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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: snowdog who wrote (82886)	4/12/2007 8:27:41 AM
From: Dennis Roth	Respond to of 206184

This may be of interest. REX Pipeline Will Cause Major Supply, Price Shifts, BENTEK Energy Report Finds April 11, 2007 09:20 AM Eastern Daylight Time home.businesswire.com Rockies producers should see rise in regional price differentials improve as Rockies Express (REX) pipeline Phase II goes into service in early 2008. Producers in the Anadarko and Permian could see a negative price impact. DENVER--(BUSINESS WIRE)--A new report released by BENTEK Energy LLC illustrates the significance of anticipated changes in natural gas market dynamics when Phase II of the Rockies Express pipeline goes into service in early 2008. The BENTEK report, second in a three part series titled “REX: A Bridge to Nowhere?” also addresses the longstanding question asked by Rockies producers: Will regional export capacity be sufficient to relieve depressed regional gas prices? REX Phase II, a massive new piece of natural gas infrastructure being built by Kinder Morgan and Sempra Energy stretching from the Cheyenne Hub in northeastern Colorado to Mexico, MO, is scheduled to begin service in January 2008. When Phase III is completed in 2009, REX will be the largest gas line built in the United States in more than 20 years. But its size may be of less importance than its location. “In contrast to the South-to-North flows of many of the nation’s major gas pipeline systems, REX will run West to East from the cheapest supply source in the nation to the northern half of many of the pipeline systems that serve premium markets in the Midwest and Northeast,” said Porter Bennett, BENTEK president. “This fact, along with the operational efficiency of the REX system, will provide buyers in Midwestern and eastern markets with access to cheaper supply via a less expensive transportation route.” The BENTEK report indicates that REX Phase II will be delivering its gas into pipelines that run near their full capacities. As a result, some of the gas flowing north from the traditional supply areas in the Anadarko and Permian basins in Texas and Oklahoma will be pinched out of the market. The transportation capacity and market access previously enjoyed by producers in the Anadarko and Permian basins will now be taken up by Rockies producers shipping lower cost Rockies gas through the REX system. “Our analysis of REX Phase II indicates that gas supplies on Panhandle Eastern and Northern Natural Gas will be at a distinct disadvantage because of their transportation rates and more expensive supply sources in the Anadarko and Permian basins,” noted Rusty Braziel, BENTEK managing director. “During the winter when demand puts maximum pressure on the constraints of these connecting pipelines, REX’s advantages likely will push Permian Basin gas back into Texas or California markets and Anadarko Basin production back into Oklahoma and Texas markets. Understanding these developments is essential for making strategic decisions on gas marketing programs, transportation arrangements, drilling budgets and pipeline investments.” According to the report, REX affiliate Natural Gas Pipeline Company of America (NGPL) will face less of an impact; only Permian gas on NGPL will be priced out of the Midwest market. Meanwhile, other pipelines, most notably Cheyenne Plains, currently bringing gas east from the Rockies will suffer from cost as well as locational disadvantages compared to where REX will deliver its gas. With improved market access and REX’s cost advantages, the report indicates that Rockies producers most likely will enjoy comparatively higher prices at Opal and the Cheyenne Hub in Colorado. The 11-13-cent price advantage enjoyed by Anadarko Basin producers last year compared to Rockies producers at Cheyenne Hub is expected to vanish. The current forward markets already indicate that price differentials between Rockies spot points and locations in the Mid-continent region will be cut by about two-thirds starting in summer 2008. However, if Rockies prices remain lower than prices in competing basins in the Southwest, it will only ensure that Midwest markets will rely more heavily on REX to the detriment of pipelines serving the Anadarko and Permian. For more information about BENTEK’s special REX reports, go to www.bentekenergy.com or call BENTEK at 888-251-1264. About BENTEK Energy LLC BENTEK Energy, LLC is an energy markets information company with offices in Golden, Colorado. The company brings its customers the analytical tools and competitive intelligence needed in order to make critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com. Contacts Weis Communications Gretchen Weis, 713-385-8912