Situation

Saying its Washington Ranch Storage Field was experiencingmaximum withdrawals, El Paso declared an Unauthorized OverpullPenalty situation Thursday, effective until further notice. Thepipeline will limit scheduled volumes at interconnects that areunderperforming.

Due to a compressor failure at its Riner Station, Williamsdeclared a force majeure situation on Line Segments 490 and 491.Necessary repairs are expected to be completed by next Monday’s gasday. Since capacity in the two segments has been reduced,maintenance originally scheduled for the week of Aug. 21 at theCheyenne and Ogallah Stations will be done this week to minimizedisruptions during August, Williams said.

Despite the tense situation in the power industry and thenumerous power alerts so far this summer, a new study by J.D. Powerand Associates and Navigant Consulting found that electric utilitycustomer satisfaction actually has improved this year and theaverage length of the longest power outage declined. Nationwideabout 65% of residential customers reported that they are extremelyor very satisfied with their electric utility provider.

Despite the tense situation in the power industry and the numerous power alerts so far this summer, a new study by J.D. Power and Associates and Navigant Consulting found that electric utility customer satisfaction actually has improved this year and the average length of the longest power outage declined. Nationwide about 65% of residential customers reported that they are extremely or very satisfied with their electric utility provider.

El Paso declared an Unauthorized Overpull Penalty situationWednesday, effective until further notice. System linepack wascontinuing to decline despite withdrawals from Washington RanchStorage Field, the pipeline said. It will limit scheduled volumesat underperforming interconnects to insure system integrity.

New York State Electric and Gas (NYSEG) told FERC yesterday thesituation has reached a critical stage at the New York IndependentSystem Operator, where start-up problems continue to threaten theretail electricity markets. It has called on the Commission toinvestigate and initiate emergency actions to correct continuingproblems at the ISO.

Although the tight supply/demand situation for gasoline took thespotlight in the Energy Information Administration’s Short-TermEnergy Outlook last week, the EIA was pretty bullish on natural gasas well. The administration has gas demand rising 3.5% this year to22.17 Tcf and 4.1% next year to 23.08 Tcf. It projects a major 22%wellhead price hike this year to an average of $2.56/MMBtu followedby a much smaller rise in 2001 to $2.61. EIA sees dry domestic gasproduction inching up about 1% this year and only about 0.2% in2001. Imports are seen rising 8.3% this year to 3.67 Tcf and 2.7%next year to 3.77 Tcf.

Despite record drilling and high gas prices, Canadian producersstill are not managing to boost production. TransCanada Pipelinesestimates Alberta field receipts were 2% lower than expected thiswinter and ended up being essentially flat with the 12.4 Bcf/drecorded in winter 1998-99.

Natural gas futures finished on a sour note Wednesday as tradersalleviated overbought conditions and took profits both before andafter the release of fresh storage data. After opening lower, theApril contract worked its way down throughout much of the sessionbefore tumbling at the closing bell to finish at $2.71. The promptmonth’s 8.9-cent decline was trumped only by the May contract,which dropped 9 cents to finish as $2.747. Estimated volume wasmodest with only 63,810 contracts changing hands.