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Adding to gains achieved in Tuesday night’s Access tradingsession, natural gas futures spiraled higher Wednesday as tradersprobed into uncharted price territory in reaction to anotherbullish storage report. Fueled by that buying pressure, theDecember contract finished 24.9 cents higher at $6.265, almost$2.00 above lows notched two weeks ago.

In an indication that Mexico may be headed toward privatizing its monopoly-run energy industry, Mexican President-elect Vicente Fox, who takes office Dec. 1 under a vow to make the government more professional and less political, is hearing calls from friends and foes alike to restructure the energy industry and allow more private investment.

Vancouver-based Westcoast Energy Inc. will pay $75 million tobuy the 50% interest in Empire State Pipeline that it doesn’talready own from Houston-based Coastal Corp., officials saidyesterday. The deal gives Westcoast complete ownership of the156-mile, 24-inch natural gas pipeline running along theU.S.-Canada border near Niagara Falls to Syracuse, NY interconnectpoints.

In the wake of FERC’s much-anticipated investigation report and companion order on the California wholesale power market last week, out-of-state power marketers breathed a collective sigh of relief when the Commission declared it didn’t uncover any “specific” instances of market-power abuse on which to pin the huge run-up in power prices this past summer. The Commission focused instead on correcting regulatory and structural design flaws, specifically with the California Independent System Operator (Cal-ISO) and Power Exchange (Cal-PX), which were aggravated by severe weather and market conditions.

The Transco pipeline system’s capacity has increased by 204,099 Dth/d with the start-up of the SouthCoast Expansion project, said parent company Williams. The $108 million expansion provides additional firm transportation capacity to gas markets in Alabama and Georgia. The expansion loops 44 miles of pipeline and adds 31,500 hp of compression at stations in Rockford, AL, and Newnan, GA. The facilities add capacity to Transco’s mainline from Station 85 in Butler, AL, to delivery points within zone four. The expansion will serve Atlanta Gas Light, Georgia Power and a new power generation plant to be built by the South Carolina Public Service Authority. FERC approved the SouthCoast Expansion in May (see NGI, Sept. 4). Transco also has numerous other expansions on the drawing board. The 38-mile, 236,000 Dth/d Sundance project will loop the southern mainline in spring 2002. The 152 mile, 700,000 Dth/d MarketLink project will loop the Leidy line in Pennsylvania and New Jersey. And the 125,000 Dth/d Cross Bay project will increase deliveries into New York City. The company cited robust economic growth and the subsequent development of gas-fired power generation facilities as the main force driving these expansions.

If FERC this week should order price caps on wholesale sales ofelectricity into the California markets as the result of itsmonths-long probe there, Puget Sound Energy Inc. has called on theCommission to take similar action in the Pacific Northwest bulkmarkets as well.

Higher interest expenses and new costs related to a fiber optics project sent third quarter earnings for Columbia Energy Group downward last week, failing to measure up to forecasts by First Call/Thomson Financial analysts. Herndon, VA-based Columbia reported income of $19.5 million, or 24 cents per share, came in under analysts’ expectations of 29 cents per share. For the third quarter of 1999, Columbia had reported earnings of $20.5 million, or 25 cents per share. Still, after adjusting for one-time items, Columbia’s third quarter income from continuing operations was $32.4 million, which is $6.2 million more than third quarter 1999. Even with lower labor costs and higher natural gas prices, the company could not offset the impact of higher interest expenses associated with its pending takeover by NiSource Inc., which is scheduled to close Nov. 1(see NGI, July 10, June 5). Columbia also said that it had additional costs associated with building a fiber optics network between Washington, D.C. and New York City. CEO Oliver G. Richard III said, “Columbia’s core businesses continue to achieve solid operating performance. Our transmission, distribution and exploration and production segments all reported higher results this quarter compared with a year ago.”

Calgary-based Fort Chicago Energy Partners L.P. — which owns a 26% equity in the Alliance Pipeline project — said that its largest unit holder, Gendis Inc., will distribute 8.5 million units to shareholders by Nov. 24. Gendis, based in Winnepeg, will retain 6.2 million units of Fort Chicago following the transaction.

Unocal said last week that its expected earnings be aboutbetween 90-95 cents per share, or about 20-25 cents more than itsprior estimates and 11 cents more than First Call/ThomsonFinancial’s consensus estimate of 79 cents. The updated earningsestimate can be attributed to rising natural gas and oil prices,the company said. The new estimate took into account the expectedaverage price for West Texas Intermediate (WTI) crude oil of $31.60per barrel and a Henry Hub natural gas price of $4.35 per Mcf. TheJuly 27 forecast was based on a WTI price of $29.75 per barrel anda Henry Hub price of $4.00 per Mcf. Unocal said the latest estimatedoes not include “miscellaneous special items,” such as an expected$36 million aftertax charge for what it called a derivativesaccrual. Last year Unocal posted earnings of 17 cents per share forthe third quarter.