Association

A new gas tolling agreement between TransCanada PipeLines andthe Canadian Association of Petroleum Producers (CAPP) soon mayreplace Nova Gas Transmission’s 19-year-old, postage-stamp pricingsystem with a formula based on distance- and the diameter of thepipe used for transportation. A memorandum of understanding (MOU),signed by CAPP and TransCanada, marks the culmination of asettlement process started when the Canadian gas industry signed apeace accord last April, which also assured construction of theAlliance Pipeline and approval of the TransCanada-Nova merger.

The bearish American Gas Association storage report was too muchfor the April contract last week. Despite strength that sent thecontract to a new high of $1.965 last Wednesday, April ended theweek near its low, down 9.4 cents on news that a large storagesurplus remains. After falling 12.1 cents on Thursday, the contractattempted an initial push Friday morning but immediately loststeam, dropping sharply to a low of 1.750 only to zigzag sidewaysthe rest of the day before closing down 6.1 cents at $1.759/MMBtu.

The surprisingly small storage withdrawal last week of 69 Bcf,as reported late Wednesday by the American Gas Association, tookthe blame for a 12.1-cent tumble in the April Henry Hub futurescontract yesterday. Most observers were expecting about 110 Bcf tobe withdrawn, so the AGA report was enough to trigger along-awaited correction. Heavy selling sent the front-month Nymexgas futures contract cascading down throughout the day to a low of$1.810 before closing at $1.820.

The Independent Petroleum Association of America (IPAA) praisedthe action of Interior Secretary Bruce Babbit in allowing marginaloil well operators producing on public lands to suspend operationsfor up to two years without losing their leases. The announcementcame Thursday on the heels of the release of an IPAA survey showinghistorically low oil prices have increased the number of shut-insand the industry unemployment rate.

The Independent Petroleum Association of America (IPAA) praisedthe action of Interior Secretary Bruce Babbit in allowing marginaloil well operators producing on public lands to suspend operationsfor up to two years without losing their leases. The announcementcame Thursday on the heels of the release of an IPAA survey showinghistorically low oil prices have increased the number of shut-insand the industry unemployment rate.

Record low rig counts are a sure sign of an energy industry incrisis, according to the Independent Petroleum Association ofAmerica (IPAA). The Baker Hughes rotary rig count dated Jan. 22 forNorth America was at 942, a steep drop from the count one year agoof 1,508.

Despite the increasing pressure of retail competition, thefuture is bright for gas utilities, American Gas AssociationChairman Dick Terry told investors last week. Terry, who also isCEO of Chicago-based Peoples Energy, told the New York Society ofSecurity Analysts he’s optimistic that federal and state regulatorsare headed in the right direction.

The Canadian Gas Association’s 1998 demand forecast showsoverall domestic gas consumption increasing nearly 30% over thenext 12 years to 100.7 billion cubic meters in 2010. The industrialsector is expected to enjoy the strongest growth (up 38% over theforecast period), largely driven by increases in power generation.In 2010, the industrial sector will represent 63% of total end-usegas demand in Canada, with consumption pegged at 63 billion cubicmeters. This compares to 45.7 billion cubic meters in 1998.

The Canadian Gas Association’s 1998 demand forecast showsoverall domestic gas consumption increasing nearly 30% over thenext 12 years to 100.7 billion cubic meters in 2010. The industrialsector is expected to enjoy the strongest growth (up 38% over theforecast period), largely driven by increases in power generation.In 2010, the industrial sector will represent 63% of total end-usegas demand in Canada, with consumption pegged at 63 billion cubicmeters. This compares to 45.7 billion cubic meters in 1998.