Tough

The East-West divergence in price tendencies was repeated againTuesday in a slightly different way. While Monday’s overall uptickshad been most pronounced in the West, eastern markets retreated byabout a nickel Tuesday as Western markets managed mostly flat tobarely-off-a-penny performances.

A 30 Tcf market is “widely anticipated and economicallypossible” by 2010, but it will not be achieved easily as allsegments of the natural gas industry will face considerablefinancial and infrastructure challenges to help supply and servethat demand, said a study issued by the INGAA Foundation Inc. onMonday.

Two recently announced deals provide further proof thatindependent producers are finding it tough going in the current lowcommodity price environment. Houston-based independentRutherford-Moran Oil Corp. struck a deal with Chevron to allow itto continue activities in the Gulf of Thailand, and EEX announcedit is selling $150 million of securities to fund its deep-waterdevelopment program.

The Energy Information Administration released its Annual EnergyOutlook 1999 (AEO99) last week, projecting gas demand will grow byabout 50% to 33.17 Tcf by 2020 from 1997 levels of 22.59 Tcf, whichis a 1.7% average annual increase.

The Energy Information Administration released its Annual EnergyOutlook 1999 (AEO99) yesterday, projecting gas demand will grow byabout 50% to 33.17 Tcf by 2020 from 1997 levels of 22.59 Tcf, whichis a 1.7% average annual increase. Total energy demand is projectedto grow 1.1%/year to 119.9 quadrillion Btu by 2020 from 94 quads in1997.

There’s no doubt about it, times are tough in the midstream gasbusiness. Depressed NGL prices and unfavorable margins have kept atleast one player from selling its assets while the same factorscaused another to seriously rethink the wisdom of a recentpurchase. Executives and analysts predict a lot more horse tradingof properties as companies look to rationalize assets and buildpositions for better times (hopefully) ahead.

There will be no free rides on Canada’s newest gas supplyfrontier, after Nova Scotia’s Liberal government established aroyalty regime that it admits puts it on the expensive side ofoffshore development areas by international standards.

Looking ahead to what might be the defining issues for his nextterm if his renomination is approved by the Senate, CommissionerWilliam L. Massey focused on FERC’s pipeline certification process,its offshore policy, the issues contained in the gas policy optionspaper – which so far have not been made public – and on ISOs on theelectric side. He said the Commission probably will act on the gaspolicy options paper with a Notice of Proposed Rulemaking withinthe next few weeks.

Following a tough first quarter in which earnings fell short of1Q97 levels by about $32 million, Sonat Inc. announced plans for amassive restructuring of its E&P properties, including the saleof 19% of its gas reserves, or 487 Bcf, and 24% of its production,or 200 MMcf/d.