Weak Economy And Energy Price Uncertainty Continue To Hamper Product Consumption

Pipeline & Gas Journal’s 2009 29th Annual 500 Report provides detailed statistical listings of the nation’s energy pipeline systems. As in past years, the report ranks the nation’s top gas distribution, liquids and gas transmission systems.

Gas distribution companies are ranked by number of customers. Transmission companies are ranked according to total miles of pipe while the rank of each liquids pipeline company is determined by yearly crude deliveries.

Additional statistical data compiled for the report are based on operating revenue, net income, total throughput of natural gas, barrels of crude and refined products delivered, miles of mains and service lines and additions to plant. More than 95% of the information is based on calendar year 2008, compiled through forms filled out by each company listed or data collected at the Federal Energy Regulatory Commission (FERC).

While extensive efforts have been made to obtain the latest statistical information available, some companies are no longer required to provide statistical data to the FERC and failed to respond to our inquiries. As a result, we are using the latest information available to us. If your company’s information is incorrectly listed, let us know. We also need to know about any changes of address, contact information, mergers and acquisitions.

Energy Outlook
According to the Energy Information Administration’s Short Term Energy and Winter Fuels Outlook released Oct. 6, 2009, energy prices remain volatile, reflecting uncertainty, or risk, in the market.

The report says the Henry Hub spot price averaged $3.06 per Mcf in September, $0.17 per Mcf below the average spot price in August. Spot prices fell early in September then moved higher as pipeline maintenance reduced available supply and natural gas-fired electric generators increased demand.

The Outlook notes that prices are expected to remain low through October before rising as space-heating demand picks up and economic conditions improve. Prices are expected to increase in 2010 but, even with a projected winter storage withdrawal greater than the five-year average, end-of-March inventories will be the highest recorded since March 1991. Lower breakeven costs for domestic production and growing global LNG supply should limit sustained price increases throughout the forecast period. EIA expects the Henry Hub spot price to average $3.85 per Mcf in 2009 and $5.02 per Mcf in 2010.

On total natural gas consumption, the report indicates that EIA anticipates consumption to decline by 2.0% in 2009 and 0.2% in 2010 as weak economic conditions hamper the industrial sector, where the most recent data show gas usage is down by 12.4% through July compared with the same period last year. With lower consumption in the residential and commercial sectors as well, natural gas use in the electric power sector remains the only demand outlet for increased natural gas supplies.

In its crude oil outlook, the EIA notes the long-term decline in total U.S. crude production has slowed over the past few years, as higher world oil prices have spurred drilling. In the projections, total U.S. domestic crude oil production, which has been falling for many years, begins to increase in 2009. Most of the near-term increase is from the deepwater offshore. Growth is limited after 2010, however, because newer discoveries are smaller, and capital expenditures rise as development moves into deeper waters.