Supply

The Natural Gas Supply Association and Independent PetroleumAssociation of America made their displeasure clear over PresidentBill Clinton’s decision last week to extend a moratorium onoffshore drilling. “Cleaner air and increased use of affordable,clean-burning natural gas depend on access to the large natural gasfields off the nation’s coasts,” said NGSA President Nicholas Bush.”Continuing today’s severe restrictions on offshore natural gasproduction is simply not in the nation’s best interest.”

Due to excess supply levels threatening system integrity and aconstraint on storage injections, Sonat implemented an OperationalFlow Order Type 6 effective Saturday. The OFO carries tieredpenalties ranging up to $15/dth for shippers with positive dailyimbalances exceeding allocated volumes by 3% or 200 dekatherms. Forthe same reasons as above, Sonat began a production areapoint-specific OFO Type 5 for nine points on its 26-inch Main PassArea Line. A penalty of $15/dth is involved for affected shippersor poolers exceeding scheduled quantities by 4%. Finally, an OFOType 1 (force majeure notice) began Saturday in connection withSonat’s retirement of facilities at the Main Pass 127 platform,which involved shutting in the Main Pass 129 and Main Pass 129Redelivery points. The work, which originally had been scheduled tostart on Friday, was expected to last 24-48 hours.

Producers predicting gloom and doom for gas supply based on 1997reserve replacement estimates are being way too pessimistic,according to Tom Woods, Ziff Energy Group vice president for U.S.gas services. He told attendees at GasMart/Power ’98 Wednesday inNew Orleans the reason gas prices have been so high is that themarket is spooked. “How much of what we are seeing is the substanceof what is occurring and how much of what we are seeing is reallythe form it is taking because of some change maybe in industrybooking practices? I would suggest to you that industry bookingpractices are beginning to resemble a more traditional inventoryapproach to life rather than the very long-term reserve toproduction ratios that we traditionally used to have in terms ofrecovery…”

New York State Electric and Gas’ indirect subsidiary XENERGYInc. has won a contract to provide gas and power supply procurementand management services for 3,000 state facilities of theCommonwealth of Massachusetts. The first phase of the three-phasecontract begins immediately, and is worth almost $500,000. Thecommonwealth spends $80 million/year on gas and electricity for allits facilities.

March 17 is the deadline for bidders to present proposals tosupply and manage the natural gas, electric and water and sewerutility services for the National Railroad Passenger Corp. (Amtrak)at facilities across the country. The current bill for the services- which Amtrak would like to see reduced – is $30 million a year.

Tennessee Gas Pipeline’s Express 500 Project, which offers firmtransportation through the bottlenecked Gulf of Mexico supply area,won more than 1 Bcf/d of capacity requests from customers duringthe project’s first open season. “We believe that this level ofparticipation demonstrates the need for incremental capacity fromthe Gulf Coast,” said Tennessee President John Somerhalder II.

The National Energy Board has started preparing a reportentitled Canadian Energy Supply and Demand 1998-2025, which isscheduled to be published in 1999. It will provide an analysis ofenergy trends, issues and developments impacting Canada over thenext quarter century. The Board will be taking public comments toobtain the views of interested parties. Written comments or papersmust be received no later than May 12. The first round of publicconsultations will take place in informal workshops in April invarious cities across the country. The Board has identified thefollowing tentative dates and locations for these publicconsultations: Calgary (April 8), Toronto (April 15), Montreal(April 17), Halifax (April 20), Ottawa (April 22) and Vancouver(April 28). Specific dates and locations will be finalizedfollowing the receipt of responses by interested parties. Fordetails see NEB’s website at www.neb.gc.ca/home.htm, or contactLorna Patterson at (403) 299-3987. Registration to participate inpublic discussion groups must be received no later than March 20

Rebecca McDonald, president and CEO of Amoco Energy Development,was named the 1998-1999 chairman of the Natural Gas SupplyAssociation last week. J. Larry Nichols, president of Devon EnergyCorp., was selected as vice chairman; Richard J. Sharples, vicepresident of marketing for Anadarko Petroleum, was madesecretary/treasurer.