Producers

Producers addled by low prices could take some comfort from atasty lunch served up with a cheerful prediction. Brad Karp,president of Duke Energy Trading and Marketing, told a producerluncheon in Houston last week his company is pretty bullish on gasprices long term.

Brad Karp, president of Duke Energy Trading and Marketing, tolda group of producers in Houston Thursday that his company is prettybullish on the gas price outlook long term.

A new gas tolling agreement between TransCanada PipeLines andthe Canadian Association of Petroleum Producers (CAPP) soon mayreplace Nova Gas Transmission’s 19-year-old, postage-stamp pricingsystem with a formula based on distance- and the diameter of thepipe used for transportation. A memorandum of understanding (MOU),signed by CAPP and TransCanada, marks the culmination of asettlement process started when the Canadian gas industry signed apeace accord last April, which also assured construction of theAlliance Pipeline and approval of the TransCanada-Nova merger.

Clinton administration officials met with major and independentproducers at the White House yesterday and assured them that ahigh-level group would be established to examine the conditionsthat are contributing to the depressed state of the oil and gasindustry.

While making clear the administration would not be engaging inany market-rigging through price ceilings or floors, EnergySecretary Bill Richardson said it nevertheless was working onfurther measures to aid the depressed oil and gas industry.

Adding insult to injury for gas producers suffering through awarm winter, reports from the Bonneville Power Administration (BPA)and California’s Department of Water Resources indicate the PacificNorthwest’s snow pack is thicker than normal, meaning hydropower isprimed for another productive year.

Companion bills have been introduced in the Texas legislature togive small producers a break on gas and oil severance taxes inlight of foundering commodity prices. If enacted, legislation wouldtrigger a temporary suspension of severance taxes on productionfrom certain wells.

Companion bills have been introduced in the Texas legislature togive small producers a break on gas and oil severance taxes inlight of foundering commodity prices. If enacted, legislation wouldtrigger a temporary suspension of severance taxes on productionfrom certain wells. Relief would be triggered if the three-monthaverage price for gas hits $1.89/Mcf (NYMEX) or $15/barrel (NYMEX)for oil.. When the price trigger is reached, the severance taxwould be suspended until the three-month average rises above thetrigger price. Severance tax relief would apply to oil productionfrom leases with wells averaging 15 barrels/d or less and to gasproduction from leases with wells averaging 90 Mcf/d or less. Ifpassed by the legislature, the measure would take effectimmediately and last until Aug. 31 or until $45 million in taxrelief has been granted, whichever comes first.

Aiming at easing the personal pain involved in the oil and gasindustry downturn, the Texas Independent Producers &amp RoyaltyOwners Association (TIPRO) has instituted an Oil and Gas Job Bankat its website www.energyconnect.com.