PHYSICAL NATURAL GAS PRICES ??
Gulf/Eastern Region
| Agua Dulce | 2.20 |
| ANR SE | 2.26 |
| Carthage TG | 2.26 |
| Chicago Citygate | 2.32 |
| Columbia Gulf Onshore | 2.28 |
| Dominion South Point | 2.51 |
| Henry Hub | 2.32 |
| Houston Ship Channel | 2.32 |
| Katy Hub | 2.28 |
| NGPL LA Pool | 2.25 |
| NGPL - Midcontinent | 2.20 |
| NGPL STX | 2.23 |
| NGPL TX/OK | 2.25 |
| NNG Demarc. | 2.24 |
| Niagara | 2.46 |
| Sonat Tier 1 | 2.27 |
| TCO IPP Pool | 2.39 |
| Tetco ELa | 2.26 |
| Tetco M-3 | 2.57 |
| Tetco STX | 2.21 |
| TGP Zone 0 | 2.23 |
| TGP Zone 1 (500 Leg) | 2.27 |
| TGT Zone SL | 2.29 |
| New York Citygate | 2.58 |
| Transco Station 65 | 2.30 |
| Transco Zone 6 (NY) | 2.57 |
| Trunk ELa | 2.24 |
| Western Region
| California Border | 2.30 |
| El Paso Keystone | 2.17 |
| El Paso San Juan-Blanco | 2.17 |
| Waha Hub | 2.21 |
| Canadian/Rockies Region
| Nova/Aeco (C$/gig) | 3.03 |
| Dawn Hub/Union | 2.39 |
| Northwest Stanfield | 2.13 |
| Wyoming Pool | 2.06 |
| Opal | 2.06 |
| PGT-Malin | 2.19 |
| Sumas | 2.07 |
Flow Date 2/20
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SG Resources Mississippi, L.L.C., a wholly owned subsidiary of SGR Holdings, L.L.C., is conducting an open season for firm storage services at its new high-deliverability, salt cavern, natural gas storage facility, known as the Southern Pines Energy Center. The open season will begin at 9:00 a.m. CDT on February 4, 2002, and will continue until 5:00 p.m. CDT on March 4, 2002. The project is located at the border of Mississippi and Alabama with access to the major pipelines serving the Mid-Atlantic and the Southeastern United States. The facility is ideally located to serve as a transportation and storage hub for shippers on any one of nine major pipelines that will be interconnected directly or indirectly to the project. Information on the facility and the Open Season is available on our web site at
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or contact us at 713-914-8188.
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Natural gas futures for March delivery on the NYMEX, driven by a fund buying rally, jumped well above key resistance levels and settled up $0.191 at $2.397 per MMBtu. The April contract gained $0.17 to $2.427 per MMBtu. The market opened up at $2.28 and continued to run higher as fund buying hit buy-stops for March at $2.345, jumped up to $2.38 and bounced between $2.38-$2.40 until the close. Look for the market to continue higher this morning ahead of the AGA storage report, perhaps into the $2.50s. A new bullish, below-normal weather forecast for next week was enough to trigger the additional fund buying. Expectations are for a withdrawal of about 110 120 Bcf. A year ago, the AGA reported a 81 Bcf draw. Estimated volume yesterday was about 111,000 contracts, with 45,000 of those spreads. The market continues to carry a very high $0.92 forward difference between March and January 2003. Natural gas for next day delivery across the US and Canada was generally $0.05 $0.!
15 higher yesterday. Natural gas for next day delivery at the Henry hub gained $0.13 to $2.32 per MMBtu.
JP Morgan Chase was sued by shareholders who accuse the bank of failing to disclose the amount of money at stake because of exposure to Enron. A law firm has filed a class action suit on behalf of shareholders who purchased JP Morgan Chase shares between November 28th and January 28th. Shares of JP Morgan Chase fell 8.5% during that time. The suit alleges that the bank was reckless when it issued a public statement on November 28th that did not fully disclose its exposure to Enron. JP Morgan Chase listed its total exposure to Enron at $900 million, then raised it to $2.6 billion, the attorneys said. JP Morgan Chase says that the action is without merit. It has been reported that the SEC is looking at JP Morgan Chase's disclosures about Enron exposure, and whether they were stated in a timely manner. JP Morgan Chases CEO has said that the bank assumed too many risks in dealings with Enron. It wrote off $456 million of trading losses and loans to Enron in the 4th quarter and h!
as exposure to potential losses of $2.06 billion.
In a move to boost its balance sheet, El Paso Corp plans to sell 10,677 miles of natural gas pipelines and gathering systems in Texas, and its share of a natural gas plant in New Mexico for $750 million to its partner El Paso Energy Partners. El Paso Energy will pay $560 million in cash and transfer $190 million in assets to El Paso Corp, including a production platform in the Gulf of Mexico. The transaction is expected to close this quarter. El Paso Corp announced plans to sell $2.25 billion in assets after Moody's warned that it must reduce debt or face credit downgrades. Moodys has moved El Paso Energy Partners credit outlook from positive to stable. El Paso Energy Partners plan to pay for the deal by borrowing money and issuing shares will raise its debt by more than 50%, Moodys said. El Paso Energy Partners said the acquisition will raise its dividend this year by $0.10 per share to $2.60, the 4th increase in the past year. Including these purchases, El Paso Energy !
Partners has said it plans to spend about $1 billion this year on capital projects. El Paso Energy Partners plans to build and operate the 380-mile Cameron Highway Oil Pipeline System in the Gulf of Mexico and is looking for partners for up to a 50% share in the $450 million project. El Paso Corp owns 27% of El Paso Energy Partners, which was formed in 1998 to allow investors to buy shares in its natural gas storage, gathering and transportation businesses. El Paso has sold $416 million in pipelines and plants to El Paso Energy in the past year, not including their most recent deal. Late last year, El Paso said it would move $2 billion in debt held by affiliated partnerships onto its balance sheet and sell as much as $860 million in stock to reassure investors.
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AES, whose stock price plunged by 50% in just the last 2 sessions, has said it would sell assets to raise between $1-$1.5 billion, including some merchant and trading operations in New York, California and the UK. Shares of AES closed at $4.75, down $2.25, or over 32% yesterday. AES shares closed at $9.50 on Thursday. AES said that maintaining its cash flow cushion is the most significant priority at the moment. It also said it would reduce its exposure to Latin American markets. AES plans to sell Illinois utility Cilcorp; a minority stake in the Ipalco utility in Indiana; interests in Itabo, a coal-fired power plant in the Dominican Republic; and other unspecified AES plants. Fitch has downgraded AES debt and convertible securities because of tight liquidity, and put its debt on a negative outlook. S&P has put AES on credit watch with negative implications. There are questions about how much AES assets will fetch in a market already inundated with assets of other power !
producers attempting to shore up their balance sheets. Weak demand could also have an impact on sales. AES said it will cut capital spending by $490 million from a planned $1.2 billion, mostly from projects under construction. AES said it had $110 million cash on hand and another $155 million through a revolving loan credit, giving it a total liquidity of $265 million. AES, whose Venezuelan unit Electricidad de Caracas was expected to generate about 10% of the companys total cash flow this year, was hurt by the devaluation of the bolivar, which fell by more than 10% after Venezuela began allowing the currency to float last week. AES has also said that because of the recent drop in its stock price, margin calls in connection with personal loans have led 3 officers to sell shares.
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Enrons accounting problems were not due to aggressive use of mark-to-market techniques but rather were the result of a lack of consistent, clear financial disclosure, according to a Dynegy senior executive at the Edison Electric Institute International Financial Conference in London. Increased financial disclosure is the critical issue for the industry, not mark-to-market itself. Accrual accounting for energy trading contracts, which has been replaced by mark-to-market in most circumstances, provides more opportunities for fraud, manipulation and deception.
A bill that would provide greater regulatory oversight of derivatives, including those traded on electronic platforms, is an overreaction to Enron's collapse and could create more problems than it solves, according to the National Energy Marketers Association. The energy marketers say that the markets have already identified and punished companies that have problems similar to Enron. The bill is sponsored by Senator Dianne Feinstein of California. It would remove existing exemptions and put the Commodity Futures Trading Commission in charge of overseeing all energy derivative transactions conducted on multilateral markets and electronic trading platforms to ensure that such transactions are transparent. All bilateral transactions not regulated by the CFTC would fall under the FERCs jurisdiction. Also, the CFTC would ensure that entities running online trading forums maintain sufficient capital to carry out their operations and maintain open books and records for investig!
ation and enforcement purposes.
Two years ago, utilities feared a surge of new data center development would overwhelm the electric power supply, but those fears were never realized. Now, utilities are preparing for the next wave of development of these facilities that house computers used to process and store digital information for the Internet, according to the latest in a series of E Source reports from Platts. A series of studies titled, "Delivering Energy Services to Internet Hotels and Other High-Density Electronic Loads," explains why those anticipated electric loads never materialized. Many of the data centers that were planned for were never built. Those built and operating are running at low occupancy rates. Now, utilities are preparing for a future wave of data center development as the economy improves and demand for Internet-based services increase accordingly. The amount of power drawn by microprocessor chips continues to rise, and so the computers installed in future data centers may de!
mand much more power than those installed today. However, a future power crunch is unlikely as utilities are already preparing for the next wave of expansion. Utilities are instituting infrastructure charges that shift risk from the utility industry to the data center developers. They are also encouraging their data center customers to use new, more efficient electronic technologies that only recently came onto the market.
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Futures Implied
Month Settlement Days Left Volatility
The Midwest Independent Transmission System Operator, PJM Interconnection and Southwest Power Pool plan to hold the 2nd meeting of the Single Market Design Forum from 10:00 AM 3:00 PM March 13th at the Hilton Greater Cincinnati Airport. To register, go to www.miso-pjm-spp.com - click Working Groups>Single Market Design Forum>Meeting Notices>March 13. Last month, MISO, PJM and SPP unveiled a vision to achieve a common single wholesale market with a one-stop shop that meets the needs of all stakeholders using the electric power grid in the areas served by them. The organizations executed a Letter of Intent to develop a joint and common wholesale energy market for electricity producers and consumers in all or parts of 26 states, the District of Columbia and the Canadian province of Manitoba. To meet the needs of all market participants, the SMDF is using a consensus-based approach throughout the market-design process. All interested parties are welcome to attend the SMDF!
meetings, which are held regularly and facilitated by MISO, PJM and SPP staff. The goal of the SMDF is to identify the needs of market participants and promote efficiency in electricity markets.
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Market technicians are taking a close look at their charts to see if today's jump in prices will give way to bearish fundamentals. "The earlier gap on the price charts should be a good reference point for price support," says John Beaver, President Private Futures Group, Oklahoma City. Before today's trading a gap was left on the March daily bar chart by the trading that took place between January 18 and January 22, an extended holiday weekend. The low price for the March contract on January 18 was $2.21, but the high price on January 22, was $2.175 thus a 3.5 cent "gap" or area where no trading took place was left on the chart. Today's trading also left a gap between the low, $2.27 and Friday's high of $2.21. The significance of the gaps is that typically buying demand is so great or selling pressure so heavy that the market will "gap" higher or lower with the next day's trading opening well above the previous day's high or substantially lower than the !
low of the day before. "The gap on the (March) daily chart from 2.21 should be a good reference point for support. A gap was also left in today's trading. The area between $2.15 to $2.27 is good intermediate support. These gaps are significant in that they are holding," said Beaver. Other traders aren't such strong believers. "Gaps are almost always filled if for no other reason than markets go up and down. You wait long enough and they will be filled, the question is when," said a Houston trader. "I look at them but they are overrated. Statistically they are extremely overrated, and traders put way too much emphasis on them but because people do that you have to pay attention to them," said a trader with Coquest, Dallas. "Locals use more of an opening range than the gap, 'Let's say we've got a gap between $3.10 and $3.20. Are you buying 20's or 10's? Where do you buy? Often the gap doesn't mean too much anyway'," he said. "I look at them buy I wouldn't risk my reputa!
tion on them." Beaver is not deterred. "I wouldn't mind seeing the AGA come out and push prices to $2.15 to $2.20 so i could buy some more. I think we could visit those support numbers very easily. If there were sell-offs, I would want to write some $2.00 put options. This last push down to $1.96 was a gift for writing out options," he declared.
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