NGI The Weekly Gas Market Report

Interstate pipelines serving the Midwest region are at the “greatest risk” of having capacity turned back to them over the next five years, said the American Gas Association (AGA) in an “issue paper” released last week.

A new report by Washington-D.C.-based consulting firm Energy Security Analysis Inc. (ESAI) projects a “massive shift in fuel consumption” by the power generation sector to natural gas from coal to meet the carbon emissions reductions required by the Kyoto Treaty. With that shift will come a doubling of gas demand, almost certain natural gas price increases and a huge cost to the power sector, potentially $21 billion more than costs without the treaty, ESAI projects.

Volumes of gas traded are growing on both the QuickTrade and Altra Streamline electronic trading systems, and both already are looking to electricity trading as the next frontier. Matt Frye, vice president at Altra Streamline, said his company plans to add electricity trading this year and will own and manage the product. David Hanson, QuickTrade’s director of marketing, said although his company is looking at it they have not picked a launch date.

FERC on rehearing last week certificated Transcontinental Pipe Line’s Mobile Bay Lateral extension/expansion and awarded it rolled-in rate treatment, but not before Commissioner William Massey urged his colleagues to take “another look at generic questions” related to the pricing of new construction that were brought to the forefront in the case.

Natural gas producers lost a major battle last week when FERC denied hearing of an earlier decision ordering them to refund an estimated $500 million to customers who were sold gas produced in Kansas in the 1980s at prices that, because they included the state’s ad valorem taxes, were above the legal limit allowed by federal law.

Southern Company Energy Marketing remains committed to growing its wholesale business, and at the other end of the pipe, developing a business to serve producer needs in an increasingly complex energy industry.

The Supreme Court last week refused to review a lower court’s ruling permitting the assessment of royalties on a 1992 gas contract settlement between a Kentucky producer and Enron Gas Marketing.

Engage Energy Canada and EPCOR announced a gas/electricity alliance called Encore Energy Solutions, which will serve municipal utilities and large commercial and industrial customers with energy cost and price risk management.

Metromedia Co. has purchased a majority interest in New Jersey-based CPM Energy Inc., formerly Cogen Marketing Power, for an undisclosed amount of cash, making it possibly the largest aggregator of natural gas and electricity in the nation.