Markets

Although no gas is flowing from the Sable Offshore EnergyProject to markets in Maritimes Canada and New England, theMaritimes & Northeast Pipeline crossed a significant politicalhurdle yesterday that smoothes the way for eventual service. Itsigned an agreement with the Assembly of the Nova Scotia Mi’kmaqChiefs covering a wide variety of environmental and socio-economicmatters. Financial details of the agreement were not released, butthe Indians had been demanding about $98 million, according todocuments filed with the National Energy Board. Pipeline officialsdid say they have agreed to contribute funds for a number ofpipeline monitoring and educational activities. They also haveagreed to give the Indians 5% of the project work done in theprovince.

Except for the Rockies and Pacific Northwest, fundamentalsremained kind of on the wimpy side in most markets Monday. However,going on the theory that a bird in the bush (weather forecast) isworth more than two or three in the hand (current conditions),traders sent prices higher by about a dime or more at most points.Although the screen provided a smidgen of support with a gain ofslightly over 6 cents, sources agreed that a new forecast for muchcolder temperatures than anything seen previously was the mainfactor in rising cash prices.

NiSource finally sweetened its unsolicited offer for Columbia Energy Group with a $74/share ($6.1 billion) bid last week — up from the prior offer of $68/share. It also laid down an olive branch by inviting five of Columbia’s top managers, including CEO Oliver G. “Rick” Richard, to take seats on an expanded NiSource board. Richard was offered a vice chairmanship.

While deal activity in the capacity release markets appears tobe leveling off, the market is still dynamic enough to accommodatenew market entrants, according to energy industry consulting firmSkipping Stone Inc.

The battle between Coastal Corp.’s ANR Pipeline and supportersof the proposed Guardian Pipeline over the lucrative Wisconsin andnorthern Illinois markets intensified last week, as each sidepresented its case through displays of public support. Yet, despitethe bickering and ANR’s attempts to keep Guardian from being built,the pipeline project is expected to be filed with FERC as soon asnext month.

The number of U.S. consumers and small businesses “choosing tohave a choice” in their electric and gas service has doubled sinceJan. 1 to 3 million and is expected to reach 4 million by the endof the century, according to a report by Cambridge Energy ResearchAssociates (CERA).

It was a tale of two cash markets on Friday, as the majority ofprice points east of the Rockies registered gains of 1 to 7 cents,while prices to the West dropped because of the typical weekenddecrease in California power demand exacerbated by a weekendconstraint announced on PG&E’s system. El Paso (non-Bondad) wasone of the pipes to fall the farthest, finishing in the mid $2.20s.

Convergence is going to continue in the energy industry becauseit is what customers and financial markets want; the market signalsare unmistakable, according to an industry representative and aninvestment funds manager.

Instead of trying to sift through all the issues relating to theshort-term and long-term transportation markets, Commissioner LindaBreathitt proposed that FERC first issue a limited rulemakingaddressing the less-controversial issues and save the more complexissues for later. “From what I’ve read in the comments [filed atFERC], the approach I am proposing appears to be one that many inthe market could support,” she said in a speech to the American GasAssociation Legal Forum in La Jolla, CA, last week.