Concerns

Bowing to the concerns of shippers, FERC last week suspended forthe maximum five-month term Texas Gas Transmission’s tariffproposal to provide new hourly service for the summer electricpower generation market. During the suspension period, theCommission directed staff to convene a technical conference toaddress shippers’ issues and report back to it within 120 days.

Phillips subsidiary GPM Gas Corp. and a number of other NorthernNatural shippers are befuddled by a complex negotiated ratetransaction between Northern Natural and its affiliate Enron NorthAmerica Corp. that covers 295,000 MMBtu/d of firm transportationspace, or about one-third of Northern’s pipeline capacity. Thecontract was filed at FERC on Oct. 29 (Docket No. RP96-272).

Phillips subsidiary GPM Gas Corp. and a number of other NorthernNatural shippers are befuddled by a complex negotiated ratetransaction between Northern Natural and its affiliate Enron NorthAmerica Corp. that covers 295,000 MMBtu/d of firm transportationspace, or about one-third of Northern’s pipeline capacity. Thecontract was filed at FERC on Oct. 29 (Docket No. RP96-272). GPMhas filed a protest and request for technical conference with FERCon the matter, saying the transaction is large, complex and maydiscriminate against other shippers.

Fueled by strong cash prices, a constructive technical picture,and lingering storm concerns the natural gas futures market wasquick out of the gates yesterday as traders lifted the market toits highest point in over a month. However, the buying pressuredropped off as November prices crossed the $3.00 threshold, whichprompted participants to trim gains into the close. After notchinga $3.03 high, the November contract finished at $2.97, a 4.3-centadvance on the day.

Feeding off Wednesday’s weakness and reflecting fading concernsthat any of the three tropical systems would reach the gas-richGulf of Mexico, the futures market tumbled lower yesterday as bothcommercial and speculative traders exited long positions. Theresultant price slide left the September contract just penniesabove its $2.90 low for the week and turned several bulls intoshort-term bears. The prompt month finished 8.2 cents lower at$2.948 shortly after notching a $2.93 low late in the session.

Natural gas futures surged again yesterday amid concerns thatproduction shortfalls associated with a sudden barrage of tropicalstorm and hurricane activity will put pressure on an already tightsupply-demand situation. Fresh off a 28-cent price run late lastweek, the September contract tacked on an additional 12.6 centsyesterday to finish at $3.064 after notching a fresh high at $3.08.Estimated volume was healthy, with 101,460 contracts changinghands.

Propelled by a tropical depression swirling in the Bay ofCampeche and concerns of yet another bullish storage report,natural gas futures spiraled higher yesterday as traders coveredshort positions. That buying interest pushed the September contractto $2.805 — the highest mark for a spot month contract sinceDecember of 1997 — before settling at $2.792 for the session.

Supportive physical prices and concerns over supply tightnesstook center stage yesterday in the natural gas pit at Nymex andthat gave bulls the impetus to post the seventh straight priceadvance. The September contract finished up 2.7 cents at $2.748after notching both a higher high and a higher low for the session.Estimated volume was 77,940 contracts.

The proposed rulemaking calling for a relaxation of FERC’srestrictive policy for off-the-record communications is “essentialto providing timely and adequate information” for the Commissionstaff to conduct environmental reviews of proposed pipelineprojects, the Interstate Natural Gas Association of America (INGAA)said last week.