Prompted

Price spikes, volatility, tight margins and stiff competitionhave prompted many energy marketers to reconsider their positionsand strategy, and this is causing changes in the energy marketingarena as a whole, according to a new report by Frost &Sullivan.

Prompted by weaker physical prices and forecasts calling forwarming temperatures this week, traders in the natural gas pit atNymex had little choice but to push futures lower Friday as theycasually transferred long positions from the prompt contract to theback months. Slipping 6.6 cents on the day to finish at $2.785, theApril contract now sits just above trendline support on the dailychart, sources said.

Fueled by a larger-than-expected storage withdrawal and promptedby gains in Wednesday night’s Access session, natural gas futuresclimbed higher yesterday as traders lifted prices in a briskafternoon buying surge. The March contract finished up 5.2 cents at$2.592, but the real story was the outer months, which gained 6cents or more on moderate position rolling.

Growing power generation and LDC demand for gas have promptedPeoples Energy and The Coastal Corp. to team up to develop a130-mile gas pipeline from Indiana to Wisconsin. The pipe, aimed atincremental growth markets, is intended to serve electric powerplants and local utility growth markets in northern Illinois,northwestern Indiana and Wisconsin beginning in late 2001. Initialcapacity will be 1.4 Bcf/d. According to the North AmericanElectric Reliability Council, the region will need more than 8,200megawatts of additional generating capacity by 2005.

Budget cutbacks and consolidation within the natural gasindustry have prompted the Gas Research Institute (GRI) and theInstitute of Gas Technology (IGT) to consider the possibility ofmerging the two research and development groups.

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.

The sharp decline in the value of Dominion Resources’ proposedacquisition of Consolidated Natural Gas, prompted Columbia EnergyGroup to make public its intentions to break up the transactionwith a competing $6.7 billion bid over the weekend.

The potential for selling to several gas-fired merchant powerplants in the area is what prompted Denver-based Western GasResources to enter California’s increasingly crowded natural gasmarket by getting an option to buy a Shell-Mobil gathering anddelivery system in northern California. Included in the proposeddeal that should be wrapped up by year-end are 170 miles oftwo-inch- and 10-inch-diameter pipelines crossing more than a dozenlocal gas fields between the Sacramento Airport north of thecapital and the industrialized north Contra Costa County to thesouthwest, where there are substantial existing and proposed largeindustrial loads.

Low oil prices prompted Texaco to cut about 1,000 out of 8,000upstream employee and contractor jobs worldwide as part of areorganization designed to increase emphasis on long-termproduction and reserve growth and streamline costs and improvecompetitiveness. Cost savings are projected to be $200 million peryear, and the reorganization is expected to be completed by the endof the first quarter of next year.