Indication

If this spring is any indication of what’s to come this summer,utility and power grid operators in the Northeast and Mid-Atlanticregions might want to say a few extra prayers for electricreliability and affordable power.

If this week is any indication of what’s to come this summer,utility and power grid operators in the Northeast and Mid-Atlanticregions might want to say a few extra prayers for electricreliability. The last two days of unexpected, severe heat andhumidity strained available power supplies, forcing grid operatorsand utilities to request reductions in power usage. The heat caughtmany operators performing seasonal maintenance on generationplants, which left the power grid without adequate power reserves.

If the results of last week’s Gulf of Mexico lease sale are any indication, the federal government is now feeling the effects of weak commodity prices and industry consolidation.

If the first quarter is any indication, Exxon and Mobil needeach other’s help. Exxon’s earnings dropped to $1.02 billion from$1.82 billion in 1Q99 while Mobil experienced a drop from $715million to $471 million. For the merging companies, the fall-offrepresents more than a 33% reduction in net income for each companyfrom the same period last year.

The role the Natural Gas Supply Association “provides is unique,and our members haven’t given us any indication that they areanything but pleased,” said Rebecca McDonald, this year’s chair ofthe organization and the future senior vice president of global gasmarketing for BP-Amoco. McDonald was questioned by NGI aboutpersistent rumors that NGSA, which originally was created topromote the decontrol of natural gas, would be disbanded and itsfunctions rolled into the American Petroleum Institute. McDonaldsaid the two organizations address very different issues, with APIfocusing on upstream oil and gas and NGSA involved mainly indownstream activities. “NGSA has done a good job with a difficulttask.”

Prices began the week with a mixed performance Monday. Flatnesswas dominant at most points, with small drops outweighing smallgains at others. Mild weather throughout much of the nation lent nofundamental support to gas demand. However, sources saw a goodchance for at least modest increases today based on Monday’sfutures uptick.

If there was ever any indication there was industry consensus onthe need for negotiated terms and conditions of pipelinetransportation service, it was soundly dispelled in a letter beingmailed to FERC today by a group of producers, end users, marketers,and municipal distributors. The Pipeline Transportation CustomerCoalition, which is being led by the Natural Gas Supply Associationand the Independent Petroleum Association of America, blasted therecent FERC policy proposal (filed May 4) by the American GasAssociation and the Interstate Natural Gas Association of Americaas “seriously flawed as to undercut any purported value.” A filingmade by Columbia Energy’s pipeline subsidiaries last week also canbe grouped with the AGA-INGAA proposal. An NGSA spokeswoman said ittoo falls under this protest.