Concerns

Futures came under heavy selling pressure early in the dayMonday, and the market never looked back as traders began discountto the threat of Hurricane Georges causing a major impact to gasproduction. “There was only one certainty you could bank on cominginto the market [Monday] morning. Momentum-whichever way the marketmoved at the open would dictate the direction for the rest of thetrading session,” a New York broker said. The October contract wasdealt the largest losses, slipping 15 cents to limp off the boardat $2.031.

Major gas producers and marketers last week said they hadserious concerns about the auction concept raised by FERC in itsnotice of proposed rulemaking on short-term transportationcapacity, with some saying it would pose a logistical nightmare,threatening the reliability of the system and the seamless flow ofnatural gas.

Major gas producers and marketers last week said they hadserious concerns about the auction concept raised by FERC in itsnotice of proposed rulemaking on short-term transportationcapacity, with some saying it would pose a logistical nightmare,threatening the reliability of the system and the seamless flow ofnatural gas.

For the second Wednesday in a row, ebbing concerns of tropicalstorms and a “buy the rumor, sell the event” mentality has put themarket under selling pressure. In the wake of Hurricane Earl lastweek the October contract sank 13.4 cents. This Wednesday, themarket was already in the process of giving back some of Tuesday’sgains even before Tropical Depression number 6 became TropicalStorm Frances. That left the October contract down 4.1 cents tosettle at $1.833 yesterday.

Sen. Larry Craig (R-ID) confirmed last week that he has sought”some information” from FERC on its natural gas policy optionspaper, saying he was especially concerned that certain proposalscould lead to re-regulation of the gas industry.

Industry concerns that FERC could lose one of its mostexperienced commissioners when his term expires at the end of thismonth were partially quelled late Tuesday when President Clintonannounced his intent to nominate Commissioner William L. Massey toanother term. His new term, which is subject to Senateconfirmation, would expire June 30, 2003.

Announcements of new pipeline projects are booming despiterecently voiced concerns by pipeline executives that return onequity is not sufficient to justify new construction (see NGI, Feb.2). A recent NGI survey of projects announced over the last threeyears indicates more than 7 Bcf/d of new capacity has already beenconstructed in the U.S. and Canada, with nearly 21 Bcf/d ofcombined capacity additions approved or under consideration. Thisis in addition to projects canceled or put on hold indefinitely.