Florida Gas Transmission (FGT) is currently working on developing an interchangeability standard for Liquefied Natural Gas (LNG). LNG is natural gas that is cooled to a liquid state and transported via ship to LNG storage terminals in various locations around the world. Currently, several LNG terminals are being proposed for construction in the Bahamas, with one terminal ultimately being built. The LNG will be piped into South Florida and interconnected with the FGT transmission pipeline. This work is scheduled to be completed by 2008.

Unfortunately the gas quality of LNG is different than domestic gas since it is extracted from different areas of the world. Therefore, gas quality specifications need to be established by FGT in order to ensure reliable operation of customer equipment on either domestic OR LNG gas. FGT has formed a technical committee comprised of gas utilities and power plants located in Florida. The role of the technical committee is to review the proposed FGT standards and make sure that both fuels can be used interchangeably with minimal impact on customer equipment performance. Issues are still being worked out on both sides, however, a final resolution is expected in late 2005.

For more information on this matter, please contact Brian Langille @ (727) 562-4911.

Natural Gas Surpasses $7 on Record High Crude Oil Prices

The natural gas market has continued to increase in spite of higher than normal storage levels. Prices in March have averaged about $7.10 per million Btu (MMBtu). The major influence is high crude oil prices, which is currently at $55 per barrel. The two commodities typically follow the same price trend, as indicated in the charts below. However, during Summer '04, the natural gas market lowered, which was opposite of crude oil. The reason for this anomaly was that storage was so high the market couldn't justify the elevated prices. Unfortunately this drop didn't last long and crude started to influence the natural gas market again.

The Energy Information Administration (EIA) reported that natural gas inventories were at 1,290 billion cubic feet (Bcf) as of Friday, March 18. This is about 22% higher than the 5-year average. Withdrawal from storage typically ends in March, so we could be looking at about a 20% head start to the April-October injection season.

The outlook for 2005 is continued high prices. In spite of adequate storage levels, the natural gas market will continue to follow the same path it has over the last several years. However prices can drop for short periods of time. Of course when this happens, Clearwater Gas will do its best to secure fixed-price gas to help stabilize and lower the cost of fuel to our customers.