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Following Monday’s 7.5% price retracement, the natural gasfutures market continued lower yesterday as short and long-termtraders added to newly established short positions. Cash prices,pressured lower for the second day in a row by record-setting hightemperatures, were also seen as a negative price factor. Afteropening at $2.64, the December contract quickly established a new4-month low at $2.59 before settling at $2.643, a 2.2-cent declinefor the day.

Natural gas wellhead prices are projected to increase at anaverage rate of 1.7% a year through 2020, from $1.96 per Mcf in1998 to $2.81 (1998 dollars) in 2020 as demand rises to 31.5Tcf/year, according to the U.S. Energy Department’s EnergyInformation Administration.

By virtue of a new agreement with TransCanada PipeLines Ltd.,Sears Canada could become the place where Canadians shop fornatural gas. Sears Canada and TransCanada, through its wholly ownedsubsidiary TransCanada Energy Ltd., plan to offer gas toresidential consumers in Ottawa. The program will start out as apilot, and the agreement between the companies is for six years.Sears will be the first national Canadian general retailer to offergas, the companies said.

First Energy has won a whopper $15 million power supply contractwith the U.S. General Services Administration (GSA) coveringdeliveries to 843 federal accounts in New Jersey, including theStatue of Liberty and Ellis Island, U.S. landmarks operated by theNational Park Service.

Foothills Pipeline CEO Robert L. Pierce said yesterday it won’tbe long before Alaskan natural gas is absolutely necessary to meetU.S. demand. And he remains convinced that the long-proposed AlaskaNatural Gas Transportation System (ANGTS) from Prudhoe Bay alongthe Alaska Highway and eventually to Alberta is the best way tomake it happen.

As might be expected at a Calgary conference where producersdominated attendance and the first day’s panels, bullishness onfuture gas prices ran rampant despite the current week’s slump.Emphasizing the challenges and opportunities in reaching aprojected 30 Tcf/year market by the 2010s, speakers at Ziff EnergyGroup’s “North American Gas Strategies” conference agreed Mondaythat Canadian gas is well positioned to benefit both volume-wiseand price-wise in the coming years.

Calgary-based PanCanadian Petroleum Ltd. announced a $1.2billion capital spending program for 2000, an increase over 1999.The company plans to spend $940 million primarily in theexploration and development of PanCanadian’s western Canadaproperties, with a significant portion devoted to growing gasassets, including off Nova Scotia, in the Gulf of Mexico andoverseas.

Indicated Shippers contend ANR Pipeline’s proposal to providenew hourly transportation services primarily for electricgeneration is discriminatory because the services would be limitedsolely to shippers who are “supplying or obtaining gas” for thatmarket.

The Canada-Nova Scotia Offshore Petroleum Board announcedwinning bids on eleven parcels (about three million acres) in theNova Scotia offshore area last week. PanCanadian was the majorwinner with a position in six of the eleven parcels. PanCanadianmore than doubled its net land holdings. Its six parcels cover morethan 1.7 million gross acres. In total, PanCanadian holds interestson more than four million gross acres across both the shelf anddeep waters offshore Nova Scotia. “We see offshore Nova Scotia asone of the most promising exploration regions in North America.”With the additions “we have clearly established a core explorationarea for PanCanadian,” said PanCanadian CEO David Tuer. In the landsale, conducted by the Canada Nova Scotia Offshore Petroleum Board,PanCanadian and its partners pledged to spend more than $48 millionon exploration over the next five years. Other winning biddersinclude Canadian 88 Energy Corp., Murphy Oil, Petro-Canada andRichland Minerals.