Levels

Northwest reported that because it has been unable to deliverspec quality gas off the south end due to increased hydrocarbondewpoint levels, starting today it will be required to shut in sixinterconnect points: Piceance Quick Cycle, Grand Valley, SandSprings, Grand Gas, Premier-Bar-X and Bar-X. The pipeline said itwould contact each affected interconnect operator to discuss gasquality details.

With commodity prices soaring, first quarter producer earningsare coming in at record levels. Vastar Resources reported a massive307% increase first-quarter 2000 net income. Income was tallied at$77.4 million ($0.78 per diluted share), the company’s thirdconsecutive quarterly record, compared to $19 million ($0.19 perdiluted share) in 1Q99. Vastar’s gas production was down nearly 10%to 1,054 MMcf/d, but realized gas prices were up 57 cents to $2.19on average. Crude and condensate production came in at 46.0thousand barrels per day (Mb/d) down from 46.7 Mb/d in the sameperiod last year, but realized oil prices rocketed to $24.73 from$11.16. And gas liquids production increased to 20.8 Mb/d from 9.2Mbd in 1Q99, while realized liquids prices soared to $19.11 from$8.10.

Although you couldn’t tell from rapidly depleting gas storagelevels or lofty gas prices, this winter turned out to be thewarmest on record for the United States, according to a report bythe National Oceanic and Atmospheric Administration. And it was thethird winter in a row in which record warmth cooked the UnitedStates.

Northwest reported that since mid-January it has been receiving”unprecedented levels” of liquid hydrocarbons from QuestarPipeline’s Clay Basin storage facility, “culminating in a criticalhigh of 21,000 gallons on Feb. 5.” Northwest has collected thecondensate at its Green River (WY) Compressor Station, but thefilter-separator system there was designed to collect only minimalamounts. Since last Monday, Northwest said, it has physicallytaken approximately 100,000 Dth/d from Clay Basin and was making upthe shortfall by withdrawing gas from Jackson Prairie. Northwestassured shippers it is working with Questar to keep Clay Basinnominations whole, but cautioned that at some point it may berequired “by prudent operations” to refuse gas nominated from ClayBasin.Northwest will provide 24 hours’ notice in such an event,but said Friday there would be no refusals over the weekend.Shippers can help ease the situation by voluntarily reducing ClayBasin nominations to whatever extent possible, Northwest said.

First-of-month swing prices were down from the weekend buthandily above February indexes Monday. As further proof that theaftermarket was getting off to a strong beginning, a marketerreported seeing Henry Hub swing swaps trading at $2.67 while thescreen was at $2.61. “That premium of 6 cents was very strong,” hesaid.

The retreat of Northeast citygates from last week’s lofty levelswas still under way Monday, but the rate of decline was slowing.Otherwise, except for softening at Rockies and PacificNorthwest/western Canada points and moderate firmness at Midwestcitygates; flat to slightly lower pricing dominated the west of themarket.

Texas Eastern (Tetco) said Friday its delivery pressures haddropped below contractual levels due to cold weather and highmarket-area takes. Thus it issued an OFO, effective at 1 p.m. CTthat afternoon, requiring that all deliveries in its M-3 zone underall rate schedules be made at a uniform hourly rate. All M-3Operational Balancing Agreements were suspended for purposes ofhourly allocations only during the OFO period, the pipeline said.Penalties for non-compliance with the OFO were $25/dth. However,late Friday afternoon Tetco said the OFO was being suspended at 9a.m. Saturday because of forecasts of a “slight” warming trend.

Due to extremely high storage inventory levels and continuedweather predictions at or above normal temperatures, Williams GasPipeline Central has been experiencing daily storage injectionsthat are substantially above contractual limits, especially onweekends, the pipeline said. Shippers under TSS and FSS rateschedules are required to adhere to their maximum daily injectionquantity and their defined contractual maximum storage quantities.Due to warmer-than-normal weather forecasts, shippers and pointoperators will need to decrease corresponding supplies to matchdeliveries. During this time, the pipeline will not acceptimbalance payback or banking of gas. If corrective action is nottake, an operational flow order may be necessary effective gas daySaturday.

Southern Co., the largest electric generator in the country,still plans to hire 1,000 more people before the end of the year,the company said yesterday. Many of the job openings are in theunregulated sector. So far in 1999, the company has filled 2,000vacant or new positions.