Natural

After etching out a wide, 20-cent trading range Monday andTuesday, natural gas futures traded sideways yesterday in a rare,low volume and low volatility trading session. Little in the way offresh news was seen to nudge prices in either direction, leavingthe November contract to slip 2.9-cents to $2.978 in pre-AGA profittaking. Estimated volume was an extremely-light 53,060 contracts.

Natural gas production from the deep water Gulf of Mexico hasincreased 252% over the last five years, from 159 Bcf in 1994 to560 Bcf in 1998, according to the Department of Interior’s MineralsManagement Service.

Feeding off bullish weather forecasts, the natural gas futuresmarket snapped back yesterday as local and fund traders added totheir growing long positions. That enabled the November contract toerase Thursday’s 13.6-cent downward retracement and retest the$3.00 level in active, pre-weekend dealings. The prompt monthfinished strongly and closed at $2.975, a 14.1-cent advance on theday.

As Atlantic Canada’s new natural gas industry prepares to beginproduction and export deliveries Nov. 1, the National Energy Board(NEB) has set out to keep it clear of legal and political feudsdisrupting the region’s fishing community.

Maybe the third time will be a charm for El Paso Natural Gas.After two failed open seasons — one of which ended last week —the pipeline is left holding the greater part of the 1.35 BBtu/d ofsoon-to-be-available firm capacity on its system. El Paso now hopesto do a negotiated arrangement for the California-bound capacity— similar to the one it worked out with Dynegy Marketing andTrade two years ago.

Seeking greater operating flexibility in what is expected to bea more fluid California natural gas market following industryrestructuring, Occidental Petroleum has started work on a $9million, 12-mile, 16-inch gas pipeline out of Elk Hills to the eastof the massive reserve. It will interconnect with Pacific Gas andElectric’s transmission line swinging north from the Arizonaborder, providing the first interconnection between Four Cornerssupplies and PG&E when combined with earlier Elk Hillsconnection work done by Oxy.

Maybe the third time will be a charm for El Paso Natural Gas.After two failed open seasons — one of which ended this week —the pipeline still is left holding the greater part of the 1.35BBtu/d of soon-to-be-available firm capacity on its system. El Pasonow hopes to do a negotiated arrangement for the California-boundcapacity-similar to the one it worked out with Dynegy Marketing andTrade two years ago.

Fueled by strong cash prices, a constructive technical picture,and lingering storm concerns the natural gas futures market wasquick out of the gates yesterday as traders lifted the market toits highest point in over a month. However, the buying pressuredropped off as November prices crossed the $3.00 threshold, whichprompted participants to trim gains into the close. After notchinga $3.03 high, the November contract finished at $2.97, a 4.3-centadvance on the day.

El Paso Natural Gas President Richard Baish said the pipelinerejected all of the bids for available California-bound capacity onits system during the second open season, which ended yesterday.