Victory

The 7-to-1 decision by the U.S. Supreme Court in favor of AmocoProduction Co. in the case that pitted the company and numerousroyalty owners against the Southern Ute Indian Tribe is good newsfor coalbed methane gas production, observers said.

Fresh after receiving a boost from a hefty storage withdrawalWednesday afternoon, natural gas futures continued higher yesterdayin yet another tumultuous trading session. And for the second dayin a row locals were seen as the catalyst, using buy stops toorchestrate a gap higher opening. But overhead resistance at $1.77held and the market was left to ebb and flow within the 4-centtrading range, which was set in the first hour of trading. TheApril contract finished up 3.9 cents to $1.762.

The Texas Supreme Court let stand an appeals court decision thatreversed a $204 million damage award against a subsidiary ofMitchell Energy & Development Corp. in the 1996 “Bartlett” casein which plaintiffs alleged the company contaminated water wells inWise County, TX. “Friday’s announcement by the Texas Supreme Court,and recent decisions at the district court level, are significantvictories because these cases clearly establish the fact thatMitchell is not the cause of any water quality problems in NorthTexas,” said Tom Battle, Mitchell general counsel.

Retail gas marketers won a major victory yesterday when aGeorgia Public Service Commission hearing officer ordered AtlantaGas Light’s unregulated marketing affiliate to “immediatelydiscontinue” the use of the name Atlanta Gas Light Services (AGLS)and stop referring to its heritage, reliability and trustworthinesswith respect to its affiliation with the state’s largest gasutility.

Gas gatherers and processors won a major victory when OklahomaGov. Frank Keating vetoed Senate Bill 319 last Friday. Thelegislation would have given the Oklahoma Corporation Commissionbroad authority to regulate rates, terms and conditions ofgathering and processing contracts and to settle disputes betweengatherers and producers.

Oklahoma gas producers are close to declaring victory in abattle with the state’s pipeline companies. New legislationexpected to be signed by the governor within two weeks would givestate regulators greater authority to settle gathering disputes,ensure producers are provided open access to gas transportation,and to ensure the rates, terms and conditions of gatheringcontracts are just, reasonable and nondiscriminatory.

Natural gas producers scored a victory Wednesday when FERC ruledthey could post surety bonds in lieu of multi-million dollarrefunds to customers that fast coming due on March 9th. The bondmethod guarantees that customers will receive their refundpayments, and it gives producers what they seek most – a delay inpaying out the amounts until disputes over the refunds calculationsare resolved. The downside of this option is that producers will berequired to continue paying interest on the refund principal aslong as the bond remains in effect. Producers also have thealternative of paying their refund amounts into escrow accounts.