Commodity

The Commodity Futures Trading Commission (CFTC) last weekapproved a New York Mercantile Exchange (NYMEX) application totrade electricity futures and options based on delivery at thePennsylvania-New Jersey-Maryland (PJM) western hub. And slated forapproval today is the proposed and competing Chicago Board of Trade(CBOT) PJM western hub electricity futures contract.

Seeking emergency relief for Texas oil and gas producerssuffering from low commodity prices, the three-member TexasRailroad Commission (TRC) last week voted to propose statelegislation to suspend severance tax payments when the price foroil and gas drops below $15/barrel of oil or $1.50/Mcf of naturalgas as determined by the Comptroller of Public Accounts.

The Commodity Futures Trading Commission (CFTC) is expected toapprove Tuesday a proposed Chicago Board of Trade (CBOT) PJMwestern hub electricity futures contract, based on physicaldelivery into the PJM western hub electricity cash market ofPennsylvania, New Jersey and Maryland. The contract is to be tradedalong with the CBOT’s TVA and ComEd contracts, creating a powercomplex to provide risk management to the southeastern, midwesternand northeastern United States. The CBOT announced the proposed PJMcontract in November.

The Commodity Futures Trading Commission (CFTC) approved a NewYork Mercantile Exchange (NYMEX) application to trade electricityfutures and options based on delivery at the Pennsylvania-NewJersey-Maryland (PJM) western hub.

Low commodity prices have driven Bartlesville, OK-based PhillipsPetroleum Co. to cut 1,400 jobs and costs and increase availablecash flow in 1999. “We don’t anticipate margin improvements in thenear term, therefore we are adjusting our plans accordingly,” saidCEO Wayne Allen. “The changes will impact our level of operatingcosts, staffing requirements and capital spending. We are takingthese steps to improve our financial performance and create valuefor our shareholders.”

Following the lead of numerous other oil and gas companies whoare trimming staff this year because of low commodity prices, UnionPacific Resources Group announced it will reduce headquarters staffby 14%, or about 140 positions. UPR has significantly cut back itsU.S. operations this year, divesting an estimated $600 million inexploration and production properties. It also acquired NorcenEnergy, with its strong Latin American focus, and recently sold itsdomestic midstream business to Duke Energy.

Yet another example of gas-power convergence shows up in NGI’sranking of the top gas and power marketers based on third quartervolumes. Three of the top five marketers of each commodity and sixof the top 10 appear on both lists.

The Commodity Futures Trading Commission approved a change inthe Kansas City Board of Trade’s last trading day for its westernnatural gas futures contract that will place KCBT contractexpiration on the same day as Henry Hub futures go off the board atthe New York Mercantile Exchange. The last trading day will now bethe third business day prior to the first day of the deliverymonth. Formerly, it was the second business day prior to the firstday of the delivery month.

The Commodity Futures Trading Commission has approved a proposalby the Kansas City Board of trade to increase the number ofconsecutive Western Natural Gas contract months listed on theexchange to 36 from 18. The additional months will be listed fortrade beginning today.