Reporting

Tennessee Gas Pipeline filed a significantly scaled-down versionof its Eastern Express Project 2000 last week, reporting thateastern markets have been slow to develop and many New Englandpower generators believe it would be premature to sign long-termcontracts for firm gas transportation. The pipeline’s applicationwith FERC calls for the addition of only 168 MMcf/d of capacityalong the northernmost part of its system at a connection with theJoint Facilities of the PNGTS and Maritimes &amp Northeastpipelines.

The American Gas Association sent out a confusing market signalyesterday, reporting 45 Bcf of withdrawals for the week ending Nov.13 but actually showing more gas in storage than was reported inlast week’s survey. The peculiar changes, the association said,resulted from 58 Bcf increase in the full level of working gas inthe country. The AGA said 20 of the more than 40 storage companiessurveyed reported increases in working gas capacity. The newestimated full level of working gas is 3,248 Bcf, which includes a29 Bcf increase in working gas capacity in the Producing Region, a21 Bcf rise in the Consuming Region East and an 8 Bcf increase inthe Consuming Region West.

Major producers, who usually have chemical and other businessesto shield them somewhat from weak commodity prices, obviously wereleft unprotected during the third quarter. They’re suffering underlow oil and gas prices right along side the independents.

PG&E Corp. suffered an 11% net earnings loss for the thirdquarter, reporting earnings of 55 cents per share ($210 million),compared with 62 cents per share ($257 million) for 3Q97. Thecompany attributed the majority of the decline to utilitysubsidiary Pacific Gas and Electric’s pending 1999 general ratecase and a change in the way revenues are recorded as a result ofthe deregulation of California’s electric industry. The utilitysubsidiary is earning below its authorized rate of return, a trendthat is expected to continue until the rate case is resolved earlynext year.

Weak oil prices were the bane of three major producers reportingsecond quarter earnings so far. Depressed crude prices were blamedfor second quarter and 1998 first half results significantly offfrom year-ago periods. At least one company said it may refigureE&P expenditures should the low prices persist. Gas prices alsowere off in most cases but less so than oil.