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Based on comments filed by trade associations last week, thenatural gas industry is split straight down the middle on most ofthe major initiatives in the notice of proposed rulemaking (NOPR)and notice of inquiry (NOI) – with the regulated pipelines and LDCssupporting proposals that would lighten FERC’s grip on pipelinetransportation, and non-regulated producers, marketers andmunicipal distributors concerned the measures could wreak havoc.

Gas supply this year is expected to fall below last year’slevels and will struggle to meet projected demand, the IndependentPetroleum Association of America indicated in a report released toinvestors in New York last week. With the gas rig count down abouta third compared to 1998 levels, U.S. production is expected to bedown 1.2% this year to 18.75 Tcf, while gas imports are expected torise 2.7% to about 3.22 Tcf, and gas demand is expected to shoot up3.2% to 21.97 Tcf.

After slipping 2.5 cents Tuesday, the May natural gas futurescontract climbed back up to just below stubborn support at $2.19yesterday in tenuous trading ahead of the release of the AmericanGas Association (AGA) storage report. May finished the session up 3cents to $2.174.

Gas supply this year is expected to fall below last year’slevels and will struggle to meet projected demand, the IndependentPetroleum Association of America indicated in a report released toinvestors in New York yesterday. With the gas rig count down abouta third compared to 1998 levels, U.S. production is expected to bedown 1.2% this year to 18.75 Tcf, while gas imports are expected torise 2.7% to about 3.22 Tcf, and gas demand is expected to shoot up3.2% to 21.97 Tcf.

Faced with conflicting reports about the need for new pipelinecapacity to serve the Northeast quadrant of the country, theFederal Energy Regulatory Commission last week called for aninquiry into the area’s projected demand for natural gas over thenext 20 years.

Cash prices finished the week on a positive note as continuedincremental heating demand and a strong futures market bolsteredprices Friday. Trading was very active from the outset, a Gulftrader told Daily GPI. “There were some undeniable factors pointingto higher cash prices. Overnight gains in Access trading set thetone, then the over the counter market verified the strength,” heexplained. So it came as no surprise when the first cash offerswere a nickel or more above Thursday’s averages. But the marketcould not sustain the price rally and after buyers had filled theirrequirements at around 9:45 CST, seller realized their lowestprices of the day in late morning dealings.

The Oklahoma Corporation Commission (OCC) delayed the state’sretail gas unbundling 20 months, saying tax and other issues needmore consideration and noting upstream unbundling must come firstanyway.

The Georgia Senate approved House Bill 822 by a vote of 52-0last week, paving the way for a one time, statewide customerassignment process to occur before the next heating season. Havingalready passed the House of Representatives unanimously, theamendment only needs Gov. Roy Barnes’ signature before it becomeslaw.

Dynegy is making a reality of its promise to increase its powerasset portfolio in the Southeast by announcing construction plansfor two separate 500 MW facilities in the past seven days. Lastweek, Dynegy announced a local commission approved plans toconstruct a plant in Heard County, GA. Yesterday, the company saidit gained approval from a local court to build the BluegrassGeneration facility in Oldham County, KY. With the Kentuckyfacility, Dynegy will own or have interest in five power plants inthe Southeast.