Gas Investing News

By Duncan Sutherland – Exclusive to Gas Investing News

Bloomberg reported that NYMEX natural gas futures have lowered to their lowest in six months. The huge decline in the past month is comprised of multiple factors. First, the increased output and stockpiles have reassured traders of supply security. Second, the commodity drawdown has lured hedging investors back into financials and out of futures. More transiently, good weather in the Atlantic and Caribbean has been comforting during hurricane season.

The Fracas in the Caucasus ™ has not greatly affected natural gas futures thus far, as only one major gas pipeline [controlled by BP (NYSE:BP)] transects Georgia. Though it had appeared the conflict was beginning to cool down, reports were just incoming that Russian forces were occupying and reinforcing the city of Gori in central Georgia. Gori sits across the only major east-west road and railroads in the country, but lies north of the major Baku-Tbilisi-Erzurum gas pipeline. Worthy of note, however, is Russian naval activity in the Black Sea, BP’s precautionary shutdown of the Baku-Supsa pipeline and Russia’s entry into the port of Poti.  Obviously the news out of the region is liable to change quickly, but in my opinion the activities that are of greatest concern to gas markets are Black Sea naval activity, whether Russia consolidates its position in Poti and/or keeps going Southward to the port of Supsa and the capital Tbilisi.

Elsewhere:

GeoResources Inc. (NASDAQ:GEOI) has rebounded from its loss during last year’s Q2 with a resounding $7.8 million profit based on a near-doubling of natural gas production.

In Australia, exploration by MEC Resources Ltd. (ASX:MMR) has yielded better than expected projections for gas quantity. The Baleen and Fish Prospect fields are located offshore from the fantastically named The Entrance, New South Wales (near Tuggerawong, just north of Woy Woy). Australia’s natural gas industry, and really all commodity industries are extremely well poised for upcoming decades. The country has already seen a fantastic mining boom based partly in demand from India and China, and most of it has not been formally surveyed.

The Canadian Maritime provinces are chugging along on the next generation of gas infrastructure, with a Newfoundland LNG transhipment and storage facility receiving its Environment Canada approvals. The Grassy Point location of the hub will provide it quick access to the American Eastern Seaboard, as it is less than two days by ship to Boston. Construction is set to begin in the next few months. Meanwhile, New Brunswick’s Saint John LNG terminals are on schedule to be completed by the end of the year. The Canaport LNG project is a venture that is being built by subsidiaries of Irving Oil Ltd. and Repsol YPF, S.A. (NYSE:REP).

An American Coast Guard operation to the Arctic Ocean will feature co-operation between USCG cutter Healy and icebreaker CCGS Louis St. Laurent of its Canadian counterpart. The mission aims to map the continental shelf topography in the Chukchi Borderland north of Alaska. Expect an article on the site next week detailing Arctic Gas prospects.

A “significant” natural gas discovery off the Trinidadian coast has buoyed Canadian Superior Energy’s (TSX:SNG) shares this morning. The Calgary based explorer hit gas from its Bounty well that is capable of producing at a rate of approximately 200 mmcf/d. I would be more than happy to do an extensive article about Trinidad and Tobago’s gas industry should either the Ministry of Energy and Energy Industries or the Chamber of Commerce offer to fly me down there.

Freeport LNG (a subsidiary of Cheniere Energy (AMEX:LNG) has petitioned the US DOE for blanket authorization to import LNG over the next two years. The company is worried as its 2008 imports have been much lower than equivalent period volumes from 2007. If approved, the request would provide predictability and stability for deliverers.

Iran is mucking about internationally again, in an apparent homage to Hugo Chavez. The country’s Iranian Offshore Oil Company has been in discussions with Nigeria’s equivalent over the provision of Iranian services for Nigerian gas exploration. More worryingly, Iran and Algeria have once again raised the prospect of turning the Gas Exporting Countries Forum into a natural gas OPEC. Algeria’s Oil Minister Chakib Khelil was in Tehran recently and has pushed the idea. Though the original OPEC is not particularly galling to oil importers, those with long memories will remember that it was much more adherent to principles of unity in its early years. Although it remains to be seen whether a NGPEC will indeed form, the interests of Russia, Iran, Qatar are far from coherent.

I’ll be in Winnipeg next week, so posting on www.heavyoilinvestingnews.com, www.gasinvestingnews.com and www.crudeinvestingnews.com will be lighter. Cheers!