Expected

As might be expected at a Calgary conference where producersdominated attendance and the first day’s panels, bullishness onfuture gas prices ran rampant despite the current week’s slump.Emphasizing the challenges and opportunities in reaching aprojected 30 Tcf/year market by the 2010s, speakers at Ziff EnergyGroup’s “North American Gas Strategies” conference agreed Mondaythat Canadian gas is well positioned to benefit both volume-wiseand price-wise in the coming years.

Cash prices Monday recovered all or most of the territory theyhad lost on Friday-and even more in some cases. Buoyed by a sharplyhigher screen and even a bit of re-emerging air conditioning load,cash numbers moved up by about a dime or more at virtually allpoints except Northern California, topped off by scattered gains of20-21 cents. Even crude oil futures, which had been in free-falllate last week, added a little psychological strength by clawingtheir way back above $21/bbl.

TransCanada PipeLines Ltd. of Calgary, Alberta, completedEnerg¡a Mayakan, a $266 million, 435-mile gas pipeline in Mexico’sYucatan peninsula. The pipeline is expected to go into commercialoperation by the end of September.

Fueled by a smaller than expected storage injection figure,natural gas futures continued higher yesterday morning asspeculative buying easily erased the Wednesday evening price dip.The buying pressure continued throughout much of the day as bullshad their sights squarely set on last week’s high of $2.72. Theirpersistence paid off, and shortly after 1 p.m. the prompt monthpunched through and notched a $2.75 high on the day. However, notenough follow-through buying was seen entering the market, and theresulting sell-off deposited prices back down near unchanged forthe day. The August contract finished just a half-penny higher at$2.647.

New Century Energies and Northern States Power said they havefiled, or are expected to file later this week, merger applicationswith state regulators in Colorado, Wyoming, Minnesota, Texas, NewMexico, Kansas and North Dakota and with FERC. Other filings withadditional state and federal regulators will follow. NCE and NSPshareholders approved the merger on June 28. The proposedcombination, to be called Xcel Energy, will serve three millionelectricity customers and 1.5 million natural gas customers in 12states.

Faced with an onslaught of new pipeline projects, FERC this weekis expected to propose a policy statement that seeks to establish a”framework” by which it can pick the winner when two or moreprojects are destined for the same market [PL99-3]. The Commissionhas listed discussion of a policy statement on pipelineconstruction certificates on the docket for its regular openmeeting Wednesday. It will be FERC’s last meeting until September.

Mexico’s energy regulatory commission (CRE) has defined a newgas distribution geographic zone and put out a call for bids fordevelopment of a distribution system expected to cost about $35million. The system will serve the region of North Bajio includingmunicipalities Aguascalientes-Jesus Maria-San Francisco de losRomo, Aguascalientes; San Luis Potosi-Soledad de Graciano Sanchez,San Luis Potosi; and Zacatecas-Guadalupe, Fresnillo, Calera andMorelos, Zacatecas.

As many had expected, prospects of severe heat averted much ofthe softness that normally accompanies a Fourth of July weekend,considered the year’s lowest demand period. But that was true onlyin eastern markets Friday. The bottom was dropping out for pricesin the West, particularly at the Southern California border.

After swallowing two energy distributors in two months most observers expected Energy East to enter a digestion phase, but the company came back for a third helping last week. The parent company of New York State Electric and Gas (NYSEG) said it is adding CTG Resources, Inc., parent of Connecticut Natural Gas (CNG), to its plate, which already is loaded with CMP Energy and Connecticut Energy.