Fairly

Except for falling San Juan Basin and Malin numbers, prices sawfairly substantial rebounds in post-weekend trading Monday. Coldweather prevailing throughout most of the eastern U.S., highlightedby a potentially severe winter storm developing in the Northeast,plus a large loss of offshore production, were primarilyresponsible for the firmness, sources said.

With record high spot and futures prices last week, continuedcold weather and bullish supply and demand projections, LehmanBrothers didn’t pick a bad week to raise its Henry Hub priceforecasts by about 20% for both 2001 and 2002.

Ridge Energy Storage (RES) is moving forward on a fairlylarge-scale power project that will incorporate the rarelyimplemented process of using compressed air storage to produceelectricity. Ridge has entered into an exclusive arrangement withTexas Brine Company LLC (TBC) to develop up to 10 of theseprojects, with potential capacity to produce up to 600 MW each, ata number of Texas Brine’s brine production sites at salt cavernsalong the Gulf Coast.

Ridge Energy Storage (RES) is moving forward on a fairlylarge-scale power project that will incorporate the rarelyimplemented process of using compressed air storage to produceelectricity. Ridge has entered into an exclusive arrangement withTexas Brine Company LLC (TBC) to develop up to 10 of theseprojects, with potential capacity to produce up to 600 MW each, ata number of Texas Brine’s brine production sites along the GulfCoast.

Pacific Gas & Electric issued a systemwide high-inventoryOFO for today. While the tolerance for positive daily imbalances isfairly stringent at 3%, the non-compliance penalty is light at 25cents/Dth. As of Thursday PG&E was projecting above-targetlinepack through Sunday.

Prices emerged from the weekend to move higher in fairly quietactivity Monday, mostly in amounts of a nickel or less. Theoutperforming points were concentrated in California and theNortheast.

Prices returned to a fairly strong upward track in most marketsThursday except for the Rockies and California, where an extendedhigh-inventory OFO by PG&E put a damper on things.

“Other than a 15-cent crash, it’s a fairly quiet market.” That’sthe only comment a Sumas trader had to offer Tuesday other than acouple of price quotes. It appeared the cash market may have onlybeen teasing producers with Monday’s moderate firming afterdouble-digit decreases dominated on Tuesday. Some sources pointedat futures as a source of cash weakness, but most said it was morethe continuing lack of positive fundamental influences that causedmost points to approximately double the screen’s fall of just over9 cents.

A major environmental group in New England foresees a “fairlyimmediate” need for expansion of two new pipelines in the regionand for “significant” additional pipe capacity to satisfy thenatural gas demands of power plants that are planned for that area.