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ARCO said it will implement a cost reduction program designed toreduce before-tax costs by more than $500 million over the next twoyears. Approximately $350 million of the cost savings are expectedin 1999. The cost reductions will fall largely into fourcategories: upstream operating and support costs; explorationspending; downstream operating and support costs; and costs for thecorporate center and support services. ARCO’s increasedconcentration on core exploration and production areas and therecent divesting of non-strategic assets have facilitated theadditional cost reductions.

FERC’s proposal to organize and monitor the short-term marketthrough daily auctions is either a belated and unnecessaryadministrative nightmare – or the road to vigorous competition inthe transportation market, i.e. the “commoditization” oftransportation.

Last week’s agreement by Semco Energy Gas Co. to a three-yeardeal with TransCanada PipeLines Ltd. for management of its gassupply gives TransCanada its largest asset management relationshipto date. Semco also will buy the majority of its gas supplies fromTransCanada for the three years of the agreement, which iseffective April 1, 1999.

The Pipeline Customer Coalition (PCC) says it supports FERC’sproposed revisions to its complaint procedures that would fosterinformal resolution of commercial differences upfront. Theobjective is to speed up the complaint process at the Commission bycutting down on the number of formal complaints filed. Thecoalition believes this can be accomplished by the FERC mandatingthat regulated energy companies make available “carefullydelineated” pre-filing dispute resolution measures for theircustomers’ use.

Parties have reached an agreement on terms for unravelinglong-term transportation arrangements that for years enabledSouthern California Gas to control its imports of Canadian gasthrough its paper pipeline affiliate, Pacific InterstateTransmission Co. (PITCO).

Capitol Hill lawmakers, federal and state regulators and anumber of power industry representatives last week indicated thatthe results of the FERC staff inquiry into the pricing turmoil inthe Midwest power market were a vindication of their originalsuspicions. Staff proved once and for all, they said, thatelectricity restructuring was not the culprit behind the pricespike in late June, and it found nothing that smacked of marketmanipulation.

Almost a third of gas and oil companies surveyed expect to havecompleted Year-2000 (Y2K) remediation by the end of the year,according to the results of a new survey by the Natural Gas Council(NGC). It further found that 73% said they would be ready by June1999, while all respondents indicated they would be prepared byDecember 1999.

There was no calm before the storm on Thursday as the futuresmarket experienced another day of volatile, choppy trading astraders turned to televisions in trading rooms across the countryfor the direction and strike probabilities of Hurricane Georges.The October contract bounced back and forth throughout the tradingsession as the market digested the imminence of supply shut ins.That prompted the spot month to move 4.8 cents higher yesterday,settling at $2.179.

Almost a third of gas and oil companies surveyed expect to havecompleted Year-2000 (Y2K) remediation by the end of the year,according to the results of a new survey by the Natural Gas Council (NGC) that was released last week. It further found that73% said they would be ready by June 1999, while all respondentsindicated they would be ready by December 1999.