* Spot prices at highest point since 2008
* Output down by as much as 2.2 bcfd
* California says feels shortages
* Noble gets cold weather boost in Israel
HOUSTON, Feb 6 Unusually frigid weather was
blamed for slipping output of natural gas in the United States
on Thursday as California warned of short supplies and No. 2
U.S. producer Chesapeake Energy Corp said foul weather
hurt its operations.
The comments from Chesapeake Chief Executive Doug Lawler
came as spot prices for natural gas, widely used to fuel power
plants, spiked to the highest levels since 2008.
Freezing temperatures across the country this winter have
pushed demand to all-time highs and filled the pipeline system
to capacity, and at the same time prompted a number of companies
to say foul weather has snarled production.
The Independent System Operator in California issued a
conservation alert saying "a shortage of natural gas triggered
by extreme cold weather in much of the United States and Canada
is impacting fuel supplies to Southern CA power plants and
reducing electricity generation." California is facing a severe
drought which could affect hydropower.
Estimated U.S. natural gas output is running about 0.8
billion cubic feet per day (bfcd) lower than the 30-day moving
average and is off 1.5 bcfd from the start of this year when
temperatures were more moderate, according to Thomson Reuters
Analytics - which sees current U.S. pure dry gas production of
Bentek Energy, an energy analytics firm, said U.S.
production fell to 64.5 bcfd on Thursday, down some 2.2 bcfd
from normal levels because of freeze-offs. Cold weather can
cause wells to malfunction and contribute to ice storms that
make transport difficult. Bentek said basins in the Southeast
and midcontinent were contributing to the most significant
impacts, down 1.4 bcfd.
Chesapeake's average daily oil and gas output in December
was well below its expectations due to "weather challenges" that
continued into January and February, Lawler told analysts on a
conference call on Thursday.
Fourth-quarter and first-quarter production will be affected
by the icy conditions that hampered some of the company's
operations, but output should "ramp up" on a sequential basis in
the second quarter, Lawler said.
On Tuesday, Chuck Meloy, an executive at Anadarko Petroleum
Corp, said on a conference call the company's operations
in Colorado were finally returning to normal.
"The Wattenberg field has suffered through the floods and
the polar vortex and I'm sure the locusts are coming," he joked.
"But ... our production is coming back."
Gas for Friday delivery at Henry Hub, the benchmark supply
point in Louisiana, traded as high as $9 per million British
thermal units early Thursday, its highest level since August
2008, traders said.
Futures prices were up more than 1 percent on
Thursday after rising more than 7 percent earlier in the day.
They pared gains when U.S. Energy Information Agency data
showed an estimated natural gas draw through Jan. 31 of 262
billion cubic feet, lower than the 270 bcf forecasted by
In Israel, Noble Energy Inc said cold weather
affected results in the fourth quarter, but in a different way
than its peers.
A rare December snowstorm in Israel, where the company has
begun supplying natural gas for heating and electricity
generation, sharply boosted demand.
The jump artificially inflated the company's production
compared with year-ago figures. The company also forecast
first-quarter production that will effectively be below
fourth-quarter numbers due to the temporary spike in Israeli
Executives said they expect production to slowly increase
this year, and told investors they do not expect a similar jump
in sales this year.
"The first quarter is really right on track with where we
expected and right on track to deliver the growth rate that
we've laid out this year," Chief Executive Charles Davidson said
on a conference call with investors.