Spending

Will production declines expected to stem from the recent rashof producer spending cuts (see related story) lend support to gasprices this year? Well that’s just one of several questions on theminds of analysts as they speculate on what the market will grantproducers this year. While there’s not a consensus, the generalmood seems to be pessimistic.

The recent rash of producer spending cuts (see related story)comes at a time when the message on prices from the analystcommunity is pretty gloomy, too. “There’s not much holding [gasprices] up,” said Thomas J. Woods, Ziff Energy vice president forU.S. Gas Services. Woods said Ziff has been warning its clientsthat current prices are not supportable. “We had put out some earlywarnings in July when prices first frayed, and we said that therewas a very significant possibility that this would go [on].”

Conoco plans to eliminate nearly a thousand positions in 1999due to low oil prices and a need to improve operational efficiency.The layoffs will result in a $50 million after-tax charge againstConoco’s fourth quarter earnings, the company announced Tuesday.Conoco also said it was reducing its 1999 capital budget by $500million to $1.8 billion.

Amerada Hess Corp. announced it will be chopping capitalexpenditures by $900 million next year from the $1.45 billion spentthis year. It also plans to reduce its exploration and productionwork force by 400 positions, a 20% reduction in the U.S. and theU.K., resulting in $18 million in annual savings after taxes.

At a time when the gas distributors and marketers are spendingbig bucks importing celebreties to popularize their brand names inthe retail market, Yankee Gas in Meriden, CT has engineered a swapwith one – none other than the ultimate TV homemaker, MarthaStewart – in its own back yard.

At a time when the gas distributors and marketers are spendingbig bucks importing celebreties to popularize their brand names inthe retail market, Yankee Gas in Meriden, CT, has engineered a swapwith one – none other than the ultimate TV homemaker, MarthaStewart – in its own backyard.

Instead of spending much time and money building a larger directmarketing operation, Aquila Energy has formed a gas marketingpartnership with Empire District Electric Co., a Midcontinentregion electric utility, to target industrial customers in Empire’selectric service territory. Aquila said the deal is the first ofmultiple partnerships and alliances it plans to form in four keyregions of the country where the market is competitive and it has asignificant presence.

Backers of Alliance Pipeline Project are going out on a bigfinancial limb by spending heavily to advance the proposed newCanadian export route to Chicago while still awaiting approval fromthe National Energy Board. Alliance president Dennis Cornelsonreported the international consortium of pipelines and producershas spent about C$200 million (US$145 million) to date. But to keepthe project moving quickly enough to fulfill its schedule, thegroup “will have to double that by the time regulatory approvalsare obtained.”