1998

A former “wild card” in the outlook for Canada’s biggest energymarket is starting to look like an ace for natural gas that willpay off for American as well as Canadian suppliers, according tonew evidence before the National Energy Board. The NEB has beentold a healthy growth market for gas is developing fast as a resultof Ontario Hydro’s shutdowns of nuclear power generators andelectricity deregulation. According to the evidence, aC$1.7-billion (US$1.2-billion) chain of gas-fired power projects isrising from the ashes of the Crown Corp.’s crumbling monopoly andtroubled nuclear facilities.

Royal/Dutch Shell Group Chairman Mark Moody-Stuart said lastweek the company plans to sell 40% of it chemicals business andtake a related fourth quarter $4.5 billion after-tax charge. Hedescribed the move as the first step in “clearing out thecupboard,” which also will include selling multiple other assets inareas of high cost oil production, refining, and gas transportationand processing.

ComEd announced it plans to sell the Collins generating stationand the company’s peaking units in conjunction with the sale of itscoal-fired generation business. The company said it received anumber of attractive proposals for all the power plants during thefirst phase of its coal plant auction. A “short list'” of qualifiedbidders on all the plants is being compiled for the next phase.

The gas market showed last week it was fed up with low crude oilprices getting all the attention. In a market swing that wasnothing short of unbelievable, gas prices collapsed to nearhistoric lows for a week in December. Spot prices at the Henry Hubplummeted to $1.01/MMBtu on Friday and averaged $1.32 for the week,down 64 cents from the week prior. Spot prices at a number of otherlocations in Louisiana and Texas fell below $1 on Friday.

A Kern River official said a large number of pipeline shippersexpressed interest in extending or signing new firm transportationagreements under the pipeline’s proposed term differentiated rateproposal, a rate discounting plan announced in late October. Thepipeline company received requests from nine new shippers, mostlymarketers, for 900 MMcf/d of firm capacity on its mainline underthe new rate design during a recent open season. In addition, eightout of its 11 existing shippers expressed interest in holding on to600 MMcf/d under new discounted rates.

The gas market showed last week it was fed up with low crude oilprices getting all the attention. In a market swing that wasnothing short of unbelievable, gas prices collapsed to nearhistoric lows for a week in December. Spot prices at the Henry Hubplummeted to $1.01/MMBtu on Friday and averaged $1.32 for the week,down 64 cents from the week prior. Spot prices at a number of otherlocations in Louisiana and Texas fell below $1 on Friday.

It was a week late, but the American Gas Association reportedlast week that the industry put more gas in storage this year thanin any of the previous four years in which it has been conductingits storage survey. In a revision prompted by a change in totalworking gas capacity in the U.S., the AGA said on Nov. 6 there was3,127 Bcf of gas in storage, which is 58 Bcf more than the previouspeak set on Nov. 8, 1994 (See survey this issue).

Interstate pipelines and industrial gas customers said theywould be opposed to any FERC proposal requiring pipes to notifyaffected landowners of proposed projects prior to filing theirapplications at the Commission, saying this would only furthersnarl the certification process. In late September, FERC indicatedin a notice of technical conference that it was leaning toward sucha proposal in order to involve landowners earlier on in thecertification process.

The signing by the United States last week of the Kyotoagreement limiting greenhouse gas emissions elicited jeers onCapitol Hill and in some energy circles. The move was seen as “moreof a gesture of goodwill” to encourage commitments from developingcountries that are attending the conference now underway inArgentina, according to Capitol Hill and gas industry sources. Theyseriously doubt President Clinton will submit the controversialaccord to the Senate, which is sharply opposed to it.