Reserved

After spiking as much as 7 cents higher in the Wednesday eveningAccess session, the new prompt month was the focus of muchconjecture and speculation. Would June continue higher, followingthe example set by May, or fall from its already lofty perch? Formany, it is still too early to tell, but if yesterday’s priceaction was any indication, June will have a difficult time matchingMay’s 50-cent price increase over the past month. After opening at$2.40, the June contract tumbled throughout the session to close at$2.339, a 0.2-cent decline from Wednesday’s close.

Regulations pertaining to the construction of new pipelineprojects took the spotlight at FERC yesterday, with the Commissionapproving a final rule aimed at updating and streamlining thecertificate process for new projects, including a change in thetimetable for the filing of project-related environmental data.FERC also proposed an initiative that would give landowners greaterparticipation in the certification process.

Disappointed by Southwest Gas’ board of directors’ decision toaccept Oneok’s $30/share merger offer over its own $32/share offer,Southern Union decided to up the ante late Tuesday by increasingits bid to $33.50/share. With the increase, Southern Union’s offernow exceeds Oneok’s by $108 million, Southern Union said.

Dynegy had a whopper of a first quarter, posting a 66% increasein operating income from wholesale gas and power marketingoperations and a 20% jump to $22.3 million in net income from alloperations, excluding special items.

Based on comments filed by trade associations last week, thenatural gas industry is split straight down the middle on most ofthe major initiatives in the notice of proposed rulemaking (NOPR)and notice of inquiry (NOI) – with the regulated pipelines and LDCssupporting proposals that would lighten FERC’s grip on pipelinetransportation, and non-regulated producers, marketers andmunicipal distributors concerned the measures could wreak havoc.

By the close of trading last Friday, Columbia Energy Group’s$6.7 billion unsolicited bid for Consolidated Natural Gas still hadthe edge on Dominion Resources’ all stock offer worth $5.9 billion,but Dominion’s stock price was gaining ground.

Most of the cash market leveled off Wednesday, with few pointsstraying more than a penny or two to either side of flatness. TheRockies, where weather is currently chilliest, recorded most of thegains of 3 or more cents. Although the screen eventually achieved again of more than 3 cents, cash had only moderate softness infutures as a morning influence.

Gas supply this year is expected to fall below last year’slevels and will struggle to meet projected demand, the IndependentPetroleum Association of America indicated in a report released toinvestors in New York yesterday. With the gas rig count down abouta third compared to 1998 levels, U.S. production is expected to bedown 1.2% this year to 18.75 Tcf, while gas imports are expected torise 2.7% to about 3.22 Tcf, and gas demand is expected to shoot up3.2% to 21.97 Tcf.

Giving interstate pipelines the authority to negotiate terms andconditions of service would pose “significant dangers tocompetitive markets,” Dynegy Inc. says. But it does favor givingsuch authority to pipeline customers – the buyers of recourseservices – to allow them to sell or trade components of theirrecourse services to and among themselves. In short, theHouston-based marketer envisions creating a secondary market forrecourse service components that would compete head-to-head withthe primary market.