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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (2240)	9/28/2005 1:47:56 PM
From: Wharf Rat	Read Replies (1) \| Respond to of 24207

Close call on natural gas for winter Experts predict adequate supply despite losses By DAVID IVANOVICH Copyright 2005 Houston Chronicle Washington Bureau WASHINGTON - Winter is coming, and most of the natural gas wells in the Gulf of Mexico remain shut in. Industry officials say gas supplies will be adequate to heat Americans' homes through the colder months. But at what cost? Before Hurricane Rita slammed into the Gulf Coast, inventories of natural gas were running above the five-year average, the Energy Information Administration reported. Despite the hurricane damage, officials at the Natural Gas Supply Association anticipate supplies still will be higher than the norm for recent years. "Based on everything we see right now, coming off of Katrina and Rita, we should be fine this winter," Natural Gas Supply Association Chairman Joseph Blount said Tuesday. Consumers, however, won't be happy. Even before Rita pushed natural gas prices to new highs, Guy Caruso, head of the Energy Information Administration, was estimating home heating bills this winter could jump as much as 70 percent in some parts of the Midwest. Lawmakers on Capitol Hill are hurriedly responding to the latest energy crunch sparked by the hurricane duo by writing a new energy bill. House Energy and Commerce Committee Chairman Joe Barton, R-Ennis, today will push a provision to encourage construction of a natural gas pipeline across Alaska and bring new supplies to the lower 48 states. Resources Committee Chairman Richard Pombo, R-Calif., will sponsor a measure that would allow states to authorize oil and natural gas drilling off their coasts. Neither provision will help consumers this winter. Natural gas prices pushed higher on the New York Mercantile Exchange on Tuesday as the markets digested the latest reports from the hurricane-ravaged Gulf. Natural gas for delivery in October rose 21.6 cents, or nearly 2 percent, to $12.66 per million British thermal units. Nearly 79 percent of the typical gas production in the Gulf of Mexico remained shut in Tuesday, the U.S. Minerals Management Service reported. To date, hurricanes Katrina and Rita have deprived the markets of nearly 5 percent of the annual gas production that would have otherwise come from the Gulf. The Henry Hub, a critical natural gas processing facility in southern Louisiana, remained inaccessible Tuesday because of flooded, debris-strewn roads. The hub on Chevron Corp.'s Sabine Pipe Line serves as a delivery point for the benchmark gas futures traded on the New York Mercantile Exchange. Another dozen or so processing plants along the Gulf Coast are also off line, as well as a number of key natural gas pipelines. Some producers operating in the Gulf, meanwhile, are having trouble getting out to inspect their drilling rigs and production platforms. Although natural gas is used year-round to generate electricity, demand is greatest in the winter months. To meet that seasonal demand, the industry must build inventories before the severe cold hits. As of Sept. 16, 2.8 trillion cubic feet of gas was in storage, the Energy Information Administration reported. That's up about 3 percent from the five-year average, although down about 3 percent from the same time last year. Industry officials are hoping to make up a portion of the lost production in the Gulf of Mexico with more gas from Canada and increased shipments of natural gas liquids from overseas. By Nov. 1, gas association officials predict inventory levels will reach a comfortable 3.2 trillion cubic feet for the traditional start of the heating season. John Tasdemir, an analyst with Raymond James & Associates in Houston, agrees that "we're going to get there." But he noted: "What's going to get us there is the fact that gas prices are going to have to squeeze out the most sensitive gas customers." Prices for natural gas being injected into storage this year are up more than 40 percent from last year, association officials said. Industrial customers with the ability to switch from use of natural gas to heating oil have largely done so. Some chemical plants have been shuttered, while more than a third of the nation's fertilizer production has been lost. Residential customers typically don't have the luxury of switching. Their demand depends on the weather. Forecasters are predicting a warmer-than-normal winter, although cooler than last year. Overall, the natural gas association estimates residential gas demand will be up more than 7 percent from last year. david.ivanovich@chron.com chron.com