Dividing

The 555-mile Sabine River forms part of the boundary between Texas and Louisiana and has sometimes been called the dividing line between the Old South and the New Southwest. But for gas producers in Texas the river represents a hurdle on the way to eastern and northeastern markets, a basis constraint point soon to be eroded by the market forces that are inspiring a bevy of west-to-east pipeline projects in the region.

The 555-mile Sabine River forms part of the boundary between Texas and Louisiana and has sometimes been called the dividing line between the Old South and the New Southwest. But for gas producers in Texas the river represents a hurdle on the way to eastern and northeastern markets, a basis constraint point soon to be eroded by the market forces that are inspiring a bevy of west-to-east pipeline projects in the region.

The October aftermarket was dividing along geographical lines as it began Friday. Eastern points fell off sharply from both first-of-month indexes and end-of-September levels. However, except for mild Permian/Waha softness, the West was realizing gains in both of the aforementioned cases. Sources attributed the relative western firmness largely to the region’s having a near-monopoly on any hot weather remaining in the U.S.

A FERC administrative law judge has issued an initial opinion, dividing the allocation of generation capacity costs to interruptible load on the Entergy Corp. system into pre-1995 and post-1995 time periods to reflect Entergy’s change in its system planning in the latter period to exclude interruptible load.

FERC’s attempt at a “Solomonic solution” to the ongoing debateover the function of Sea Robin Pipeline – dividing the offshoresystem in two, with the smaller part being declared transportationand the larger section found to be gathering – apparently hasfailed miserably, with both pipelines and their customers citingshortcomings with the remand decision and seeking rehearing. If theSea Robin ruling is upheld by FERC, the case – which has beenpending since 1995 – would be headed back to the courts for asecond time.

FERC’s attempt at a “Solomonic solution” to the lingering feudover the function of Sea Robin Pipeline — dividing the offshoresystem in two, with the smaller part being declared transportationand the larger section found to be gathering-apparently has failedmiserably. Both pipelines and their customers have cited shortfallswith the decision and are seeking rehearing. If the Sea Robinruling is upheld by FERC on rehearing, the case — which has beenpending since 1995 — would be headed back to the courts for asecond time.