Withdrawal

The Public Utilities Commission of Ohio (PUCO) said Thursday that it modified and then adopted a stipulation and recommendation from Columbia Gas of Ohio and a collaborative group of parties that relates to Columbia’s rate, natural gas choice program, gas cost recovery, and long-term forecast report, among other things.

El Paso declared an Unauthorized Overpull Penalty situation Sunday, saying its Washington Ranch storage facility was at maximum withdrawal.

Buoyed by another in a string of supportive storage reports (151 Bcf withdrawal), natural gas futures turned decisively higher Wednesday as pre-weekend short-covering met virtually no selling resistance.

Other than a smaller than expected storage withdrawal report for a change, Friday’s cash market held no surprises. As sources had expected the day before, a screen decline of nearly 20 cents on Thursday, the normal demand drop of a weekend (especially coming between two major holidays) and forecasts of upcoming milder weather led to most points falling 15-35 cents or so. Transco Zone 6-NYC was conspicuous with a plunge of more than 60 cents.

Even prior to last week’s massive storage withdrawal of 162 Bcf and $5-plus January futures prices, the Energy Information Administration (EIA) had tacked on another 46 cents/Mcf to its first quarter 2003 natural gas wellhead price forecast compared to last month’s prediction in its Short-Term Energy Outlook. In the latest Outlook, EIA said it is expecting first quarter prices to average $4.16. It also raised its price forecast for all of next year to $3.69/Mcf from its prediction last month of $3.37.

Columbia Gas told storage customers Friday that it will raise the Maximum Monthly Withdrawal Quantity (MMWQ) for February from 30% to 40% of the Storage Contract Quantity (SCQ).

National Fuel is holding an open season for up to 1 Bcf winter firm storage and transportation services (Nov. 1-Feb. 28). The service includes maximum injection of 10,000-30,000 Dth/d and a maximum withdrawal of 33,333 Dth/d. Receipt and delivery points include Columbia (Independence), Dominion (Ellisburg), Tennessee (Rose Lake), TransCanada (Niagara), Transco (Leidy) and Transco (Wharton). Bid sheets are available at National Fuel’s web site or by calling (716) 857-7740. For details call Jim Zernentsch (716) 857-7509.

As the traditional storage withdrawal season came to an end last week with working gas near record lows at 627 Bcf (19% full) and 404 Bcf lower than the same time last year, there were mixed opinions on Wall Street about what the 2001 refill season might hold. Lehman Brothers and Salomon Smith Barney warned that storage might be refilled at a record rate this year, possibly prompting a bearish reaction in the market in the short-term despite the extremely low level of working gas currently. Meanwhile, UBS Warburg and IFR Pegasus said that scenario was very unlikely.

In a reflection of Wednesday afternoon’s meager storagewithdrawal report and the accompanying screen downturn, most cashpoints fell between about a dime and 20 cents Thursday. The majorvariations from the overall market were Northern Californiaupticks, flat to barely lower numbers in the Rockies and San JuanBasin, and a Southern California border decline of nearly 40 cents.