| From: Ed Ajootian | 1/4/2008 12:07:11 PM | | | | | | UK energy prices rise in 2007, drive retail tariff rise
London (Platts)--4Jan2008
Wholesale gas and power prices in the UK have risen steadily during the
12 months since the round of retail price cuts in early 2007, an analysis of
Platts' data shows. UK utilities have pointed to rising wholesale prices as
the basis for a new round of retail price tariff hikes.
UK utility RWE Npower said Friday it would announce retail price rises
later in the day, and its fellow utility Centrica said in its trading update
in December that rising wholesale prices had squeezed margins. If high
wholesale prices continued, they would "create a more difficult environment"
in 2008, Centrica said, adding: "We will continue to monitor this with regard
to future pricing policy."
The last round of domestic price changes from UK utilities began at the
end of 2006, when Centrica announced the first price cut after several years
of price rises. Scottish and Southern followed in January, with other
utilities promising price matching or special cheaper tariffs.
Last winter UK gas and power prices had been falling steadily for several
months, partly because of two new major pipelines bringing gas from Norway and
the Netherlands. In addition to the extra supply, the UK experienced an
extremely mild winter season, lowering demand and hence price.
At the start of 2006 prompt gas prices had spiked in response to supply
problems, with day-ahead reaching as high as 187.5 pence/therm in March 2006,
and the front month contract above 100 p/th at points during the winter.
But with the new supplies online at the end of 2006, and low demand, gas
prices plummeted. Day-ahead traded below 30 p/th for almost the whole of
the first quarter of 2007. Similarly, the month-ahead contract fell steadily
from above 50 p/th at the start of winter 2006 to under 30 p/th in January
2007, usually a peak period.
UK power prices tend to track UK gas prices because the marginal power
generation supply in the country is largely gas-fired. So with gas prices
fairly low, power prices followed. And that improved utilities' margins
significantly, creating a strong rationale for price cuts.
During the course of 2007, however, the bearish wholesale trend reversed.
To some extent this was due to a rising oil price. At the start of 2007 the
dated Brent crude oil contract was at just above $50/barrel. But by July it
was up to $77/b, and on the first trading day of 2008 it hit $100/b for the
first time ever.
Gas contracts on the Continent tend to be indexed to oil products, with a
six-month delay. So the steady rise in the oil price caused a steady rise in
European gas prices over the course of the year from July onwards. With
European gas prices rising, producers could choose to send gas to the
continent in preference to the UK, so UK gas prices also rose.
Compounding matters, there were several incidents of North Sea
infrastructure problems, including the extended outage at BP's CATS pipeline.
The weather was also an important factor with the UK experiencing a fairly
mild summer and then a rash of colder-than-normal weeks towards the end of the
year, raising demand.
In July, the UK gas day-ahead price stuck close to the 30 p/th mark, up
from the sub-20 p/th level seen in April despite the summer's traditionally
lower demand. As the year wore on and the market entered the higher demand
winter period, prompt prices rose further and day-ahead traded above 50 p/th
for much of November and December, almost double the level seen in early 2007.
By the start of 2008, infrastructure problems, higher demand than
expected and the rising oil price had combined to raise market expectations of
future prices. The winter 07 contract had closed in September at 43.75 p/th.
But January 3, the winter 08 gas contract was 50% higher than this, at 61.6
p/th.
On the power side, as well as the rising gas price pushing up power
prices, nuclear plant problems added extra bullish spice. Four of British
Energy's nuclear power units, two at Hartlepool and two at its Heysham-1
plant, have been out of action since October 22 after the generator found a
wiring problem at Hartlepool-1. All the units have a similar design, and
therefore the three other units have been kept offline for further checks.
The four units together generate 2,360 MW of power and they are usually
run on a constant baseload shape, since marginal costs are relatively low
compared to gas and coal plants.
Traders said the nuclear outages brought up prompt power prices as well
as forward prices for November and December 2007, a period when demand
increases due to the colder winter weather. The average daily baseload power
price in November 2007 was GBP44/MWh, 57% higher than November 2006. In
December 2007, day-ahead power was 39% more expensive year-on-year, at an
average of GBP51/MWh.
Finally, in addition to other factors, the start of 2008 saw the onset of
the second phase of the EU's Emissions Trading Scheme. Phase 1 was
oversupplied with carbon certificates, leading to an EUA price of under 10
euro cent equivalent to 1 mt of CO2. But Phase 2 is widely expected to be
short and the current December 2008 EUA price is Eur23.50/mt CO2e. That makes
generating power using fossil fuels such as coal and gas more expensive, hence
raising power prices further.
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| To: Celtictrader who wrote (102) | 4/11/2009 11:42:48 AM | | From: Celtictrader | | | | Maybe Not,just found this article!
Natural gas prices tumble almost 75%
ASSOCIATED PRESS
COLUMBUS - The 60 million American homes that rely on natural gas for heat can expect substantially lower bills next winter, thanks to a glut in supply and the weak economy.
Just as distributors start to lock in contracts for the coming winter, natural gas prices have fallen almost 75 percent. Not all of that will show up as savings on heating bills, but it should mean noticeable savings.
New technology this decade has unlocked massive reserves of natural gas in North America, and the sudden jump in supply has collided with a recession, the worst since World War II, that has sapped demand.
The result has been a collapse even more dramatic than the drop in oil prices.
Natural gas futures ended this week at $3.61 per 1,000 cubic feet, down from a July peak of $13.69. That's a decline of 74 percent, compared with a decline of 64 percent in oil prices over the same period.
Households have yet to see those huge drops reflected in their heating bills because the companies that buy and distribute natural gas in bulk are still passing on the premium prices they paid last summer.
But lower rates are almost certainly coming. Distributors already are signing contracts for next winter that lock in today's low rates.
A 75 percent decline in the price of natural gas does not mean the heating bill will decline by that much. On average, the price of gas makes up about two-thirds of the bill with transportation, taxes, and other expenses covering the remaining costs. Americans spent about $60 billion on natural gas for heat this past winter.
Distributors don't profit from the price of gas. They typically make money from getting the gas to your home. If they want to charge more, they need approval of state regulators.
In some places, natural gas bills are already way down. The average bill this month for customers of Columbia Gas of Ohio will be $101.54, the lowest in five years and down 26 percent from a year ago.
The government's Energy Information Association says the volume of gas in storage around the country, a staggering 1.67 trillion cubic feet, is 35 percent more than it was last year. |
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| To: Ed Ajootian who wrote (99) | 4/16/2009 12:12:08 PM | | From: Celtictrader | | | | | Hi Ed,do you have any favorite Beaten down Natural gas plays?Bloomberg this morning talking about natural gas is used by only 150,000 cars & trucks in the USA while Worldwide it is used by about 10 Million. 1 MCF of gas = about 7 gallons of diesel i believe.Looks like a pretty good time to start buying up some beaten natural gas co? Thanks & good luck Jerry |
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| To: Celtictrader who wrote (104) | 4/16/2009 10:03:47 PM | | From: Ed Ajootian | | | | Jerry, I'm not really looking very closely at natgas companies right now because I believe the pain of low commodity prices is not over yet. One company I have in mind to look at more closely if/when the future looks brighter is GMX Resources (GMXR). They have a large exposure to the Haynesville Shale, a very hot play right now. Another company I would look at would be Double Eagle (DBLE).
BTW, I don't really check this board any more, so I suggest you post any further thoughts/questions on the Boom Boom Room board, see Subject 50987 . I check that board regularly and you will find that there are a lot of astute posters there. |
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| From: Ed Ajootian | 12/6/2009 1:45:17 PM | | | | | | Denbury Sharpens Enhanced Oil Recovery Focus
Copyright © 2009 Energy Intelligence Group, Inc.
Friday, December 4, 2009
Dallas-based Denbury Resources is expanding further into the carbon dioxide-based enhanced oil recovery (EOR) business and disposing of its largest remaining natural gas assets.
Denbury said on Thursday it will pay $430.7 million in cash and stock to privately held Wapiti Energy for a 95% stake in the old Conroe oil field north of Houston.
The cash will come from the proceeds of a $210 million sale of Denbury's remaining Barnett Shale gas assets in North Texas to Talon Oil & Gas, another private company that purchased 60% of the Barnett properties earlier this year (OD May14,p7).
The two transactions will get Denbury almost completely out of the natural gas business, even after factoring in the recently announced $4.5 billion purchase of Encore Acquisition (OD Nov.3,p1).
Denbury is currently in the process of acquiring Fort Worth-based Encore which focuses on enhanced oil recovery and unconventional oil, such as the Bakken Shale play of North Dakota. Encore does have a few small natural gas holdings.
Denbury is representative of an emerging trend, especially among independent producers, but also some majors, to focus more on North American oil which currently offers much higher margins.
Current Nymex futures prices have oil and natural gas at a 17:1 price ratio, compared to the historical ratio of 10:1. The multiple had been as high as 30:1 earlier this year.
"We believe that taken together, these two transactions further enhance our core strategy, assets and focus," said Denbury Chief Executive Phil Rykhoek.
"We are acquiring an asset with an estimated 125 million barrels of upside potential in exchange for an asset that we believe has far less potential," he added.
Rykhoek described the Conroe field as the "single largest potential tertiary flood on our list of desired Gulf Coast properties."
Denbury has been expanding from its original base in Mississippi into the Upper Texas Gulf Coast through the acquisition of an assortment of old oil fields. It is currently constructing the Green Pipeline to transport naturally occurring occurring carbon dioxide from an underground source to the region.
The company also is looking at opportunities to capture carbon dioxide from industrial emissions for use in enhanced oil recovery projects in the Gulf Coast area.
Developing the Conroe field as an enhanced recovery project will not be cheap, however. Denbury said it will invest $750 million to $1 billion to recover an additional 125 million bbl of oil from the field, including construction of an 80-mile connection to the Green Pipeline.
In addition, Denbury believes it can recover another 20 million barrels of oil equivalent of conventional reserves from the property.
The Conroe field, located about five miles northwest of the town of Conroe and 40 miles north of Houston, was discovered in 1931 by wildcatter George W. Strake.
As was often the case, development of a find of this magnitude was beyond Strake's means, so he brought in the Humble Oil & Refining Co. -- one of Exxon Mobil's predecessor companies -- as his partner.
Other drillers had interests in the field, and it became a test case for the Texas Railroad Commission as the agency sought to implement newly passed production regulations in the 1930s. Eventually the field was unitized under a single operator, initially Humble, which later became part of Exxon.
According to Texas Railroad Commission figures, the Conroe field has already yielded more than 750 million bbl of oil over a lifetime of nearly eight decades.
Barbara Shook, Houston |
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| To: Ed Ajootian who wrote (107) | 11/19/2010 12:02:08 AM | | From: DipNoid | | | | Be on the look out. TRDY is a clean debt free shell and we expect to see an O&G company R/M into it between now and Monday AH. (.017)
Could be big. A Stan Larson is controling this |
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