The Texas Railroad Commission has set monthly gas allowables based for the first time on prorationing rules adopted in late April, apparently without increasing wellhead prices or capping demand as predicted by opponents of the new system.
TRC commissioners allowed prorated Texas gas fields this month to meet market demand of about 299.3 bcf, almost 46 bcf more than statewide gas production in July 1991.
This month's allowable is based on July 1991 production of 253.3 bcf and producers' forecasts of July 1992 demand, adjusted by TRC to account for factors such as well productivity and new wells.
U.S. spot market gas prices as estimated by Natural Gas Clearinghouse, Houston, averaged $1.42/Mcf this month, down from $1.61/Mcf in June. NGC said the 190/Mcf decrease reflected lower demand, including diminished calls on gas for storage.
According to NGC estimates, U.S. spot prices returned to a 1992 peak in June because of increased gas demand for storage and because of scheduled shutdowns of nuclear plants, as well as concern among local distribution companies and industrial end users about the effect of new prorationing rules on gas supplies.
Decreased demand on July spot markets apparently overshadowed worry about prorationing.
U.S. spot prices averaged about $1.61/Mcf last January before dropping to $1/Mcf in February, NGC estimated. After February's low average, spot prices bounced back to $1.17/Mcf in March, $1.33/Mcf in April, and $1.48/Mcf in May.
Through July, NGC's estimated U.S. spot market prices in 1992 have averaged $1.37/Mcf, up 7cts/Mcf from the same period in 1991.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
