Returns

While oil and gas companies took huge hits during the 19-monthenergy price crash between 1997 and early 1999, one silver liningwas the effectiveness of government incentive programs in assistingthe beleaguered industry, said the Interstate Oil and Gas CompactCommission (IOGCC). The findings were drawn from an IOGCC reportpublished last week titled Against the Wind: The Economic Impact ofIncentives during the Oil Price Collapse.

Coastal Corp. hit pay dirt in the third quarter with highernatural gas production and prices and increased returns frompipeline operations, “the direct result of Coastal’s success inexecuting its integrated North American natural gas strategy,”according to Chairman David A. Arledge.

Coastal Corp. hit pay dirt in the third quarter with highernatural gas production and prices and increased returns frompipeline operations, “the direct result of Coastal’s success inexecuting its integrated North American natural gas strategy,”according to Chairman David A. Arledge.

Several producers who blasted El Paso Natural Gas last week in aSection 5 complaint at FERC got an earful right back from thepipeline yesterday. El Paso wasted no time in filing an answer, andin an interview with NGI, A.W. “Al” Clark, El Paso’s vice presidentof marketing and operations control, said this is just another casein which producers are attempting to hide behind FERC because theyare afraid of competition.

Unlike a week earlier, the slump in gas demand that almostalways accompanies a weekend had its usual negative effect on cashprices Friday. Declines ranged from only 3-4 cents at Midwest andNortheast citygates to as much as a dime or so at Southwest andRockies points, where most of the maintenance outages at processingplants and compressor stations had ended by Friday. Most otherpoints registered drops of about a nickel.

The trend among the top energy marketers appears to be that thebig movers continue getting much bigger while the smaller marketersare struggling to maintain previous sales volumes andprofitability, according to NGI’s marketing survey. The survey alsoindicates volume growth has very little correlation with financialperformance.

Producers are eating a bigger slice of the revenue pie,pipelines claim. Pipelines, however, are piling up a much greaterreturn for a much smaller investment, producers retort. And that’sjust the beginning of the arguments spawned by FERC’s probing thepossibility of lighter-handed regulation of pipelines, includingnegotiated terms and conditions.

Wednesday’s novelty of a homogenous market that had pricesrising in all regions failed to carry over into Thursday. Insteadtrading tendencies reverted to the previous pattern: generallysofter in the East and flat to a little higher at most Westernpoints. The biggest drops of about a dime occurred on theAppalachian pipes.

June has ushered a familiar characteristic back into the naturalgas trading pit at Nymex: volatility. Natural gas and volatilityoften are spoken in the same breath. However, for periods thiswinter and spring, the dips and rallies that have drawn manytraders to natural gas have been largely suppressed. But now withsummer clsing in, June has been marked by choppy trading withweather bulls on one side and storage bears on the other. Analystsin the middle are mixed as to who will win the battle, but nearlyeveryone in the market agrees the “V” word is back to stay for awhile.