Energy Sector Roundup: Natural Gas Rises

Following is a summary of top stories in the energy sector Monday afternoon.

Crude Still Sliding

Crude oil prices dropped, while natural gas prices rose as lingering cool temperatures kept demand strong.

Light, sweet crude for May delivery tumbled $4.92 to settle at $100.70 a barrel on the New York Mercantile Exchange, adding to a drop of nearly $2 a barrel on Friday.

The decline came as traders sold off a broad range of commodities, from precious metals and gasoline to pork bellies and soybeans.

As the first quarter came to a close and contracts for heating oil were set to expire, traders unwound some of those trades. Market observers said the rush to sell may have been to settle open future positions and lock in profits.

Heating oil futures fell 5.58 cents to settle at $3.0492 a gallon, while gasoline futures sank 10.7 cents to settle at $2.6163 a gallon.

Natural gas for May delivery jumped 30.1 cents to settle at $10.101 per 1,000 cubic feet on the Nymex.

Crop Report Brings Down Ethanol Shares

Ethanol stocks dropped after an Agriculture Department survey showed that corn supplies will be tighter this year, pushing costs up for ethanol producers.

Farmers are expected to plant 86 million acres of corn this year, down 8 percent from 2007, when the amount of corn planted was the highest since World War II. The report is based on sample surveys of 86,000 farm operators in the first two weeks of March.

Most ethanol in the U.S. is made from corn, and though prices have rebounded from historically low levels in the fall and are expected to climb during the spring and summer travel season, they have not risen enough, according to Lehman Brother analyst Mansi Singhal.

"The recent rise in corn and natural gas prices has more than offset the rise in ethanol prices," Singhal wrote in a note to investors. "We expect ethanol prices to start declining in the second half of the year, worsening the macro environment for producers."

US BioEnergy Corp. posted a sharp decline, dropping 81 cents, or 12 percent, to $5.93 in afternoon trading. VeraSun Energy Corp. fell 91 cents, or 11 percent, to $7.36. VeraSun's acquisition of US BioEnergy is expected to close this week.

Elsewhere in the sector, Pacific Ethanol Inc. lost 40 cents, or 8.3 percent, at $4.45. Archer-Daniels-Midland Co. fell $1.17, or 2.8 percent, to $41.11.

Delaware Wins Supreme Court Fight on LNG Terminal

Delaware won a Supreme Court fight, which that will probably kill a proposed liquefied natural gas terminal on the Delaware River.

The justices, in a 6-2 decision, said Delaware can block the project, even though BP PLC wanted to build it on New Jersey's side of the river.

Delaware blocked the project because of safety concerns. The state owns the river bottom most of the way across the waterway, including the land on which a 2,200-foot-long pier would be built on the Jersey side.

The states agree that Delaware owns the land, but New Jersey argued that a century-old agreement allows each state to control piers on its side of the river.

Justice Ruth Bader Ginsburg, writing for the court, said Delaware cannot block ordinary projects from going forward. The proposal at issue, however, "goes well beyond the ordinary or usual," she said.

BJ Buying Innicor

BJ Services Co. plans to buy Innicor Subsurface Technologies Inc. for about $55 million.

The oilfield services company offered $2.50 Canadian ($2.44 U.S.) per share for Innicor. The companies expect the deal to close in BJ Services' fiscal third quarter.

Headquartered in Calgary, Alberta, Innicor makes tools and equipment used to produce oil and gas.

BJ Services wants to buy Innicor to expand its tools line and to add manufacturing capacity.

Energy Partners Stumbles on More Gulf Oil

Energy Partners Ltd. says it found more oil than expected in its East Bay field area in the Gulf of Mexico.

Energy Partners expects to bring production on line early in the second quarter, with initial output of 400 to 800 barrels per day.

Energy Partners thinks it will find oil in at least one more location in the same area, with a number of other opportunities to review in the coming months.

The East Bay field is 89 miles southeast of New Orleans near the mouth of the Mississippi River. The company holds about 51 square miles of acreage in the field.

Energy Partners shares rose 7 cents to $9.40 in afternoon trading.

Venezuela's Chalmette Crude Goes to China

Venezuela sent China oil that used to go to Exxon Mobil's Chalmette, La., refinery, according to Venezuela's oil minister.

Rafael Ramirez said Exxon Mobil stopped ordering crude for the refinery as legal battles continued between it and state-owned Petroleos de Venezuela SA (PDVSA).

PDVSA and Exxon are arguing about compensation for the 2007 nationalization of a jointly owned heavy oil project in Venezuela's Orinoco basin.

Venezuela said last month that PDVSA would meet its existing contracts with Exxon, including continued shipments to Chalmette. The refinery processes about 190,000 barrels a day, but does not depend exclusively on Venezuelan crude.

U.S. Nuclear Power Generation Had Record 2007

The Energy Department's Energy Information Administration said the U.S. nuclear industry produced a record 806.5 billion kilowatt-hours of electricity last year.

Nuclear generation was 2.4 percent above 2006, and 2.3 percent higher than in the previous record year, 2004. The capacity factor _ the amount of power generated compared with the maximum amount that could be generated _ for 2007 was 91.8 percent. The previous record capacity factor of 90.3 percent was in 2002.

Tennessee had the biggest increase, with 4 billion kilowatt-hours more electricity from nuclear sources in 2007 than the year before _ a 16 percent increase.

The number of commercial nuclear reactors operating in the U.S. increased by one to 104, as the Brown's Ferry 1 reactor, which was shut down in 1985, returned to service. The number of operating commercial reactors peaked at 112 in 1990. But nuclear power generation in 2007 was 40 percent above the 577 billion kilowatt-hours produced in 1990, mostly because more reactors stayed on line and generated more power.

--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.