Predicted

Christopher Helms, president of CMS Panhandle Pipe Line Co.,estimated that LNG use will swell to take up 3.5% of the predicted30 Tcf gas demand by 2010. In an interview with NGI, Helms saidPanhandle is working toward building LNG trade to the same level ascrude oil trading, complete with a futures and financial market,with Lake Charles serving as the hub for all operations.

Brian Watt, CEO of Columbia Energy Services (CES), predicted ashakeout of retail energy providers over the next five years on thescale of what happened in the telecommunications industry, wheremarket participants dwindled from 400 to less than 10.

In its recent report on the future of natural gas prices,Friedman, Billings, Ramsey & Co., Inc. (FBR), a Virginia-basedfinancial institution, predicted continued price increases throughthe summer, giving way to price moderation over the long-term. Thereport, titled “The Boom in the Natural Gas Markets — Fact orFiction?” was released earlier this month.

Rebounding from Thursday’s heavily predicted, albeit modestsell-off, natural gas futures turned higher Friday as tradersjumped at the opportunity to increase their length while the marketwas trading off fresh highs. After opening lower and quicklymatching Thursday’s $2.75 low, the April contract rumbled 4.2 centshigher to close at $2.825, just below its $2.83 high for the dayand only pennies less than the $2.865 life-of-contract high put inThursday. Estimated volume was solid, with 53,424 contractschanging hands.

In what some predicted would be a “watershed” decision, FERClast week scrapped a proposal in which Viking Gas Transmissionsought authority to incrementally price existing transportationcapacity as it opened up on its system without filing a full-scalerate case. The Commission did not generically address the issue inthe order, leaving open the door to similar proposals by otherpipelines.

In what some predicted would be a “watershed” decision, FERClast week scrapped a proposal in which Viking Gas Transmissionsought authority to incrementally price existing transportationcapacity as it opened up on its system without filing a full-scalerate case. The Commission did not generically address the issue inthe order, leaving open the door for similar proposals by otherpipelines.

As expected, weekend prices took a steep plunge in Friday’strading as almost every point fell by around 20 cents or more. Thebiggest drops of almost 40 cents occurred at the SouthernCalifornia border and PG&E citygate, where both majordistributors had widely anticipated high-inventory OFOs in placefor Saturday.

As many traders predicted, the futures market continued lowerThursday morning amid a swirl of bearish fundamental factors, whichwere freshly updated Wednesday evening. But the dip wasshort-lived, and afternoon buying bid the spot January contractback up to test resistance, before settling at $1.84, off 0.7 centsfor the day.

As several observers expected, cash prices started to retracetheir steps back down Thursday after having peaked the day before.Declines ranged from as little as a nickel to nearly 15 cents, butmost were in the neighborhood of a dime.