Supplies

Houston Industries Wholesale Energy Group, an affiliate ofHouston Lighting & Power, has signed a 10-year contract tosupply up to 50 Bcf to LGS Natural Gas, an affiliate of LouisianaGas Service Co., the largest distributor in the state.

Southern Company Energy Marketing signed a five-year deal tomanage Brazos Electric Power Cooperative’s power generation andfuel supplies and deliver 1,650 MW of power to the co-op. Southerncan market the excess power on the open market. The deal alsoobligates Southern to expand the Texas co-op’s generation capacityby 600 MW to satisfy projected load growth, particularly in thearea surrounding Dallas-Fort Worth.

The futures market spiked higher Monday in response to thethreat to natural gas supplies in the Gulf of Mexico posed byHurricane Mitch. There was an early buying surge as non-commericaltraders struggled to close out short positions ahead of the rally.However, once the market started its momentum, buying came from allsegments of the market. The November contract settled up 13.4 centsto $2.298.

Canadians are wasting no time making sure production capacitykeeps up with increases in demand for natural gas that pipelineprojects are expected to generate over the next two years,according to an annual deliverability survey released last week bythe Canadian Energy Research Institute. Not even this year’s 30%drop in oil prices hurt producer revenues and budgets enough toslow down gas development.

Questar is holding an open season through June 26 to solicitinterest in a new pipeline to provide FT service for supplies inthe Wind River and Powder River Basins. Questar proposes to build aline with up to 300,000 dth/d of capacity and a projectedin-service date of Oct. 1, 2000. The route would begin near theMontana border at Recluse, WY and run south through the PowderRiver Basin, then southwest to Lost Cabin, WY and continuing toQuestar’s Kanda/Coleman/Nightingale compressor stations. From theregas could be delivered to Questar, Wyoming Interstate Co., CIG orOverthrust. Questar also is evaluating an alternative in which theline would run southeast from Powder River Basin to Chalk Bluffsnear Cheyenne, WY, where gas could be delivered into pipelinesserving the Midcontinent market. The pipeline said it would pickthe final route based on shippers’ desired receipt points. Itanticipates charging incremental rates. Call Brad Burton at (801)324-2717 or Brent Kitchen at -2117 for information.

Heavy air conditioning load and a tightening of supplyavailability not only generated a late rebound in bidweek pricesFriday but also pushed up last-of-May and early June aftermarketnumbers in nearly all Eastern, Gulf Coast and Midcontinent/Midwestmarkets. Waha and Permian Basin gas, supported by Texas andMidcontinent cooling demand, also was rising above index levels.But in the generally cool West, weekend and 1st-of-month swingprices tended to go down by a few cents.

Despite predictions of waning gas supplies and worries over Gulfof Mexico production potential from some, several companies aretouting boom years for reserve replacement with some settingrecords. The strong reserve replacement came in a year when gasproduction is said to have seen only a modest increase of abouthalf a Bcf. Much of the good news for reserve replacement comesfrom oil and international operations, but domestic gas fared well,too, according to some company reports.