhregiongaz subsidiaries, as well as free traders.

Most of the gas - 70 million cu m (60%) - was sold to OGK-4 (Generation Company Four). The deal was large enough to affect the price. After the first two auctions, the price was above $60 per thousand cubic meters. The final average weighted price at compression stations was $36.89, and at regional gas distribution stations it was $51.07.

Ahead of trading, experts had forecasted a 45% to 47% rise, but the real figures proved modest - 31.6%. All in all, 119 million cu m was sold, although 150-200 million cu m was expected to be bid on. Many explain the relatively small quantities sold by the warm weather in most of the country.

Specialists forecasted that between 150 and 200 companies might trade. Itera, Novatek, TNK-BP, LUKoil, Rosneft and others were supposed to be among the sellers. In the end, however, only Gazprom and Novatek took part in the gas auction, while the other producers held back.

Long before trading began, experts commented on the lack of interest among independent suppliers. The main reason is that the latter can always sell their gas at negotiated, or free, prices, at least inside the country. Gazprom takes a different approach. It benefits from exchange trading because it can sell a combination of its own gas and gas imported from Turkmenistan.

The exchange has sold less gas than it was expected to. Is this a poor result? Perhaps it would be wrong to think so. According to Deputy Industry and Energy Minister Andrei Dementyev, the experiment will help to improve the trading technology, get adequate price signals, and create incentives for more effective use of gas.

The second exchange session is scheduled for December 15 and is expected to generate more interest because its gas volumes will be counted on the 2007 balance sheet.

Wednesday, November 22, 2006

Working gas in storage was 3,449 Bcf as of Friday, November 17, 2006, according to EIA estimates. This represents a net decline of 1 Bcf from the previous week. Stocks were 174 Bcf higher than last year at this time and 240 Bcf above the 5-year average of 3,209 Bcf. In the East Region, stocks were 72 Bcf above the 5-year average following net injections of 2 Bcf. Stocks in the Producing Region were 114 Bcf above the 5-year average of 901 Bcf after no net change in stock levels. Stocks in the West Region were 54 Bcf above the 5-year average after a net drawdown of 3 Bcf. At 3,449 Bcf, total working gas is above the 5-year historical range.

Tuesday, November 21, 2006

Please note........Natural Gas Inventory Numbers will be released on Wednesday due to the Thanksgiving holiday. InsideThePipelines will have the numbers immediately after they are released at 12 Noon Eastern Time.

January crude closed at $60.17 a barrel, up $1.37, to mark its highest closing level since Wednesday, while December natural gas declined 3.1 cents to end at $7.088 per million British thermal units.


Reduced oil flow at Alaska's Trans-Alaska Pipeline helped support oil prices Tuesday. Oil production in Alaska fell below 360,000 barrels per day as of Sunday, from a month high of more than 836,000 bpd a week earlier, due to weather-related disruptions to tanker operations at the port of Valdez last week, state data showed on Tuesday.

The Trans Alaska Pipeline, which connects the oil fields of the North Slope to the Valdez tanker terminal, cut rates to 25 percent of normal Monday amid high stocks at the Valdez tank farm, forcing North Slope oil producers to slash production.

Crude futures climbed Tuesday morning to trade back above the $59-a-barrel level as traders weighed expectations for a climb in U.S. crude inventories against predictions for a sixth-weekly decline in motor gasoline supplies.

The Energy Department will release its weekly data on petroleum supplies on Wednesday. January crude was up 50 cents at $59.30 a barrel. December natural gas fell by 8.9 cents, or 1.1%, to $7.93 per million British thermal units.

Monday, November 20, 2006

Natural Gas Weather Alert................

Freezing temperatures expected as far South as Florida

Southwest Florida residents should start digging out those heavy sweaters and even a glove or two, as another strong cold front is expected to move into the area Monday night.

Cold air blowing down the Florida peninsula today could lower temperatures as much as 20 degrees, according to the National Weather Service. It could also bring some scattered rain showers.

The cold air will be moving over the area from the gulf and mixing with the warm surface air. That could form sparse rain clouds around the area, according to forecaster Ryan Sharp.

"The chance of rain for (today) and Tuesday will increase, but just slightly," Sharp said Sunday.

After the front moves in Monday night, Tuesday morning is expected to be very cold with temperatures falling into the lower to mid-30s in the more inland areas, and near 40 on the Gulf Coast.

"If that prediction nudges down a degree or two, inland areas could see near-freezing lows," Sharp said.

Iran is confident deals to sell liquefied natural gas to India and build a pipeline linking Iranian gas fields with energy-hungry South Asia will both be agreed by the year's end, its foreign minister said on Friday.

Manouchehr Mottaki and Oil Minister Murli Deora said after talks in New Delhi that the two countries were negotiating the price of LNG to be supplied by Tehran.

"I am hopeful and somewhat confident that before the current year is over we will be able to finalise these two important projects," Mottaki told a news conference. Deora said he too hoped the process would soon bear fruit.

Last year the National Iranian Gas Export Company said it would export liquefied natural gas to India for 25 years from the end of 2009, but the deal was subject to ratification by the Iranian government.

The two countries have since been in dispute over the price India will pay for up to five million tonnes of LNG a year, and the haggling had become a stumbling block in attempts to build a pipeline to bring Iranian gas to Pakistan and India.

Mottaki said after the meeting Iran was keen to press ahead with both the LNG deal and the gas pipeline.

"I am sure with further negotiations with a specific formula we will finalise the LNG imports from Iran to India," he said. "Based on political will, India will receive gas very soon."

New Delhi accuses Tehran of seeking to increase the price tag, while Iran says the Indian offer is too low.

Iran has the second-largest natural gas reserves in the world behind Russia -- about 940 trillion cubic feet -- while growing Asian economies, including India and Pakistan, are scrambling to find energy sources to feed industrial expansion.

Deora said the Iranians had submitted a proposal on the pricing of gas and India would get back to them. He was hopeful of fixing a price acceptable to both sides.

He said new proposals had been added to the contract signed in June 2005 in Tehran, and these were being reviewed.

"I cannot say when we will get LNG, but not very late."

Separately, Mottaki and Deora said both sides were awaiting a report on the price to be paid for Iranian gas to be delivered through the proposed $7 billion pipeline.

India, Pakistan and Iran agreed last month to appoint an outside consultant to suggest a price for the pipeline gas. Iranian officials had offered a price linked to Dated Brent crude that equated to about $8 per million British thermal units (mmBtu), while New Delhi wants to pay about $4.25 per mmBtu.

Deora said the consultants were expected to submit their report soon and this would be followed by secretary level talks between the three countries in Tehran.

Saturday, November 18, 2006

Natural gas closed at a three-month high on speculation that cooler weather will hit the northern U.S. in the last two weeks of this month.

AccuWeather Inc. revised its forecast to show colder-than- normal air over much of the western and central U.S. from Nov. 23 through Nov. 27. The State College, Pennsylvania-based forecaster yesterday predicted warmer-than-average air over much of the country, including the northern third.

``You keep getting speculative dollars flowing in here on any news of a cold front,'' said Carl Neill, an analyst with Risk Management Inc. in Chicago.

Gas for December delivery gained 42.4 cents, or 5.5 percent, to $8.179 per million British thermal units on the New York Mercantile Exchange, the highest close since July 31. Benchmark futures are 8.6 percent higher this month. They gained 4.9 percent this week.

MDA EarthSat Energy's revised outlook today showed a shot of colder-than-average air pushing across the northern Plains and Midwest from Nov. 27 through Dec. 1.

The Midwest is the biggest gas-consuming region in the U.S. Seventy-nine percent of households there burn the fuel for heat, according to Energy Department data.

Mild Weather

Mild weather last week let utilities add to the underground caverns that hold excess supplies. U.S. gas inventories rose 5 billion cubic feet to 3.45 trillion last week, the Energy Department reported yesterday. The increase was the first in three weeks and left stockpiles the highest they've ever been at this time of the year.

``Warmer weather across all major U.S. natural gas markets likely undermined heating demand for natural gas in the week ending Nov. 10, causing underground inventories to rise,'' Antoine Halff, vice president and head of energy research at Fimat USA Inc. in New York, told clients in a report on Nov. 15. ``Nuclear plants continued to boost power generation, further trimming requirements from gas-fired plants.''

Gas inventories are 7.4 percent higher than the average for the past five years and 5.4 percent above a year ago at the comparable time.

Technical traders have made several attempts this week to bring gas prices past the $8.26 three-month high from Nov. 9. Each time, they have been turned back. The closest was a price of $8.25 during today's session.

``We should fail at the same levels that we've been failing at,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``Fundamental traders are not going to buy natural gas above $8.30. It's just chart-based traders trading off numbers.''

Friday, November 17, 2006

December crude fell 14 cents to $58.62 a barrel in New York, reversing from an earlier high of $59.30.

December natural gas dropped 20 cents, or 2.5%, to $7.92 per million British thermal units. "The natural-gas injection number was a bit bearish and it caused crude traders to book profits," said Phil Flynn, an analyst at Alaron Trading.

The Energy Department said natural-gas supplies rose 5 billion cubic feet last week, while data from tanker-tracking firm Petrologistics showed that key oil producers were following through with their promised cuts in crude output.

Thursday, November 16, 2006

The Energy Department said natural-gas inventories rose 5 billion cubic feet for the week ended Nov. 10, marking the first increase in three weeks. Global Insight expected a rise of 2 billion. Total stocks now stand at 3.45 trillion cubic feet, up 176 billion cubic feet from the year-ago level, and 238 billion cubic feet above the five-year average, the government data said.
Natural gas producer and distributor Williams Cos. on Thursday said it has agreed to sell its 74.9 percent interest in its Four Corners gas-gathering business to minority owner Williams Partners LP for $1.22 billion.

The partnership originally acquired a 25.1 percent stake in Williams Four Corners LLC from Williams for $360 million in June 2006. Williams spun off Williams Partners in 2005 but retains a majority stake.

The Four Corners business is located in the San Juan Basin of New Mexico and Colorado and includes about 3,500 miles of gathering lines and five natural gas processing plants. The system has capacity to collect 2 billion cubic feet of gas per day.

Williams Partners expects the deal to immediately boost cash flow. The company expects to finance its purchase evenly split between debt and equity.

The transaction is expected to close by the end of the fourth quarter, subject to closing conditions.

Williams Four Corners LLC earned $113.5 million in 2005.

Tuesday, November 14, 2006

It is the biggest fear for the Western Europe. It is even a bigger fear for countries like Poland and Romania. They are dependent on Russian natural gas. The economies in US, India and China are also dependent on natural gas more than crude oil. The rise in natural gas price can hurt the world economies beyond any imagination.

Russia is planning to set up a gas cartel. That will include Algeria, Qatar, Libya, the countries of Central Asia and Iran. It can be devastating for Indian and Chinese economies. It can be devasting for the world economic growth if natural gas price quadruple over the next two years.

The biggest problem comes from the fact many countries including developing countries have converted to natural gas using claen fuel technologies. They thought they can get away from the crude oil price control by OPEC. Now they face a new cartel headed by the Russia.

Regular contacts already tale place among gas exporting countries.

The world's top natural gas producers launched the Gas Exporting Countries Forum (GECF) in May 2001. The 15-member group includes OPEC oil producers Iran, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Nigeria and Venezuela, as well as leading European supplier Russia.

The group straddles about two-thirds of the world's gas reserves. Energy ministers of GECF stress the forum is a talking-shop rather than a cartel in the making.

However, the European Commission has said it is watching closely a cooperation deal agreed in August by Russian gas monopoly Gazprom and Algeria's Sonatrach company after concern it could lead to higher gas prices in Europe.

At the same time, the Commission is pressing the 25-nation European Union to adopt a common energy policy that would reduce its reliance on individual suppliers and strengthen its collective voice in dealings with Moscow.

Russia's energy might came to the fore at tense talks between European leaders and Russian President Vladimir Putin in Finland last month, where EU officials said Putin pledged to avoid a "politicisation" of oil and gas.

EU leaders sought to maintain a common front at the meeting but there are splits within the bloc between those who want to explore closer national energy ties with Moscow and those who view Russia as a neighbourhood bully using its gas power.

Poland threatened on Monday to scupper a Europe-Russia summit later this month by refusing to give its go-ahead for EU talks on a new cooperation pact with Moscow unless the bloc sought Russian commitments on food imports and energy security.

Monday, November 13, 2006

China National Offshore Oil Corp., the third-largest offshore oil producer in the country, said that it has signed deals for spot cargoes of liquefied natural gas with three foreign companies.

CNOOC said it had concluded master agreements with France's Total SA (TOT), Franco-Belgian supplier Suez (SZE) and a unit of Royal Dutch Shell PLC (RDSA). They were all signed between Oct. 5 and Oct. 10.

The prices and volumes will be determined by each shipment purchased by CNOOC under the terms of the master agreements, with the supply dates to be decided later.

Friday, November 10, 2006

PetroChina, the country's biggest oil producer, expects natural gas output to surpass 70 bln cubic meters in 2010 amid growing demand as the country shifts to more environmentally-friendly energy.

Tang Yali, vice president of PetroChina unit Natural Gas and Pipeline Co, said at the China Gas Summit that PetroChina plans to sell 37 bln cubic meters of natural gas this year, with the sales target accounting for 80 pct of output in 2006.

China's natural gas consumption is expected to grow at 15 pct in the 15 years to 2020, Wang Jing, an official with the National Development and Reform Commission's energy department said recently.

China's consumption of natural gas in 2005 was 47.9 bln cubic meters.

Thursday, November 09, 2006

El Paso Corp., the nation's largest natural gas pipeline operator, on Thursday said it expanded its natural gas hedging for 2007.

The company said it hedged 210 billion cubic feet (Bcf) of natural gas production at an average floor price of $7.64 per million British thermal unit (MMBtu). Of that production, 121 Bcf carry an average capped price of $11.80 per MMBtu.

Previously, El Paso hedged 130 Bcf of collars for 2007 with an $8 per MMBtu floor and a $16.02 per MMBtu ceiling. In addition, the company placed fixed-price swaps on approximately 5 Bcf of production with an average hedge price of $3.57 per MMBtu.

None of the derivatives are subject to margin calls, the company said.

Shares of El Paso advanced 26 cents to $14.04 in midday trading on the New York Stock Exchange.
Working gas in storage was 3,445 Bcf as of Friday, November 3, 2006, according to EIA estimates. This represents a net decline of 7 Bcf from the previous week. Stocks were 225 Bcf higher than last year at this time and 246 Bcf above the 5-year average of 3,199 Bcf. In the East Region, stocks were 74 Bcf above the 5-year average following net withdrawals of 10 Bcf. Stocks in the Producing Region were 116 Bcf above the 5-year average of 894 Bcf after a net injection of 2 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,445 Bcf, total working gas is above the 5-year historical range.

Wednesday, November 08, 2006

Russian prosecutors are seeking to annul licenses held by BP PLC's Russian joint venture to develop major gas fields, according to an official statement posted late Tuesday.

The move marks the latest step against foreign interests in the Russian oil and gas sector, where the Kremlin is actively increasing its control.

The statement posted on the Prosecutor General's Web site said prosecutors had sent a letter to the federal subsoil agency Rosnedra asking for the licenses to the Novo-Urengoyskoye and Vostochno-Urengoyskoye gas fields to be revoked due to environmental and licensing violations.

The licenses are held by the Rospan International unit of TNK-BP, which is owned jointly by BP and a group of Russian billionaires.

"We are not aware of any legal violations committed at Rospan," TNK-BP spokeswoman Marina Dracheva was quoted as saying by Dow Jones Newswires.

TNK-BP's license to develop the massive Siberian Kovykta gas field has also come under threat over complaints of violations similar to those made against Rospan International.

While the announcement served to turn up the pressure on TNK-BP, analysts noted that a decision to revoke the license would be unprecedented.

"The investment environment has become less friendly to foreigners in the oil and gas sector over the last two years," Dmitry Loukashov, an analyst with Moscow's Aton investment bank, was quoted as saying by Dow Jones Newswires. Loukashov noted, however, that "there are no precedents of enforced license revocations."

Rosnedra said it had not yet taken a decision to formally consider revoking the license. At the next stage the company would be given three to six months to resolve the problems at the fields before the licenses could be annulled, a spokesman told Dow Jones Newswires.

Monday, November 06, 2006

Crude oil prices are not expected to react to the results of the U.S. midterm elections Tuesday, although a Democratic victory could have implications for energy legislation, analysts said on Monday.

To take away Republican power in U.S. Congress in Tuesday's elections, Democrats must gain 15 seats in the House of Representatives and six Senate seats. Polls show Democrats are likely to take the House, but the contest for the Senate still is seen as too close to call.

"Obviously, the feeling is out there that if Democrats do well, its going to have an impact on the oil industry, but I don't see any immediate impact on price," said Tom Bentz, analyst at BNP Paribas.

Analysts pointed to a perception that a Democrat victory would mean some attempt to take away tax credits or incentives from oil companies, but any such action would need to pass both the House and the Senate and get President George W. Bush's signature.

"I'm not sure that anything Democrats want to do concerning energy will make their short list of things to do if they win," said Peter Beutel, analyst at Cameron Hanover.

He noted that the new Congress will not be seated until January and said Democrats may give energy legislation a lower priority than the Iraq war and issues such as raising the minimum wage.

U.S. Rep. Nancy Pelosi, who stands to be House speaker if her party takes control, has vowed to try to roll back billions of dollars in tax breaks and financial incentives given to big oil companies.

Pelosi also backs higher fuel efficiency requirements for cars and trucks.

But crude oil futures markets in recent weeks have been reacting to a perception of ample supply in the world's oil markets, and the efforts of OPEC producers to implement an output cut of 1.2 million barrel per day decided last month.

U.S. crude oil futures rose on Monday after Saudi Arabia's oil minister said OPEC will take more action in December if the current imbalance in the market remains.

Crude oil for December delivery settled on the New York Mercantile Exchange at $60.02 a barrel, gaining 88 cents,

One analyst said the oil market could feel a knock-on effect if the stock market reacts to the vote.

"It could have some impact if Democrats take both houses of Congress and it puts some downside pressure on the stock market," said Jim Ritterbusch, president at Ritterbusch and Associates in Galena, Illinois. "You could see that cause some long liquidation in the crude market."

Nowhere in the world do oil companies pay taxes on oil or gas before it is pumped from the ground. Exxon Mobil Corp., BP Plc and ConocoPhillips want to make sure Alaska doesn't become the first.

Voters there will decide tomorrow whether to impose a $1 billion-a-year tax on natural gas that the three companies own and have left in the ground. The ballot question is meant to force them to build a $25 billion gas pipeline to the lower 48 states that was proposed three decades ago.

Voters already have shown their frustration by defeating Republican Governor Frank Murkowski in a primary in August after his efforts to get the pipeline under way failed. Even so, the oil companies may win the day. Their campaign ads have helped turn a 7-percentage-point deficit for ``no'' votes in a poll less than a month ago into an 18-point lead in a late-October survey, according to Ivan Moore, an Anchorage-based pollster.

``A few months ago, Alaskans were in an anti-establishment mood,'' said Moore, 42, whose Ivan Moore Research has been tracking sentiment about the proposed tax for more than a year. ``Then the companies basically said the tax would be a huge, economy-chilling nightmare that would turn Alaska into a wasteland.''

The oil companies have been unwilling to build the gas pipeline on their own and have rejected proposals by other companies, according to Eric Croft, the Democratic state representative who sponsored the initiative. Calgary-based TransCanada Corp. and Warren Buffett's MidAmerican Energy Holdings Co. both failed to get shipping commitments when they proposed Alaska gas pipeline projects.

Penalty

``If you're going to get a gas line built, you've got to do two things: Make delay expensive and make sure that building the line is profitable,'' Croft said. ``We're talking about $1 billion a year as a penalty for them warehousing our gas.''

Some of the tax would be refunded once gas begins to flow, Croft said.

A portion of the profit from the gas would be paid to Alaska's treasury, as is the case now with oil. This year, the state will pay every adult Alaskan $1,106.96 from its energy fund.

The plan to ship Alaska's gas south was proposed in the mid- 1970s by a group of pipeline companies. The reserves were held then by Exxon Corp., Atlantic Richfield Co. and Phillips Petroleum Co. -- predecessors to the three now involved.

Feasibility Study

A route was surveyed and rights-of-way acquired before the plan was shelved because of low gas prices. The oil companies spent $100 million for a feasibility study in 2001 and concluded it would yield a return on investment of about 10 percent, less than the 15 percent they sought.

Benchmark New York natural-gas futures soared to a record $15.78 per million British thermal units in December 2005. While they have fallen by about half since then, prices are still four times as high as the average through the 1990s.

Even so, the cost of new energy facilities has also soared, with steel and labor in short supply.

A tax on reserves is ``inherently unfair and without merit,'' Exxon Mobil said in a statement. ``Exxon Mobil has been diligently working for over 30 years and spent more than $150 million to commercialize Alaska North Slope gas,'' according to the statement.

Murkowski

Murkowski had negotiated a tax plan with the companies designed to make it more profitable to produce Alaska's gas. The legislature, controlled by his fellow Republicans, rejected his plan three times, calling it too generous. The initiative was placed on the ballot after 46,722 voters signed petitions.

``There's a very real sentiment against the oil companies, and that's unusual, seeing as we live off them,'' said Gerry McBeath, a political science professor at the University of Alaska in Fairbanks.

Any tax probably won't be imposed quickly should the initiative pass, McBeath said. ``It will go to court right away, and the issue could be litigated for 10 to 20 years.''

Moore's statewide poll of 500 Alaskans, taken Oct. 28-29, showed that 58 percent said they would vote against the tax, 29.5 percent were for it, and 12.5 percent were undecided. The results are accurate within 4.4 percentage points, Moore said.

A similar poll Oct. 7-8 showed the initiative would pass by a 7 percentage-point margin, he said.

The oil companies have spent more than $1.6 million to sway voters, according to campaign finance reports.

Ad Campaign

A full-page newspaper ad paid for by Houston-based ConocoPhillips promises lawsuits and delays that will cost Alaska jobs should the initiative pass. More than $1 million of the companies' spending has gone to AlaskaFirst.org, a political action committee registered in late September.

Our Gas, Our Decision, the only registered group supporting the tax, has raised less than $5,000, according to the Alaska Public Offices Commission.

For now, the cost of the project probably dooms it, regardless of what Alaska's voters or politicians do, according to Ron Denhardt, an analyst with Strategic Energy and Economic Resources in Winchester, Massachusetts. ``If Alaska gas was economic, it would come on.''

Saturday, November 04, 2006

Spectra Energy is likely to become Houston's newest Fortune 500 company come January, when the newly named Duke Energy spinoff becomes a publicly traded stock.

The natural gas pipeline, storage and processing company will have a market capitalization of about $15 billion and annual revenue of between $4 billion and $4.5 billion, said Fred Fowler, CEO of Spectra. This would rank it at about 460th on this year's Fortune 500 list.

The new name is the plural of spectrum and is meant to reflect the range of businesses the company is in, from gas transport to processing to end-user delivery, the company said.

Like other natural gas pipeline and product companies, including Kinder Morgan Energy and Enterprise Products Partners, Spectra will also create a master limited partnership, a business structure that pays most of its profits to shareholders, thus avoiding corporate taxes.

"It's a structure we need to use since there are a lot of competitors who are also MLPs," Fowler said.

The MLP would be formed some time in the first half of 2007 and have its own publicly traded stock.

600 in Houston

About 600 of the company's 7,400 employees are based in Houston.

The spinoff of Charlotte, N.C.-based Duke Energy's natural gas business has been planned since 2005. It was put on the back burner when Duke acquired Cinergy in May for about $9 billion, but it should be ready to hit the New York Stock Exchange on Jan. 1 under the symbol "SE," Fowler said.

The new company will combine Duke's natural gas transmission business unit, which is already based in Houston, the Denver-based Duke Energy Field Services business and Union Gas, a retail arm that serves 1.3 million people in Ontario, Canada.

The new entity will be one of the largest natural gas companies in North America, with 17,500 miles of pipelines and extensive natural gas storage capacity.

Friday, November 03, 2006

Electricity and natural gas distributor Pepco Holdings Inc. said Friday its third-quarter profit fell 38 percent, as mild weather reduced energy demand.

For the quarter ended Sept. 30, the company reported net income of $104 million, or 54 cents per share, versus a prior-year profit of $168 million, or 89 cents per share.

Excluding charges for impaired assets, profit would have totaled $111.9 million, or 58 cents per share, compared with $135.6 million, or 72 cents per share, in the year-earlier period.

Revenue rose to $2.59 billion from $2.48 billion in the year earlier period.

Wall Street had forecast a profit of 74 cents per share, the average estimate of six analysts surveyed by Thomson Financial.

Earnings for the quarter were hurt by a 15 percent decline in cooling degree days, Pepco said. Sales were also tempered as customers conserved energy amid rising energy prices.

Shares of the company shed 6 cents to $25.28 in morning trading on the New York Stock Exchange.

Thursday, November 02, 2006

Cascade Natural Gas Corp. said on Thursday that it has canceled a fourth-quarter conference call scheduled for Nov. 16 and has postponed its annual meeting in February due to a pending merger with MDU Resources Group, Inc.

The company said that fourth-quarter earnings will be released Nov. 15.

U.S. supplies of natural gas fell last week but remain above their average level for this time of year, the Energy Department said Thursday.

Inventories declined by about 9 billion cubic feet in the seven days ending Oct. 27. That`s unusual because normally at this time of year inventories of natural gas are rising, the department said.

However, despite that decline, the nation`s supply of natural gas is about 9 percent above its five-year average.

Further, current natural gas inventories exceeded last year`s level by 288 billion cubic feet and the five-year average by about 276 billion cubic feet.

'This is the earliest weekly withdrawal approaching the heating season since 1994 when the weekly data series began,' the Energy Department said in a statement. 'The only other instance of a withdrawal in October was reported for the week ending October 31, 1997. Unusually colder-than-normal temperatures that prevailed during the report week in large sections of the country likely contributed to the withdrawal from working gas stocks as the unseasonably cool temperatures would have increased heating demand for natural gas.'

Working gas in storage was 3,452 Bcf as of Friday, October 27, 2006, according to EIA estimates. This represents a net decline of 9 Bcf from the previous week. Stocks were 288 Bcf higher than last year at this time and 276 Bcf above the 5-year average of 3,176 Bcf. In the East Region, stocks were 99 Bcf above the 5-year average following net withdrawals of 14 Bcf. Stocks in the Producing Region were 121 Bcf above the 5-year average of 887 Bcf after a net injection of 4 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,452 Bcf, total working gas is above the 5-year historical range.
Natural gas producer and pipeline company Williams Cos. Inc. (NYSE WMB) on Thursday reported higher third-quarter earnings on increased natural gas output and sales margins.

Net income rose to $106.2 million, or 18 cents a share, from $4.4 million, or 1 cent a share, a year earlier.

Earnings from continuing operations were $172.4 million, or 28 cents per share, beating analysts' average forecast of 26 cents per share, according to Reuters Estimates.

Williams also raised its expectations for full-year recurring consolidated segment profits after mark-to-market accounting adjustments to a range of $1.8 billion to $2.02 billion from $1.69 billion to $2.01 billion.

Wednesday, November 01, 2006

Independent oil and gas explorer Devon Energy Corp. on Wednesday said its third-quarter earnings fell 5 percent, due mostly to lower natural gas prices and greater operating expenses.

Quarterly earnings after paying preferred dividends decreased to $703 million, or $1.57 per share, from $742 million, or $1.63 per share, during the same period last year.

Excluding special items totaling $38 million, or 9 cents per share, related to the use of derivatives and a reduction in the carrying value of oil and gas properties, the company earned $1.66 per share, in the latest period.

Analysts polled by Thomson Financial forecast a profit of $1.52 per share. Thomson estimates usually exclude special items.

Revenue grew less than 1 percent to $2.72 billion from $2.7 billion during the same period a year ago, but came in above analysts' estimate of $2.65 billion.

The company said its realized price for natural gas shrank 21 percent to $5.62 per thousand cubic feet in the quarter, compared woth $7.13 per thousand cubic feet in the year-ago period. Devon Energy said it also incurred higher operating expenses, such as higher oil field service and supply costs, lease operating expenses, higher production taxes and greater labor costs.

Devon Energy drilled 740 wells in the period, with 731 successful. Combined oil, gas and natural gas production in the quarter averaged 602,000 oil equivalent barrels per day, an increase of 1 percent versus last year.

Tuesday, October 31, 2006

Australia's natural gas sector wants to know why it is not playing a greater role in the push to reduce greenhouse gas emissions.

The Federal Government is funding two research projects in Queensland to extract methane from coal, with any carbon dioxide emissions to be buried underground.

But the Australian Pipeline Industry Association has questioned the continued reliance on coal while renewable energy sources come on line.

Chief executive Cheryl Cartwright says there is enough known natural gas reserves in Australia to last 100 years and it would make better environmental sense to start using it.

"Instead of relying on coal fired generation in the immediate term and the medium term, we can start to reduce greenhouse gas emissions," she said.

"Certainly not to the level that renewable energy provides, which is almost zero but natural gas greenhouse emissions in energy generation are far lower than coal."

Federal Resources Minister Ian Macfarlane says coal will remain a feature of global energy generation for the next century.

Mr Macfarlane says Australia is leading the research into cleaner burning and emission technologies, and the natural gas sector should see itself as a part of that.

"They're promoting their side of the industry, the Government is promoting a broad mix, we need to make sure as we announce that mix we get it right," he said.

"Gas has its place but it has to be part of the mix."

The Interior Department has dropped claims that the Chevron Corp. systematically underpaid the government for natural gas produced in the Gulf of Mexico, a decision that could allow energy companies to avoid paying hundreds of millions of dollars in royalties.

The agency had ordered Chevron to pay $6 million in additional royalties but could have sought tens of millions more had it prevailed. The decision also sets a precedent that could make it easier for oil and gas companies to lower the value of what they pump each year from federal property and thus their payments to the government.

Interior officials said Friday that they had no choice but to drop their order to Chevron because a department appeals board had ruled against auditors in a separate case.

But state governments and private landowners have challenged the company over essentially the same practices and reached settlements in which the company has paid $70 million in additional royalties.

In a written statement, the department's Minerals Management Service said it would have been useless to fight Chevron.

"It is not in the public interest to spend federal dollars pursuing claims that have little or no chance of success," the agency said. "MMS lost a contested and controversial issue" before the appeals board. "Had we simply wanted to capitulate to 'big oil,' the agency would not have issued the order in the first place."

Trying to pay correctly

Chevron said in a written statement that it "endeavors to calculate and pay its oil and gas royalties correctly," and the Interior Department had agreed.

The agency notified Chevron of its decision in a confidential letter on Aug. 3, which the New York Times obtained under the Freedom of Information Act.

The reversal in the case, which involves Chevron's accounting of natural gas sales to a company it partly owned, has renewed criticism that the Bush administration is reluctant to confront oil and gas companies and is lax in collecting royalties.

In return for the right to drill on federal lands and in federal waters, energy companies are required to pay the government a share of their proceeds. Last year, businesses producing natural gas paid more than $5.1 billion in government royalties.

But the Bush administration has come under fire on Capitol Hill for its record on collecting payments. While the Interior Department has sweetened incentives for exploration and pushed to open wilderness areas for drilling, it has also cut back on full-scale audits of companies intended to make sure they are paying their full share.

Administration officials knew that dozens of companies had incorrectly claimed exemptions from royalties since 2003, but they waited until December 2005 to send letters demanding $500 million in repayments.

In February, the Interior Department acknowledged that oil companies could escape more than $7 billion in payments because of mistakes in leases signed in the 1990s. Top officials are trying to renegotiate those deals, but some Republicans and Democrats have complained that the administration is dragging its feet.

Dynegy involved

In the Chevron case, auditors in the Minerals Management Service were addressing an issue that had bedeviled royalty enforcement for decades: How does the government make sure it gets its due when companies sell natural gas to businesses they partly own?

In 1996, Chevron sold its holdings in more than 50 processing plants to Dynegy in exchange for a 26 percent stake in the natural gas company, which is based in Houston. For the next seven years, Chevron sold virtually all its domestic natural gas to Dynegy for processing.

In their original accusations, dating to 2001, the auditors asserted Chevron had understated sales, and hence its royalty obligations, by inflating costs for processing gas at Dynegy.

Monday, October 30, 2006

Duke Energy Corp. (DUK NYSE) on Monday said the natural gas business that it is in the process of spinning off will be named Spectra Energy Corp.

Duke said in June that it would spin off the business to its shareholders as a separate, publicly traded company, but did not name the new company. Spectra will include Duke's natural-gas transmission unit, which owns about 17,500 miles of pipeline, as well as its 50 percent stake in Duke Energy Field Services.

Bolivia's nationalization of energy assets over the weekend excluded any agreement with Brazil on natural gas prices and compensation for Petroleo Brasileiro SA's oil refineries that will become the property of the government.

Brazil's Mines and Energy Minister Silas Rondeau said his government will keep discussing the issue of pricing with Bolivia and come up with a proposal to compensate for the takeover of Petrobras' two refineries. Rio de Janeiro-based Petrobras is Bolivia's biggest foreign investor and provided almost a quarter of Bolivia's tax revenue last year.

``It's going to be difficult for the Brazilians to accept a unilateral change in prices,'' said Dino Barajas, a Los Angeles- based lawyer for Paul Hastings LLP who was voted the best energy lawyer in 2004 by California Lawyer Magazine. ``They are right in seeking some sort of compensation'' for Petrobras's refineries.

Bolivian President Evo Morales claimed victory after he negotiated new contracts with all 10 energy companies that have interests in Bolivia, including Petrobras, Spain's Repsol-YPF and France's Total SA. The extent of his victory, aimed at reducing poverty in the continent's poorest nation, will depend on his ability to sell natural gas to Brazil at a higher price.

Brazil's $790 billion economy is the largest in South America and four times bigger than Argentina's, which is the second- biggest. Bolivia supplies over half of Brazil's gas needs, and about four-fifths of all gas consumed by Sao Paulo's industrial belt.

Stripy Jumper

``We are obliged to be married to Brazil without divorce,'' Morales said in a ceremony in La Paz in the early hours of yesterday, wearing the same stripy sweater he wore when he met Spain's King Juan Carlos and China's President Hu Jintao after becoming president last year. ``Brazil is the leader in the region.''

Morales said the agreements signed with the 10 energy companies would bring in more than $4 billion a year in revenue from 2010, transforming a nation where over a third of the population lives in extreme poverty, according to the International Monetary Fund.

Bolivian government officials will meet with their Brazilian counterparts in Rio de Janeiro on Nov. 10 to discuss an increase in natural gas prices, according to Brazil's Rondeau.

International Prices

``It's very clear that the price of gas today in Sao Paulo adheres absolutely to the price in the international market,'' Rondeau said. ``If we don't reach an agreement, the issue will go to international arbitrage.''

Brazil is developing its own Plangas deposit, which will produce as much as 26 million cubic meters of natural gas a year, and building two liquefaction plants in Rio de Janeiro and Fortaleza to bring in supplies from other countries, Rondeau said.

At the same time, Morales is planning to lessen his country's dependence on Brazil by supplying natural gas to Argentina and Chile.

Bolivia will almost quadruple gas exports to Argentina over the next 20 years, after Morales signed a deal with Argentine President Nestor Kirchner on Oct. 18. Bolivia is also in talks with Chile's government to become a supplier to that country's copper district, which flanks its western border.

Total

Paris-based Total, the world's fourth-biggest energy company, will spend about $2 billion producing and exploring for gas in Bolivia, Morales said on Oct. 28. Total spokeswoman Patricia Marie declined to confirm the figures.

State-owned oil company YPF Bolivianos will become a majority owner in each of the ventures agreed to by the 10 companies that signed a deal with Bolivia over the weekend, according to ABI.

Los Angeles-based Occidental Petroleum Corp. will spend $220 million on exploring or gas in the Naranjillo and Chaco Sur, the government said.

Petrobras and Madrid-based Repsol didn't say how much they would invest in Bolivia. Repsol has invested $1.17 billion in the country over the past decade.

Since 1994 Petrobras has invested $1.5 billion in Bolivia on oil and gas exploration and production, construction and expansion of pipelines and to renovate the country's two refineries, which Petrobras operates. The refineries produce all of Bolivia's gasoline and aviation fuel and 70 percent of its diesel oil.

Morales, who campaigned for coca-leaf farmers' rights before becoming Bolivia's first indigenous leader last year, sent soldiers to take over the country's natural gas industry on May 1 and threatened to evict foreign companies if they didn't agree to hand over their assets to YPF Bolivianos within 180 days.

Saturday, October 28, 2006

Despite a reduction in activity due to weak natural gas prices, the oilpatch is on pace to drill a record number of wells this year, says the Canadian Association of Oilwell Drilling Contractors.

In releasing its outlook for the remainder of the year and 2007, CAODC said the number of rigs drilling declined last month in response to weak gas prices.

During the fourth quarter an average of 454 rigs are expected to be running and over the course of 2006, the average number of rigs drilling is pegged at 498, representing a utilization rate of 62%.

In terms of overall activity, the association expects 22,298 well completions this year, which is more than 3,700 lower than CAODC's original estimate released last October, but still ahead of the record 21,927 completions in 2005.

Drilling is projected to decline further next year, resulting in an average of 427 rigs running, a 51% utilization rate and 19,023 well completions, a drop of 15% from 2006.

"The 2007 forecast of drilling activity is dominated by weaker gas prices," said the association's outlook.

"The CAODC expects oil well drilling and deeper gas work to continue. Drilling to establish gas reserves is not impacted by reduced gas prices, which are assumed to be a relatively short-term phenomenon."

The forecast is based on oil being US$65 per barrel and natural gas prices of US$6.50 per thousand cubic feet.

China's largest offshore oil company said that it has signed framework agreements with three foreign energy suppliers on buying liquefied natural gas (LNG).

China National Offshore Oil Corp (CNOOC) said on its website that it has signed master agreements with French Suez and Total companies and Shell Eastern Trading Ltd. for spot trading.

The spot trading agreements are different from long-term fuel supply contracts.

The buyers and sellers sign a master contract first and then will elaborate on trading details when a particular transaction is made.

As one of China's three major oil companies, the Beijing-based CNOOC is the country's pioneer in exploring LNG market.

China's first shipment of 60,000-ton imported LNG arrived from Australia at the LNG terminal in south China's Guangdong Province on May 26.

China's three oil giants, China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec) and CNOOC, all have LNG development plan, under which they will import at least 60 million tons by 2020.

Friday, October 27, 2006

The U.S. Department of Energy says it will conduct a public education forum on liquefied natural gas next month to help increase U.S. energy security.

"The Department of Energy's Liquefied Natural Gas Forums will initiate constructive dialogue among community members, local, state, and federal government leaders," said Jeffrey Jarrett, assistant secretary for fossil energy. "This forum is one step, of many, that will help us address and evaluates our energy needs, and increase America's energy security."

The Energy Information Administration estimates the United States will have to increase imports of LNG by more than 600 percent during the next 25 years to fulfill increasing demand for natural gas.

The Houston forum, the fourth in a series, will be open to the public. Questions and comments can be submitted via the internet, on cards to be provided at the event, or in written form by mail to: LNG Forums, Attn: Bob Corbin, 955 L'Enfant Plaza North, S.W., Suite 1500, Washington, D.C. 20024

The first three forums were held in Boston, Los Angeles and Astoria, Ore

Thursday, October 26, 2006

Precision Drilling Trust reported its net profits fell to $139.7-million in the third quarter from nearly $1.4-billion last year, a period when the company booked a huge gain from the sale of assets.

Canada's largest oil and natural gas driller said Thursday it earned $1.11 a share for the quarter ended Sept. 30, compared with net profits of $11 a share in the same 2005 period.

The 2005 results, which came before Precision Drilling became a trust, were fattened by $1.38-billion in special gains from the sale of assets, mainly the company's international division.

In its latest quarter, revenues rose to $349.6-million from $300-million, but the company warned that its drilling business is being squeezed by lower natural gas prices, which has cut the number of gas wells being drilled in western Canada.

Meanwhile, the company said it generated record operating profits of $142.4-million for the third quarter, up from $111.9-million because of higher prices for contract drilling and well completion and production services.

“We can only do as well as our customers and we are working closely with them to ensure we respond to their needs in this market,” said Gene Stahl, president and chief operating officer of the trust.

“We are concentrating on the basics — customer focus, cost control and allocation of capital, and most importantly the welfare of our people.”

To close out the third quarter, the company noted that 1,784 new well licences were issued in September, the lowest industry total for that month since 2002.

In breaking down its operations, Precision said its drilling rig activity in October is averaging 48 per cent operating day utilization compared with 68 per cent in the 2005 fourth quarter.

While wet weather in October has contributed to the decline, the trust said the weakness in natural gas prices “has impacted the urgency with which customers are approaching their upcoming winter drilling programs.”

“In contrast to last year, there is more rig availability for the spot market and bidding for contracts has become more competitive,” the trust said.

“Natural gas accounts for about 70 per cent of Precision's activity in Canada and the drop in prices has slowed down drilling but the one-year forward strip on gas prices remains respectable,” added Mr. Stahl.

“What we are seeing is movement away from drilling shallow gas wells to deeper targets and a shift in our equipment utilization to our deeper rigs. It's a good example of how Precision can respond to the changing market.”

Wednesday, October 25, 2006

Crude oil prices rose Thursday a day after jumping more than US$2 a barrel in response to a report that showed U.S. inventories dropped last week. OPEC's steps to cut production and attacks by Nigerian villagers on oil facilities also contributed to the increase.
Light, sweet crude for December delivery was up 25 cents to US$61.65 a barrel in Asian electronic trading on the New York Mercantile Exchange.
Though global oil supplies are still relatively ample and some skepticism remains about OPEC's willingness to go through with the 1.2 million barrel-a-day reduction it announced late last week, traders were betting on tightening supplies going into the winter, when fuel demand ramps up.
Heating oil futures rose nearly half a cent to $1.7435 a gallon (3.8 liters) on the Nymex, while gasoline futures dropped marginally to $1.5920 a gallon (3.8 liters).
Crude oil stockpiles fell by 3.3 million barrels to 332.3 million barrels in the week ending Oct. 20, the U.S. Energy Department's Energy Information Administration said Wednesday. Distillate stocks, which include heating oil and diesel fuel, fell by 1.4 million barrels to 144 million barrels, and gasoline supplies dropped by 2.8 million barrels to 207.4 million barrels.
Crude stocks declined last week largely because of a 936,000-barrel decrease in imports from the previous week.
Oil prices had fallen to an 11-month low below US$57 a barrel Friday — even after the 11-member Organization of Petroleum Exporting Countries decided to reduce its daily production by a larger-than-anticipated amount of 1.2 million barrels — amid doubts about the cartel's ability to implement the decision to cut daily production.
But prices have bounced back up above US$60 a barrel after reports this week that so far, Saudi Arabia, the United Arab Emirates and Iran have begun informing customers that they are going through with the cuts, according to Dow Jones Newswires.
Meanwhile in Nigeria Wednesday, angry villagers stormed and seized three Royal Dutch Shell PLC oil platforms in the Niger Delta, forcing oil production to be shut down at each one, a spokesman for the oil company said.
Royal Dutch Shell officials declined to say how much oil had been cut off after the platforms were attacked. Attacks by armed militants in Nigeria have cut more than a quarter of the country's oil exports since the beginning of this year.
In other trading, natural gas futures rose 8.8 cents to $7.781 per thousand cubic feet. The contract has risen about US$2 in two weeks.
The federal government has agreed to halt oil and natural gas lease sales off the Louisiana coast until environmental studies determine whether drilling degrades the coastline, the Department of the Interior announced Tuesday.

Gov. Kathleen Blanco sued the agency in July, trying to block it from selling leases to 381 tracts in the western Gulf of Mexico for future oil and gas exploration. The sale went ahead, with 62 companies submitting $340 million in high bids.

The agency said Tuesday it settled the lawsuit by requiring that companies planning to drill in those areas prepare a new environmental assessment, subject to review by Louisiana coastal officials.

The department also agreed to postpone a lease sale planned for March until it completes a new environmental impact study, taking into account the 217 square miles of Louisiana's coast that were washed away in Hurricanes Katrina and Rita last year.

Interior Secretary Dirk Kempthorne called Blanco to acknowledge the settlement on Tuesday, Blanco said.

Blanco called the settlement a breakthrough that will give Louisiana new power over its own coast. She said the settlement will lead to an influx of federal money because the environmental assessments are expected to show that drilling contributes to the steady erosion of Louisiana's marshy coast.

“I fully expect that an honest environmental assessment will lead to money” from the federal government, she said at a news conference.

EnCana Corp., Canada's largest natural-gas producer, said third-quarter profit soared fivefold on higher output of the fuel and gains from an asset sale and derivatives contracts.

Net income rose to $1.36 billion, or $1.65 a share, from $266 million, or 30 cents, a year earlier, the Calgary-based company said in a statement today. Sales after royalty payments rose 31 percent to $3.92 billion.

EnCana lowered its 2006 gas-production forecast to 3.36 billion to 3.4 billion cubic feet a day from an earlier 3.42 billion to 3.56 billion. The reduction reflects reduced drilling because of higher costs and lower gas prices, said Jim Hall, a portfolio manager at Mawer Investment Management in Calgary.

``There were no big surprises, one way or the other, in quarter,'' said Hall, who oversees the equivalent of about $665 million including 500,000 EnCana shares. ``Gas prices are weaker and costs are up, so why would you go out and drill like crazy when there is no need to at this time?''

Chief Executive Officer Randy Eresman, 48, has sold assets to focus on natural-gas fields in North America and oil-sands projects in northern Alberta. EnCana and Houston-based ConocoPhillips on Oct. 5 agreed to spend $10.7 billion to produce and refine oil from oil sands.

Shares of EnCana fell 40 cents to $C53.35 at 9:39 a.m. on the Toronto Stock Exchange. The stock, which has 14 buy recommendations from analysts, 11 holds and three sells, has gained 1.5 percent this year.

Less Drilling

The results included gains of $255 million from the sale of a stake in a Brazilian offshore oil discovery and $285 million from the increased value of derivatives contacts used to lock in prices for gas and oil, EnCana said. In the second quarter of 2005, the hedging practice reduced earnings by $604 million.

Excluding such one-time items, EnCana earned 98 cents a share, exceeding the estimate of 95 cents from Andrew Potter, an analyst at UBS Securities LLC in Calgary. Higher-than-forecast gas prices and lower spending contributed to better-than-expected performance, Potter said in a note today.

EnCana said it expects to drill about 3,650 wells this year, down 15 percent from 2005. Gas futures traded in New York were 36 percent lower than a year earlier in the third quarter, averaging $6.182 per million British thermal units, down from a record $15.78 in December.

Third-quarter gas production rose 4.3 percent to an average of 3.36 billion cubic feet a day, and the fuel sold for an average of $5.75 per thousand cubic feet, down 21 percent from a year earlier.

Daily output of oil and natural-gas liquids was little changed at 150,565 barrels, compared with 150,457 a year earlier, and the liquids sold for $50.37 a barrel, a gain of 9.1 percent.

Crude oil was little changed in New York after rising yesterday as frigid weather in the U.S. focused investors on peak winter heating demand.

Freezing winds sweeping across the northern U.S. may bring snow to parts of Colorado and Wyoming, forecaster AccuWeather Inc. said on its Web site. Below-normal temperatures through Oct. 31 in the Northeast, the nation's largest heating oil consumer, will lift heating demand 30 percent above levels usual for this time of year, researcher Weather Derivatives said.

``I think oil is going to hold from here,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``You don't usually get snow until the beginning of November.''

Crude oil for December delivery was at $59.55 a barrel, up 20 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:29 a.m. in Sydney.

The contract rose 54 cents, or 0.9 percent, to $59.35 a barrel yesterday, its first gain in three days. Heating oil for November delivery was at $1.6988 a gallon after rising 1.6 percent yesterday.

``It's pretty cold out there right now,'' Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago, said yesterday. ``We're getting into the winter season and consumption is going to go up.''

World oil demand peaks in the fourth quarter when refiners in the U.S., Europe and northern Asia prepare heating fuel for the winter.

Winter Rebound

The early cold snap coupled with the contract's failure to breach long-term support around $58.60 a barrel, may be enough to stall the recent slide in prices, Excel's Waggoner said.

``December is a fairly active month,'' he said. ``A lot of people were expecting the market to break down. But we hit that support and it's gone straight back up.''

Oil prices have fallen 24 percent from the record $78.40 reached on July 14. Futures slid the past two months as fuel stockpiles in the U.S., the world's biggest oil consumer, rose and forecasters including the Organization of Petroleum Exporting Countries trimmed their demand projections citing slower global economic growth.

U.S. oil stockpiles held 335.5 million barrels on Oct. 13, or 14 percent more than the five-year average for the period. Supplies of distillates, including heating oil and diesel, were 145.4 million barrels, 15 percent more than average.

An Energy Department report later today will probably show crude oil supplies gained 2.9 million barrels last week, based on the median estimate from a Bloomberg News survey of 10 analysts. Distillate supplies may have dropped by 1.25 million barrels while refiners had units shut for pre-winter maintenance, according to the survey.

``We have ample stocks,'' Andrew Lebow, a broker with Man Financial in New York, said yesterday ``We're well above last year and well above the average. We've got a way to go here to draw back to normal'' levels.

Tuesday, October 24, 2006

- Oil rose for a second day on Wednesday, pushing toward $60 a barrel after the United Arab Emirates' move to cut exports lent more credibility to OPEC's supply curbs while cold U.S. weather increased energy demand.

U.S. light crude rose 22 cents to $59.57 a barrel by 0243 GMT, after gaining 54 cents on Tuesday. London Brent was up 24 cents at $60.10 a barrel.

Abu Dhabi's state oil firm told major customers on Tuesday that it would cut crude exports by about 5 percent in November, following Saudi Arabia's lead and tempering skepticism on how OPEC's 1.2 million barrel per day (bpd) cut would materialize.

But prices are still only about 5 percent above the year's low of $56.55 a barrel, touched last week, and have not closed above $60 a barrel since Oct 5 as some traders still want to see proof of deeper cuts reflected in inventory levels.

"It shows some resolve on the part of OPEC producers, but it is going to take more than these two countries to restore the group's credibility," said Jim Ritterbusch, president at Ritterbusch and Associates in Galena, Illinois.

The UAE is due to reduce output by about 100,000 bpd as part of an OPEC deal last week to cut production by about 4.3 percent of its September output. Top oil exporter Saudi Arabia told customers at the weekend it was cutting November supply.

However, U.S. government inventory data due out later on Wednesday is likely to show a further rise in already high crude inventories as refinery turnarounds kept feedstock demand tepid, a Reuters poll of analysts showed .

Crude stocks probably rose by 2.6 million barrels. With a more than one-month sailing time from the Middle East to U.S. shores, it may be December before OPEC curbs begin to show.

Distillate stocks, including heating oil, which stood 15 percent above year-ago levels in the previous week, were seen falling by 1.1 million barrels, the survey found. Gasoline stocks likely dipped by 600,000 barrels.

"We've got surplus supplies of winter fuels, which despite concerns over a colder than expected winter, should keep up with demand through winter," Ritterbusch said.

Temperatures in the U.S. Northeast, the biggest oil consuming region in the world, will be colder than usual and see higher heating demand over the next five days, U.S. based private forecaster Meteorlogix said on Tuesday.

Private WSI Corp on Monday predicted warmer-than-normal Northeast temperatures in November followed by cooler weather in December and January, becoming the latest forecaster to predict average or below-average temperatures for the region.

The price of crude oil rose 54 cents Tuesday on the New York Mercantile Exchange to close at $59.35 per barrel.

Natural gas soared about 21 cents to end the session at $7.091 per million Btu, a 3-percent gain, MarketWatch said.

Heating oil rose 2.62 cents to settle at $1.6952 per gallon and gasoline increased 6.45 cents, or 4.4 percent, to end the day at $1.536 per gallon.

AAA said early Tuesday that the average U.S. retail gasoline price was $2.202 per gallon.