Possibility

Budget cutbacks and consolidation of the natural gas industryhave prompted the Gas Research Institute (GRI) and the Institute ofGas Technology (IGT) to consider the possibility of merging the twoR&D groups.

After warning of its possibility Tuesday, Florida GasTransmission issued an Overage Alert Day notice Wednesday for themarket area east of Station 12 (Santa Rosa County in the FloridaPanhandle). The notice carries a 6% tolerance for daily negativeimbalances. FGT will re-evaluate conditions this morning beforedeciding whether to extend the notice.

The rumor mill produced some major headlines yesterday withseveral dominant players in the energy industry apparently inmerger talks. Unicom Corp., parent of Commonwealth Edison, and PECOEnergy Co. were reported to be in discussions about forming a”merger of equals,” while Chevron now has its eye on Phillips.

The possibility of a market-based solution to California’snatural gas industry restructuring stayed alive yesterday when moretime was allowed by state regulators for about 75 parties to hammerout a settlement. Without a deadline extension from the CPUC, hopesof a market-based solution to the state’s future gas unbundlingwould have been abandoned in favor of another round of regulatoryhearings. The settlement process now has until Oct. 27 to come upwith a broad-based agreement. The previous deadline was Sept. 6.

Warm temperatures in major eastern cities and apprehension aboutthe possibility of “another bullish storage report” gave bulls thereason to buoy the market higher yesterday, and they did notsquander the opportunity. Buying, led mainly by commercial traders,sent the July contract up to a retest of its previous open outcrysession high of $2.41 before settling at $2.407. Estimated volumewas 73,884.

The futures market again came under selling pressure onWednesday as traders embraced the possibility Hurricane Georgeswould not be a threat to natural gas concerns in the Gulf ofMexico. The October contract was able to post an optimistic open at$2.23 before profit taking led the contract to settle at $2.131, a5.5 cent loss for the day.

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.