Unlike much of last month, when Western markets persistentlydisplayed weakness while their Eastern counterparts were rising, itis the West flexing a bit of price muscle this week. Rockies pipeswere back up into the $1.30s Tuesday after several had made a briefsojourn into sub-$1.30 territory Friday and Monday. The reason forthe rebound mystified one trader. “It’s not that cold in theregion, so go figure,” he said, adding maybe it was just a resultof the normal “tug of war” between gas buyers and sellers.
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Spurred by deregulation and the changing role of localdistribution companies, KeySpan Energy, parent of Brooklyn UnionGas, and Enron Capital & Trade Resources (ECT) made an allianceto market gas supply management services to LDCs throughout theNortheast.
Pacific Gas & Electric said less than 1,000 of the more than60,000 customers who lost natural gas service last week in SantaCruz County, CA, were still without service Monday. A massivelandslide Wednesday had ruptured two main transmission pipelinesserving the county, which is southwest of San Jose. More than 600PG&E workers and another 190 from Southern California Gasworked thoughout the weekend to restore service. Facilities withhot showers were set up in two towns for those without gas to heatwater. It was PG&E’s largest gas restoration project since the1989 Loma Prieta earthquake caused severe damage to thedistribution system throughout Northern and Central California, thecompany said.
The first phase of the Dauphin Island Gathering System (DIGS)expansion was put in service last week, making it the first easternGulf of Mexico pipeline to transport deep-water production toonshore facilities in Alabama. When complemented by the secondphase of its expansion, DIGS – a project of the Dauphin IslandGathering Partners (DIGP) – will have the capability to deliver upto 1.1 Bcf/d to onshore markets and pipelines in south Alabama andsouth Louisiana. The system will have hub platform capabilities atmultiple locations on the Outer Continental Shelf and in deep-waterareas. It is expandable with the addition of compression.
Inadequate reserve replacement last year should set off an alarmin the gas industry given continuing increases in gas demand,according to a new report by Arthur Andersen and John S. HeroldInc. Proved domestic gas reserves were essentially unchanged in1997 despite a 24% increase in extensions and discoveries to 10.1Tcf, the highest level of drillbit gas reserve additions in thefive-year study period, according to the study titled U.S. UpstreamPerformance Trends. The study noted, however, that negative reserverevisions of 1 Tcf, including a 623 Bcf downward revision by EEXCorp. and smaller downward revisions by Amoco, Mobil and PioneerNatural Resources, are included in the figures.
The major accord signed by Canadian gas industry stakeholders lastweek that virtually assures construction of the Alliance Pipelineproject (See GPI Daily, April 9) hasmade the fate of the competing 1.4 Bcf/d Viking Voyageur projectextremely doubtful. Voyageur sponsors TransCanada PipeLines andNorthern States Power were in meetings all day Monday and Tuesday andan announcement is expected later this week. One Voyageur officialsaid all options are possible, including shelving the 800-milepipeline project.
Peace broke out in the Canadian natural gas community. A newpact on competition in the industry virtually assures constructionof the Alliance Pipeline Project, approval of the merger betweenTransCanada PipeLines and Nova Corp., and a settlement on a newtolling regime on Nova’s Alberta gathering grid.