Path

Canada’s upstream energy sector is on a path to “eclipse” 2000’sdrilling pace, and early indications are that this year will showcontinued strength in gas exploration and production — a goodsign that supply may be on the upswing, according to a report byCambridge Energy Research Associates.

The softening that had begun in late trading Monday carried overto Tuesday’s activity, but the path back down wasn’t as steep asthe climb up.

Although the creation of Westar Energy did not follow the pathoriginally intended, plans for the utility holding company were setin motion last week when Western Resources announced it will splitthe company into two separate entities, one covering electricutility businesses and another for its non-electric operations.Both companies will be public entities. The separation is expectedoccur through a voluntary exchange offer expected to be completedprior to year-end.

If El Paso continues on its current path, there may be nopipelines left to buy. After announcing an agreement to merge withCoastal Corp. only a week earlier, the Houston-based energy giantannounced two more major purchases last week.

TransCanada Pipelines put down the scalpel last week and took upthe ax. Having determined the path toward improved financial healthmust involve some painful surgery, the company decided to lop off15% of its asset base in exchange for expected proceeds of about$3.6 billion (net $3 billion), which will be used to pay down debt.It also decided to trim its dividend by a hefty 30% to $0.80/share.

Thanks, but no thanks. Texaco continues to go it alone after turning down a merger offer from Chevron last week.

The screen giveth, and the screen taketh away. Wednesday was aday of taking away much of what had been given to cash prices theday before. As traders continued to play the Hurricane Georgesguessing game (will it or won’t it get close enough to the Gulf ofMexico production area to substantially impact offshore supplies?),quotes were falling across the board but mostly by lesser amountsthan they had risen on Tuesday. With a few exceptions prices werevolatile, with ranges of a dime or more seen at many points.

Hurricane Georges continued along a path yesterday that revealeda stunning possibility that the Gulf of Mexico could be paid afifth unwelcome visit by a named storm this hurricane season,making 1998 one of the most active in recent memory. And therestill are more than two entire months left for mother nature tobrew up even more trouble. Two more tropical storms are growing inintensity right behind Georges.