Western

“This gas market is stuck in neutral gear,” lamented a westerntrader Monday. “We’re seeing about the same prices as on Friday, soyou could almost ‘cut and paste’ those notes into today’s report.”Sure enough, except for a moderate spike at Transco Zone 6-NYC thatwas retreating in late action, Monday’s quotes maintained thepredominantly flat market that has prevailed since last Tuesday.

The cash market continued to muddle around Monday in a generallyflat mode with a slight bias to the upside as traders tried toassess whether there was enough cold weather around to reallymatter. To Houston sources donning sweaters for possibly the firsttime this season, the answer might have seemed to be yes, but toothers it was no as they noted the abundance of available storageand the fact that only a few markets were experiencing sub-freezingtemperatures. Most points were flat to a couple of cents higher,with the declines of any size occurring at Northeast citygates(although Transco Zone 6-non NYC bucked the trend there with asmall gain). Northeast weather was rainy but not freezing.

Producer investment in Western Canada Sedimentary Basin (WCSB)natural gas is expected to grow from the $8 billion spent in 1998to just under $9 billion by 2001, which should add up to about a 6%hike or 3.1 Bcf/d in production and 3.4 Bcf/d in maximum peak daydeliverability over the 1998 to 2001 period, according to a surveyby the Canadian Energy Research Institute (CERI). The report notes”the WCSB is moving into a period of tighter supply/demandbalances,” in which lower than estimated spending could result insupply shortfalls, while higher spending could create a surplus.The group’s “1999 Canadian Natural Gas Producer Survey &Deliverability Outlook” sees export capacity from the basinpossibly exceeding market demand in the short-term. “For year 2001CERI’s required production estimate equates to an 89% averageannual load factor on ex-basin capacity, notably lower than the95-100% factors experienced since the mid-1990s.”

With the opening of expanded natural gas storage anddeliverability last week at jointly owned Jackson Prairie in thesouthwest part of Washington state, interstate pipelines likeWilliams’ Northwest and Kern River are trying to develop more andbetter services to gas-fired electric generation plants which areexpected to proliferate across the U.S. landscape in the early 21stCentury.

With the opening of expanded gas storage and deliverability thisweek at jointly-owned Jackson Prairie in southwest Washingtonstate, interstate pipelines like Williams Northwest are trying todevelop better services for electric generation plants, which areexpected to multiply significantly in the coming years.

Most of the overall swing market was mildly higher Tuesday, withwestern-especially Rockies-points tending to exhibit the most pricestrength with gains of up to a dime. A few PG&E citygate quotessurpassed $3, marking the first time that area has been hit (inU.S. dollars) since Transco Zone 6-NYC topped out at $3.02 forSept. 15 flows.

The Chicago Board of Trade (CBOT) closed an hour earlyyesterday, due to a power outage on the western loop area ofCommonwealth Edison’s (ComEd) power supply system. Thomas Donovan,CEO of the CBOT, said the outage was caused by three out of fourtransformers in the West Loop being out of service. ComEd did notreturn phone calls. The outage left 2,300 people in the heart ofChicago without power. Although no gas contracts are traded at theCBOT, the two electricity contracts traded at the exchange wereclosed at 2 p.m. EST. The exchange said its open outcry marketswill open normally today, and its electric trading system, ProjectA, is scheduled to open at 8 a.m. (Chicago time). There was noovernight trading at the CBOT.

An IBM Internet outage that affected many western and Canadiancustomers last week temporarily cut off access to Altrade’selectronic gas trading system Thursday afternoon costing thecompany and its customers at least 5 Bcf/d in trading volume duringa peak bidweek trading period.

An IBM Internet outage that affected many western and Canadiancustomers last week temporarily cut off access to Altrade’selectronic gas trading system Thursday afternoon costing thecompany and its customers at least 5 Bcf/d in trading volume duringa peak bidweek trading period.