Houston, TX (8/1)-Baker Hughes Inc. reported U.S. oil and natural gas rotary rigs for the week ending Friday (8/1) at 1,097, a net increase of 6 rigs from the previous week. The rig count is 249 rigs higher than the comparable year-ago period when U.S. rigs numbered 848. Canadian rigs totaled 416 as of Friday (8/1), down 8 rigs from the previous week and up 159 from 257 rigs operating during the same period last year. The report shows 969 of the U.S. rigs to be located on land, 111 rigs in offshore waters, with the remaining 17 rigs operating in inland waters. Of the 1,097 U.S. rigs, 937 rigs were searching for gas and 156 for oil. ♦

House GOP Creates Gas Crisis Task Force

Attempting to preempt any political fallout from a possible natural gas crisis next winter, House Speaker Dennis Hastert (R-Illinois) last Thursday named a task force of 18 Republican House members to determine the causes of the current supply shortage and ways to prevent shocks to the US economy stemming from high prices.

The panel — Task Force for Affordable Natural Gas — is to report back by Sept. 30 with short- and long-term ideas to stabilize natural gas supply. Republican leaders also signaled the task force’s findings would be used during a Senate-House conference on a comprehensive energy bill later this year to force an increase in production on federal lands. Hastert said he was greatly concerned that American families will be facing high heating bills should there be a natural gas crisis. ♦

Natural Gas Prices Average Higher for 2003

The Energy Information Administration (EIA) projects that natural gas prices will remain relatively high through the rest of 2003, with monthly wellhead prices ranging between $4.31 and $4.96 per million Btu (MMBtu). Currently, gas prices are averaging $4.80 per MMBtu. Until July 2003 the daily price had been above $5.00 per MMBtu since the beginning of the year. In addition, the price topped $6.00 in late May and early June, due to increased concerns about the ability to rebuild underground storage supplies. However, natural gas storage injections were about 40 percent above normal in June. Working gas in storage was 2,032 billion cubic feet (Bcf) as of Friday, July 25, 2003, climbing past the psychological 2,000 Bcf mark for the first time since January 2003. Unfortunately, this is still 20 percent below the level last year for the same week. To reach the 3,000 Bcf mark by November 2003, net injections would have to average roughly 69 Bcf per week over the next 14 weeks. Many people in the gas industry believe that storage will be filled to 3,000 Bcf, which is a level that the gas industry recognizes as a sufficient amount of storage to meet the wintertime demand across the Country. ♦

In a surprise move, Senate Republicans seized on a proposal to ditch this year's energy bill and resurrect one passed by the Democratic-controlled Senate last year. Late Thursday evening (7/31), the Senate passed S.14 on a vote of 84-14, boosting chances for enactment of the nation's first major energy policy since 1992.

The legislation faces a difficult conference this fall. The House passed a related bill in April but unlike the newly resurrected Senate version it would open the Arctic National Wildlife Refuge to drilling.

Passing legislation with incentives for conservation and alternative fuels and with billions in tax breaks to spur domestic energy exploration has been a top priority of both the White House and Frist. Vice President Dick Cheney, architect of the administration's energy policy, telephoned wavering Republicans to keep them in line.

Last year's bill would require utilities to generate 10 percent of their electricity from renewable energy facilities by 2020, mandate that renewable fuels, such as ethanol, be used in gasoline - something both New York senators have opposed-and includes provisions addressing climate change. The GOP bill called for waiving environmental reviews when exploring for energy on Indian lands and included broad subsidies for the construction of nuclear power plants.

The unlikely deal had benefits for both sides. Republicans could avoid politically sensitive debates over global warming and air quality and were able to advance a major legislative goal. Still, a danger for Democrats was that the conference this time would be headed by two Republicans, Domenici and Rep. W.J. "Billy" Tauzin, long supportive of the energy industry. ♦