Lower

Despite slightly lower wellhead deliverability this yearcompared to last and the growing need for producers to increasedrilling just to maintain production because of steep declinerates, Natural Gas Supply Association President Skip Horvathinsisted yesterday there will be no gas supply “shortfalls” thiswinter. As long as buyers are willing to pay the price, the gaswill be there.

A Gulf Coast producer figured it had to be “storm hype”outweighing a sharply lower gas futures screen and causing nearlyall cash markets to soar by a dime or more Monday. Even mild tocool temperatures and the additional negative influence of Novembercrude oil futures plunging by 78 cents to settle below $24/bbl forthe first time in weeks failed to avert substantial upticks forspot gas.

For the second Friday in a row, most points avoided the pricejinx associated with lower weekend demand. Flat to slightly higherwas the general rule, although a few points rose by as much as 8cents. Most of the weaker spots were concentrated in Northeastcitygates and the Rockies, with Iroquois Zone 2 deliveries fallingby almost 15 cents. Prices were down overall, but experiencing alate bounce due to screen strength, a Northeast trader said.

September prices were a little lower following the weekend, butsome sources saw something of a yo-yo effect with quotes regaininga penny or two in the afternoon as the October screen managed toachieve a small advance. A buyer at the Chicago citygate said hisdeals averaged just over $2.90 on Friday and just under $2.90 onMonday.

In less than two months, BP Amoco Canada succeeded in unloadingall of its crude oil producing properties in Canada in an effort tolower costs and focus on natural gas, gas liquids andpetrochemicals. The company said last week it signed agreements tosell its heavy oil operations to Canadian Natural Resources andPenn West Petroleum for C$1.6 billion.

In less than two months, BP Amoco Canada has succeeded inunloading all of its crude oil producing properties in Canada in aneffort to lower costs and focus on natural gas, gas liquids andpetrochemicals. The company sold the high-cost heavy oil operationsto Canadian Natural Resources and Penn West Petroleum for C$1.6billion. The assets include five major fields, which currentlyproduce a total of 54,300 b/d of oil and liquids and 75 MMcf/d ofgas. About 250 employees will be affected by the sale, but many areexpected to sign on with the two buyers, said Dan Kane, spokesmanfor BP Amoco Canada.

BP Amoco CEO Sir John Browne put the company on a crash dietlast week, with a worldwide three-year plan to cut $4 billion incosts and surgically remove $10 billion in non-core asset fat,including the sale of its 64% share in U.S. gas and oil producerAltura Energy. BP Amoco also intends to boost capital expenditures$26 billion.

Weekend prices drifted lower by varying degrees Friday, rangingfrom barely a penny down on a couple of Gulf Coast pipes todouble-digit decreases throughout much of the West. A flat screenprovided no cash guidance, traders said, so it was primarily milderweather plus the typical drop in weekend load that promptedmoderate declines of about a nickel or less at most eastern points.

After cascading nearly 15 cents lower Tuesday and Wednesday,natural gas futures rebounded yesterday as traders ignored thebearish technical picture and focused instead on constructivefundamental factors. The August contract slipped at the close, butwas still able to post a 2.1-cent advance for the day to $2.162.