National

Canada’s National Energy Board has sent a message toparticipants in the international natural gas trade: Stay cool andgreet predictions of Canadian supply shortages with healthyskepticism.

The EIA said its “Short-Term Energy Outlook” will reflect netreductions in projections for energy demand due to the agency’sadoption of the National Oceanographic and AtmosphericAdministration’s (NOAA) weather premises of a three-decade longwarming trend. The report is set to be published Sept. 7.

Western Resources yesterday threatened to cut its losses andsell the company to a national energy conglomerate because of adecision by the Kansas Corporation Commission (KCC) to reopen thedocket on its merger with Kansas City Power and Light. The KCCissued an order late Monday to reopen the merger docket because ofa stipulation and agreement Western signed with the Missouri PublicService Commission staff and others in the Missouri docket.

The national heat wave continued through Friday into theweekend, and electric utilities continued to use appeals forcustomer conservation and other demand-side management tools tokeep juice flowing as needed. But the heavy cooling load lost itsability to keep cash gas prices moving higher. Instead, most pointswere about a dime or more down in flows for the last day of July,and although quotes for Sunday and Monday tended to surpass thosefor Saturday, they still were below monthly indexes. Sources citedthe usual drop in weekend demand, a small screen decrease andforecasts that major market areas will have cooled off a bit bytoday as reasons for the softness.

With possible national implications, California has proposed astate law that would impose “public goods” surcharges on all gassold for consumption within the state, including gas delivered byseveral proposed federally-regulated interstate pipelines that seekto bypass local distributors and directly serve large industrialcustomers. The fees would support energy efficiency,weatherization, public interest energy research and development,and low-income programs. The proposed change undergoes its firstpublic scrutiny in a legislative committee hearing in Sacramento onApril 19. If passed it is sure to splinter the gas industry betweenintra-and interstate interests.

For the second time in five months, the National Energy Boardhas served notice that competition has arrived to stay in theCanadian natural gas pipeline community.

While just a smidgen of its project would be in Canada, Vectorstill needed – and got yesterday – approval from Canada’s NationalEnergy Board (NEB). “This is a significant milestone and supportsVector’s status as the most advanced project to meet increasingdemand for natural gas for markets east of Chicago,” said VectorVice President Juri Otsason. Vector expects to receive finalcertification from the Federal Energy Regulatory Commission (FERC)in the second quarter, which will represent the final step inregulatory approvals.

On the heels of a decision showing that Canadian landowners canforce changes, the National Energy Board has called hearings on 38objections to the route of Alliance Pipeline Project.

With weather forecasts producing bearish news at every turn andthe national storage reserves looming ever larger, Raymond James& Associates recently published a report projecting spotwellhead gas prices to drop below the $1.50/Mcf level before thebeginning of summer. The study gives the correlation between gasprices and storage levels, the onslaught of gas production, and theeffects of a third warm winter as reasons for its forecast. Thestudy also warns of a gas “price shock” in early 2000, when gasshortages run rampant and production is unable to keep up.