Pipeline Curtailments Indicator of Natural Gas Supply Changes

By Robinson, Robin | THE JOURNAL RECORD, June 16, 1987 | Go to article overview

Pipeline Curtailments Indicator of Natural Gas Supply Changes


Robinson, Robin, THE JOURNAL RECORD


The current dependency on short term-natural gas supplies by consumers will be reversed when the first natural gas pipeline reports curtailment on its lines, John Spears told participants in a May 22 continuing legal education seminar at Oklahoma City University.

"The `portfolio' of supplies held by gas consumers is heavily weighted toward short-term supply," the oil and natural gas industry consultant said. "Perhaps spot gas purchases account for 60 percent to 70 percent of the gas supplies held by many end users, whereas five years ago, spot gas sales were only 10 percent of the market.

"We believe that the announcement of curtailments by pipelines will be enough to alert those who are buying gas that it is time to change the perception of the gas bubble and know that long-term gas supplies have value."

When those curtailments are announced, spot market purchasers will revert to purchasing through long-term contracts and the price of natural gas could climb to $2.50 per thousand cubic feet, Spears said. Natural gas is currently sold on the spot market for approximately $1.40 per thousand cubic feet.

"This rubber-band effect may mean gas prices exceed the British thermal unit price of oil for a while, say 6 to 12 months, until the market settles down and British thermal unit parity levels are the norm," Spears said. . .

- The May U.S. seismic crew count rose to 166 land and marine crews, up two crews or 1.2 percent from the number operating in April, according to the latest report from the Society of Exploration Geologists.

In May 1986, the crew count was 191, 13.08 percent more crews than are currently working.

Land crews alone accounted for 146 of the crews working in the United States in May, one more crew than was working in April, but 26 fewer crews, or 15.1 percent less than were working in May 1986.

The society reported 20 marine crews working in U.S. waters in May, one more than worked that territory in April. The May 1986 marine crew count had 19 crews working. . .

- The Oklahoma Corporation Commission is allowing price discrimination by allowing Oklahoma Natural Gas Co. to deviate from the commission's priority rules for taking natural gas from Oklahoma wells, a Denver company said in its application with the Oklahoma Supreme Court to review the commission's decision.

"It makes a sham of the priority rules by allowing price discrimination," Forest Oil Co. attorney Rick Schelin said of the commission's decision. "It only permits the selling of lowest priority gas as long as it is priced below $2."

The commission order, issued April 30, approved two programs that ONG was instituting and modifying to provide low-cost natural gas as an incentive for small industrial customers and fertilizer manufacturing customers of the utility. …

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