By Duncan Sutherland – Exclusive to Gas Investing News

Market news

Natural gas futures fluctuated in response to Hurricane Gustav’s threatening track through the Gulf of Mexico over the weekend.

As of Tuesday morning, they were hovering in the mid US$7 range. Thankfully, ‘Gustav’ weakened significantly and did not appear to cause much damage to oil and gas operations, or the Gulf Coast population centers. It appears that the offshore rigs and the onshore refineries weathered the storm successfully.

Hurricane season, however, is not over by any means, not atleast till November. In the meantime Hanna, Ike and Josephine might throw a wrench in the works, yet. To help hurricane victims, please donate to the American Red Cross here.

As summer gives way to autumn and winter, gas prices traditionally see support due to increased heating demand. Expect a boost to prices in the next few weeks, especially if high oil prices continue to make swing producers favour gas.

Company news

Dominion Transmission, a subsidiary of Dominion Resources (NYSE:D) is drawing up US$1 billion proposal to get West Virginian natural gas (largely coal seam) to Eastern Seaboard markets like Pennsylvania. Under this, some 122 miles of new pipe will be laid, and it is to be seen which of West Virginia’s producers jump on board.

A joint venture is to be formed between Flowserve Corporation (NYSE:FLS) and Germany’s Linde Group to implement vehicle-fuelling natural gas systems in Europe. Natural-gas vehicles remain a relative oddity in most parts of North America, but are used more heavily in Europe and the developing world.

BP America (NYSE:BP) will buy one quarter of Chesapeake Energy Corporation’s (NYSE:CHK) Fayetteville Shale. The stake in the Arkansas project will run BP a tab of US$1.9 billion, of which a significant proportion will be funding for drilling and extraction.

International news

South Parse covered the huge auctions of British Columbia potential gas properties a little over a month ago, noting that the province was poised to inaugurate a new era in production. The yearly oil and gas commission report detailed the “highest level of reserves in the province’s history”.

Russia has been active in the past week, perhaps taking advantage of the American preoccupation with political conventions, hurricanes, and sex scandals. (Sometimes, two at once!) An agreement has been struck with Uzbekistan and Turkmenistan to build a pipeline that would introduce 26-30 billion cubic meters of gas per year, into Russian export infrastructure. Almost all the gas will eventually find its way to European consumers.

Also this week, Gazprom offered to buy 100 per cent of Azerbaijan’s natural gas exports for resale to Europe. It will be interesting to see if Azerbaijan will comply. The country is not particularly friendly to Russia, especially given Russia’s diplomatic and financial support for its enemy Armenia. Indeed, the Baku-Tbilisi-Ceyhan pipeline was possible largely because of the close relations Turkey and Azerbaijan enjoy.  Given the Russo-Georgian conflict and Western responses, Baku is evaluating its options carefully.

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