Western Natural Gas, a Denver-based marketing company, isphasing out its retail marketing business in the face of increasingnatural gas prices and the capital requirements necessary to obtainsupplies.

The escalating prices “have placed constraints on the ability ofprivate companies to obtain operating capital needed to providequality natural gas service,” Western said in a press releaseissued yesterday after an article appeared in the Rocky MountainNews. “We have determined that continuing to service the retailmarket is not feasible and are in the process of phasing out ofthat arena. During this transition period, Western continues toexplore options that will satisfy our existing retail customerbase. We would like to stress that Western Natural Gas is stillflowing gas to all of our customers — and will continue to doso.”

Lori Vining, Western’s president, said the company is lookingfor a new supplier for its customers as a group. “We are notleaving them high and dry.” Vining said the problems her companyare facing are “no different than those facing others at these highprice levels.” She declined to say how many customers or how muchgas, but confirmed they include some Denver school districts.

An industry source said he had been told there were about 100customers and the volumes totaled between 15 and 20 MMcf/d.

Vining confirmed that the customers had the option of returningto service from Xcel Energy’s distribution subsidiary, PublicService of Colorado. A spokesman there confirmed the distributionrates for commercial customers currently are $5.85 per MMBtu, butare expected to go up to $8.60 an MMBtu when the latest rate hikeis approved by the state public utility commission.

John Talley, president of Proliance Energy in Indianapolis,denied a published report that it would buy out the retail businessof Western Natural. Proliance “had some brief discussions inmid-December, but they were not successful. There was noagreement.”

In the future, Western Natural said its focus will be onproduction and producer services, gathering, upstream technologyand wholesale marketing.

Western’s dilemma is the latest evidence of the financialsqueeze put on marketers, large and small, by the high marketprices, which are boosting credit requirements for those trading inthe market. Several small marketers have already filed forbankruptcy.

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