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Rising sales volumes and favorable currency exchange rates morethan made up for erosion of prices fetched by Canadian exports inthe last natural gas contract year.

Williams Energy signed a 10-year agreement to supply more than16,000 Dth/d of pre-paid gas to Florida Gas Utility fordistribution to its members, consisting of 15 Florida LDCs.Williams Energy began supplying Florida Gas Utility Dec. 1.Historically, Florida Gas Utility bought gas using short-term (lessthan one month) and medium-term (up to three years) contracts. “Wechose Williams because of its competitive price and most favorablecontract terms,” said Katrina Vaughn, general manager of FloridaGas Utility.

The bears were at it again at the New York Mercantile ExchangeWednesday when follow-through selling on the heels of Tuesday’sprecipitous price falloff took prices lower. The prompt Januarycontract gapped lower at the open and never looked back, posting a6.6-cent loss to $1.847 for the session.

Mandating the use of a pre-filing collaborative process fornatural gas pipelines would do more harm than good, and in the endcould thwart industry’s efforts to build enough transportationcapacity to support a 30 Tcf market by 2010, a major pipeline groupsays.

Weak commodity prices hit major producers hard in the thirdquarter. Texaco, Amoco, and Exxon all reported sharply lowerresults compared to third quarter 1997. All blamed, for the mostpart, lower commodity prices.

ARCO said it will implement a cost reduction program designed toreduce before-tax costs by more than $500 million over the next twoyears. Approximately $350 million of the cost savings are expectedin 1999. The cost reductions will fall largely into fourcategories: upstream operating and support costs; explorationspending; downstream operating and support costs; and costs for thecorporate center and support services. ARCO’s increasedconcentration on core exploration and production areas and therecent divesting of non-strategic assets have facilitated theadditional cost reductions.

Midland, TX-based Clayton Williams Energy Inc. will acquire morethan 65 Bcf of gas equivalent reserves in east Texas from SonatExploration Co. The company executed a purchase and sale agreementwith Sonat to acquire the assets for about $46.5 million. Thetransaction is effective April 1. The assets are concentrated inthree east Texas fields and consist mainly of long-life gasreserves with significant potential for behind-pipe re-completionsand developmental drilling. Clayton Williams will assume operationson substantially all of the acquired properties at closing,expected to occur by Nov. 20.

The prospect for more liquid energy markets with stepped-upintra-day deal-making is driving development of a second merchantunderground natural gas storage facility in northern Californiawith proximity to Pacific Gas and Electric’s backbone transmissionsystem (Line 401), according to the Sacramento-based manager ofWestern Hub Properties LLC.

Chairman James Hoecker said this week FERC plans to hold onestaff workshop (possibly more) with the gas industry in mid-Octoberto flesh out the details involved in the auctioning of short-termcapacity. The workshop will occur prior to the deadline forindustry comments on the notice of proposed rulemaking (NOPR) thataddresses regulation of short-term capacity, specifically theauctioning of that capacity. The comments are due in earlyNovember.