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AFTER THE ATTACK
Minnesota pipeline operators told to increase security Dan Browning; Staff Writer 09/25/2001 Star-Tribune Newspaper of the Twin Cities Mpls.-St. Paul Wood's First FERC Meeting Expected to be Long NGI's Daily Gas Price Index published : September 26, 2001 Senate to discuss infrastructure security, supply Gas Daily September 26, 2001 Pipeline operational update Gas Daily September 26, 2001 Utilities, refineries, pipelines step up security Energy But experts say facilities in Southern California and elsewhere were not designed to thwart terrorists. Series: utility.0923 CHRIS KNAP and TONY SAAVEDRA 09/23/2001 The Orange County Register US Physical Natural Gas Prices Fall; Thin Trading Ranges 09/25/2001 Dow Jones Energy Service INDIA PRESS:DPC,Govt Fail To Reach Stake Sale Pact At Mtg 09/26/2001 Dow Jones International News Futures Quiet at Options Expire; Traders Look to Storage Report NGI's Daily Gas Price Index published : September 26, 2001 Calif Agency Urges Greater Natural Gas Storage, Delivery 09/25/2001 Dow Jones Energy Service Producers See Sept. 11 Effect on Winter Gas Demand NGI's Daily Gas Price Index published : September 26, 2001 -------------------------------------------------------- AFTER THE ATTACK Minnesota pipeline operators told to increase security Dan Browning; Staff Writer 09/25/2001 Star-Tribune Newspaper of the Twin Cities Mpls.-St. Paul METRO Page 10A (Copyright 2001) The state of Minnesota has told its 85 pipeline operators to increase security on the 62,000 miles of natural gas and hazardous liquid lines that crisscross the state. Pipeline operators were told they should increase patrols and be alert to any unusual activities or packages left near their facilities, said Ron Wiest, chief engineer for the Minnesota Office of Pipeline Safety. They were told to maintain the heightened security for the foreseeable future and to notify authorities of any irregularities or suspicions, he said. Two-thirds of the state's pipelines carry natural gas. The remainder carry commodities such as jet fuel, crude oil and other hazardous liquids. The federal Office of Pipeline Safety sent two security circulars - one right after the Sept. 11 attacks and one on Sept. 14 - to thousands of companies operating more than 2 million miles of pipelines nationwide. Wiest said the Sept. 11 circular cited the attacks in New York and Washington, advising pipeline operators that "their system may be affected by terrorist acts not specifically directed at their facility." The second circular reiterated the threat and advised the companies, which provide their own protection, to institute a heightened level of security and increase personnel. Wiest said operators were cautioned not to record or discuss the specifics of their security methods. But it primarily would involve increased patrols and video surveillance, he said. A presidential commission in 1997 described pipelines as sitting ducks. "The increase in transportation of oil via pipelines over the last decade provides a huge, attractive, and largely unprotected target array," according to the report "Critical Foundations: Protecting America's Infrastructures." "Oil and gas vulnerabilities include lines at river crossings; interconnects; valves, pumps, and compressors; and natural gas city gates," the report said. "Large metropolitan areas could be deprived of critical fuel for an extended period by a properly executed attack." The U.S. Office of Pipeline Safety, a division of the Department of Transportation, said it was unaware of any specific threats to the lines. The largest natural gas pipeline operator in Minnesota is Northern Natural Gas Co., a division of Houston-based Enron Corp. About 3,200 of the company's 17,000 miles of pipelines are in Minnesota. Most of Northern Natural's pipelines in Minnesota are underground, but they emerge where they enter compressor and meter stations. Gina Taylor, spokeswoman for Northern Natural, said it has not received any information about a specific threat to the pipelines. Even so, the company has increased staff at all "manned facilities" and is keeping in close touch with authorities and the Interstate Natural Gas Association of America, a trade group, she said. NGI's Daily Gas Price Index published : September 26, 2001 Wood's First FERC Meeting Expected to be Long Today's regular FERC meeting, the first one over which Chairman Pat Wood III will preside, promises to be a very long and interesting one. In addition to the regular consent agenda items, the Commission has listed a number of administrative issues that will be discussed, including the adequacy of the energy infrastructure, an update on the pipeline capacity situation to and within California, "strategic and 2002 business plans," as well as other items. (AD01-2, AD01-3, AD01-1). FERC's long-awaited action Wednesday on its affiliate rule is likely to be the focus of considerable attention (RM01-10). The Commission is expected to plug up the loopholes surrounding the flow of non-public information between regulated energy companies and their unregulated affiliates. On the electric side, the Commission also has docketed discussions addressing "significant national transmission constraints," and the progress of regional transmission organizations (EX01-2, EX01-3)). For natural gas, FERC has scheduled discussions of gas pipeline operational flow orders, and the "efficient and effective collection of data" (GX01-1, GX01-2). Senate to discuss infrastructure security, supply Gas Daily September 26, 2001 In closed testimony today, the Senate Committee on Energy and Natural Resources is due to review the energy industry's response to the Sept. 11 terrorist attacks. Although the hearing is not open to the public, the discussions are likely to focus on measures to protect sensitive infrastructure, including ways to safeguard major pipelines and transmission lines from potential terrorist threats. The Senate's renewed focus on energy is also likely to lend momentum to efforts to bolster domestic supply -- including a Republican-led bid to open up the Arctic National Wildlife Refuge. Security has been a watchword for the industry since Sept. 11. Although the attacks delayed a number of energy policy initiatives (GD 9/21), Congress is now turning its attention to the issue again. Federal agencies have also followed suit. Immediately after the attacks, FERC pledged that it would allow energy companies to recover the cost of any security upgrades made to protect vital infrastructure (GD 9/17). Today's hearing will cover a broad range of issues. Representatives from all sectors of the energy industry will deliver testimony; both domestic and international issues will be on the agenda. The first panel will feature testimony from Deputy Energy Secretary Francis Blake. A second panel will comprise members of the main energy associations, including the National Petroleum Council, the American Gas Association, Edison Electric Institute, the Interstate Natural Gas Association of America and the North American Electric Reliability Council. Scheduled to appear on behalf of the industry are: Robert Gilham, manager of global security for Conoco, representing the NPC; Ralph Beedle, senior vice president of the Nuclear Energy Institute; Laurence Downes, chairman and CEO of New Jersey Resources, representing AGA; Eugene McGrath, chairman, president and CEO of Consolidated Edison, representing EEI; Greg Bilinski, vice president, transmission for Duke Energy Gas Transmission, representing INGAA; and Michehl Gent, president of NARUC. Nuclear security is one topic of concern. In response to the attacks, the Nuclear Regulatory Commission advised nuclear power plants to go on high alert; NRC has also launched a review of security regulations. But ensuring pipeline security is also a major worry, particularly because the United States depends on cross-border pipeline systems that ship gas from Canada. With that in mind, some in Washington are worried that gas transmission infrastructure might potentially be targeted. Earlier this week, Senator Bob Bennett, R-Utah, introduced legislation to encourage information sharing between the federal government and private industry on infrastructure issues. "With more than 85% of critical infrastructure entities owned and operated by the private sector, voluntarily shared information leads to a more focused understanding of threats and empowers government, industry and private citizens to mitigate risk," Bennett said. The Critical Infrastructure Information Security Act, co- sponsored by Sen. Jon Kyl, R-Ariz., would allow companies to voluntarily submit sensitive information to federal agencies while keeping the information confidential. According to the bill's sponsors, information shared with a federal agency for security purposes would be protected from requests under the Freedom of Information Act. In addition, the bill would allow for companies within one industry to share information on infrastructure without being subject to antitrust review. The bill would also require the federal government to share information with the private sector in the form of notifications, warnings and strategic analysis. The discussions over energy security are also likely to spur more debate over drilling in ANWR. A scant two weeks ago, Republicans and Democrats were gearing up for a fight over President Bush's proposed energy policy. In a statement yesterday, House Majority Whip Tom DeLay, R-Texas, urged the Senate to join the House by passing the Securing America's Future Energy Act of 2001. "As we stand here together, America understands that the defense of freedom hinges on our energy security. A bipartisan majority in the House knew this before the terrorist attacks on September 11. That's why we came together to pass the Securing America's Future Energy Act of 2001," said DeLay. "We all understood the vital security and stability improvements it carried for our energy needs." DeLay said opening up ANWR to exploration and production would be "one important step" in that process. "Opening ANWR could meet the daily energy requirements of our armed forces for an entire year. Look at it another way; it could replace all the oil from Iraq for the next fifty years," he said. "We can't wait another day. The strength of our security, the health of our economy, rests on expanding our domestic energy supply immediately." Pipeline operational update Gas Daily September 26, 2001 Reliant Energy Gas Transmission's Amber Compressor Station will require unscheduled maintenance beginning at 9 a.m. today. This work will take approximately three days to complete. Effective today, all interruptible and secondary firm supplies of gas flowing from west of Amber Station to markets east of the station will be reduced to zero for the duration of the work. For the month of October, El Paso Field Services will have approximately 20 million cfd of delivery space available to Transwestern Pipeline through its Carlsbad-Transwestern interconnect at meters 14873 and 78093. The company said shippers may flow gas to Transwestern provided the gas has been properly nominated in EPFS Star Web system for the next day's flow and a corresponding take away nomination has been confirmed with Transwestern. Utilities, refineries, pipelines step up security Energy But experts say facilities in Southern California and elsewhere were not designed to thwart terrorists. Series: utility.0923 CHRIS KNAP and TONY SAAVEDRA 09/23/2001 The Orange County Register 1 PageM (Copyright, The Orange County Register - 2001) Although utilities, refineries and gas pipelines have stepped up security in the wake of the terrorist attacks Sept. 11, experts say Southern California -- and the country -- are still vulnerable to attacks from determined terrorists. Built in the 1950s and '60s, long before terrorism became a domestic threat, Southern California's refineries, public water supplies, even nuclear power plants are too close to public thoroughfares and too accessible to commonly available assault weapons. To date, these facilities have relied primarily on chain-link fences, security cameras and the belief that "it won't happen here," national counter-terrorism experts say. Local law-enforcement officials say residents should feel safe. Orange County sheriff's officials say they had cataloged and assessed potential targets long before last week's attacks. They moved immediately to step up security for utilities, mass- entertainment businesses and religious facilities, among other vulnerable facilities. "The county of Orange at this moment has as much safety resources as at any time in history," Assistant Sheriff George Jaramillo said. "You can never prepare for every eventuality, but we are as safe as we can possibly be." Terrorism experts don't agree. "Does the U.S. have sufficient security at its utilities and refineries? No, and you may quote me: No," said Thom as L. Preston, a former Army counterterrorism officer who now heads Preston Global, an international security-consulting firm based in Kentucky. "We have represented a number of utilities and developed counterterrorism plans for them," Preston said. "But the common view is: It won't happen on my watch." One theory that weighs against terror attacks in Orange County, some experts say, is that terrorists want to make a major spectacle and create as big a disruption as possible. Although local officials have identified some 40 "areas of concern," including Disneyland, the San Onofre Nuclear Power Plant, and John Wayne Airport, none of them could create the flaming spectacle of the World Trade Center coming down. "Most terrorists want something big, eye-catching, spontaneous -- something that controls the media," said David F. Ray, a former Secret Service section chief who now performs risk management for major corporations. According to terrorism experts and a survey of Southern California infrastructure, there are still many areas of vulnerability: a major refinery with a public diner and parking lot just across the street. A major power plant with a public animal shelter just on the other side of the chain link. Miles of aqueducts so accessible that people routinely fish in them. A nuclear power plant that fronts on a public beach. Federal officials have warned utilities, refineries and pipeline companies to take steps to safeguard their facilities. "We would be ignorant to assume we've seen the worst of the worst, that there are not other (terrorist) cells that will be of equal or more devastation to us," said Matthew Devost, co-founder of the Terrorism Research Center in Virginia. Utilities feel they are well-protected: Southern California Edison said it has stepped up security at high- voltage transmission lines and other power facilities. Edison said it can't guard every mile of lines, but "the transmission system is designed with redundancy in the event of a loss of power or a lost (transmission) path," said Steve Conroy, media-relations manager for Edison. The Metropolitan Water District of Southern California, which provides most of the drinking supply from Santa Barbara to the Mexican border, closed public access to its offices and facilities and quadrupled guards at key points. Water is being sampled several times daily. Joe Tait, chief operating officer for MWD, said the water supply is so large that it would be difficult to contaminate. "You'd need a tremendous amount of some kind of agent to affect our waters," Tait said. Refineries and fossil-fuel pipelines immediately went on heightened alert after the attacks last week. "It's been a situation, ever since the attack, of heightened security and heightened awareness," said Larry Pierce of Kinder Morgan, which owns 30,000 miles of natural gas and refined petroleum product pipelines in the United States, including a major pipeline through Southern California. "Obviously we are taking precautions." US Physical Natural Gas Prices Fall; Thin Trading Ranges 09/25/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON -(Dow Jones)- U.S. physical natural gas prices fell slightly Tuesday on light demand, as traders took advantage of cash-outs on pipelines and a small backwardation premium to the New York Mercantile Exchange. Cash prices in Florida led the nation, with prices at the Florida Citygate around $2.71 a million British thermal units. Most other pipelines were just under or just above $2/MMBtu. "Everything was pretty flat," a Texas trader said. Traders in Texas and the Gulf Coast mostly pointed to storage buying and people rushing to next month baseload trading. Looking ahead, some incremental demand may be seen next month, as some utilities switch to natural gas from fuel oil and a number of nuclear energy sites go off-line for maintenance, one veteran trader said. October, a shoulder month, tends to be a major price discount month, he said. On the Nymex there's currently about a 40-cent difference between the outgoing October contract and the November contract. Traders again saw tight ranges Tuesday, as the Nymex's October contract traded under the spot cash bid-ask price, which are both at 30-month lows. Traders are in the midst of a three-day monthly bid week as they set baseload pricing for October. The Nymex Oct natural gas futures contract rose 1.5 cents to settle at $1.925/MMBtu, near lows seen in March 1999. October expires Wednesday. Some traders see the 17,000 $2/MMBtu puts, well above Tuesday's settlement, as a prime reason for short covering Wednesday ahead of expiration and the American Gas Association's storage report. Early predictions are for the AGA report to show a build around 84 billion cubic feet up to 94 Bcf. At the benchmark Henry Hub in south Louisiana, the delivery point for Nymex gas, prices fell 1 cent-4 cents to a $1.93-$1.97/MMBtu closing range. First-of-month index for the Henry Hub is around $2.34/MMBtu. Deals at Transcontinental Gas Pipe Line Station No. 65 were done at $1.98-$2.09/MMBtu, down 1 cent-2 cents. At the Arizona-California Border, where gas from El Paso's pipeline begins delivery to Southern California, buyers paid $1.77-$1.85/MMBtu, down 2 cents-5 cents. Index for September is at $2.66/MMBtu. At PG&E Citygate, traders paid $1.88-$1.97/MMBtu, up 5 cents on the bid, down 6 cents on the offer. September first-of-month index is at $2.71/MMBtu. At the Katy hub in East Texas, prices were in a $1.87-$1.93/MMBtu range, down 5 cents. First-of-month September index is $2.37/MMBtu. At Waha in West Texas, buyers paid $1.74-$1.81/MMBtu, down 3 cents-4 cents. Index is at $2.32/MMBtu, traders said. INDIA PRESS:DPC,Govt Fail To Reach Stake Sale Pact At Mtg 09/26/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Enron Corp.'s (ENE) unit, Dabhol Power Co., and India's federal government have failed to reach an agreement on selling DPC's stake in the Dabhol power project, reports the Business Standard. After the two-day meeting, DPC refused to accept the government's offer to sell its stake in the $2.9 billion power project at a 20% discount, the report says, quoting unnamed government sources. "At the meeting, the two sides remained stuck to their respective positions and haven't made any progress so far," the newspaper quoted one of its sources as saying. According to the report, the government won't take a stake in the 2,184 megawatt Dabhol project located in the western Indian state of Maharashtra. The government won't even allow any state-owned company to buy a stake in Dabhol, the report added. As reported, Enron, which holds a 65% stake in Dabhol Power Co., threatened to pull out of the project following payment disputes with its sole buyer, the Maharashtra State Electricity Board, and the failure of India's federal government to honor its payment guarantee for the project. Dabhol is the single largest foreign investment in India to date. NGI's Daily Gas Price Index published : September 26, 2001 Futures Quiet at Options Expire; Traders Look to Storage Report Following Monday's 9% price drop, natural gas futures were held to an extremely-tight, nine-cent price range yesterday as traders elected to wait for fresh fundamental data to be released Wednesday. Unable to push to fresh lows or highs, the October contract notched an inside day on the daily chart yesterday, closing 1.5 cents stronger at $1.925. Several traders noted that while crude oil futures rallied and then tumbled back below unchanged, natural gas prices remained steady Tuesday. For bulls who have had little to like about the market lately, the lack of follow though to the downside was well received. "Marginally bullish," were the words used by broker Tom Saal of Pioneer Futures in Miami to describe the slight uptick. "We were unable to probe beneath Monday's low at $1.88 and that is constructive." Another feature of yesterday's trade that failed to spur much in the way of volatility was the expiration of the October options contract. Saal was quick to point to more than 17,000 $2.00 put options that existed as of Tuesday morning that never became a factor during the futures session. "Sometimes you get option-related buying or selling in the futures market as options players attempt to pin the futures contract near a specific strike price," Saal said. Obviously, that was not the case [Tuesday]." However, Saal believes that those puts may have a latent effect on prices. "Because those puts were likely exercised, there are some new shorts in this market that may need to cover their positions before the expiry of the October contract Wednesday," he reasoned. Looking ahead, it goes almost without saying that there are traders out there who are looking to profit off the latest supply data to be released by the American Gas Association today at 2 p.m. (EDT). However, they had better act quickly this week. Last week Nymex moved to extend open-outcry pit trading hours this afternoon from 1:45 p.m. to 2:45 p.m. in order to take advantage of the liquidity surrounding the AGA's release. Nymex is usually open until 3:10 p.m. (EDT) giving traders a full 70 minutes in which to play the market. Today, traders will only have 45 minutes. Expectations ahead of the storage report call for a net injection of 80-100 Bcf, which if realized would surpass last year's 77 Bcf injection, as well as the five-year average refill of 75 Bcf. As of Sept. 14 storage was 87% full at 2,757 Bcf, compared to 71% full at 2,325 a year ago. Calif Agency Urges Greater Natural Gas Storage, Delivery 09/25/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) WASHINGTON -(Dow Jones)- California needs to boost its instate natural gas pipeline capacity and underground storage systems to better cope with increasing demand for electricity production and winter heating, according to a report pending before the California Energy Commission. "The state will need to monitor the natural gas situation closely to provide an early warning of developing problems in time to take actions to prevent shortages," the commission's Electricity and Natural Gas Committee said in a report analyzing last year's high natural gas costs. The five-member energy commission will vote Oct. 3 to either accept the report or send it back to the committee for further work, a commission spokesman said Tuesday. The unprecedented run-up in natural gas prices late last year was due to a combination of increased demand from electricity generators and colder-than-usual winter temperatures, combined with inadequate instate and interstate pipeline capacity, the report found. "The extraordinarily high prices during this period appear to be the result of either the competitive market's rationing of supply through a scarcity premium, or price manipulation through the exercise of market power by market participants, or both," the report said. "In any case, prices would have been lower if the receipt capacity in Southern California had been greater," the report said. The findings have some bearing on the California Public Utilities Commission's complaint before the U.S. Federal Energy Regulatory Commission, which alleges that El Paso Corp. (EPG) manipulated capacity on its pipeline system to drive up natural gas prices in the state. A FERC administrative law judge is expected to rule on the complaint in early October. Whether high prices in California were the result of scarcity premiums, manipulation by a company, or a combination of the two factors "is beyond the scope of this report," the committee report pending before the state commission said. California entered last winter's heating season with lower-than-usual gas in storage, and electricity generators were "indifferent" to the high gas prices because a "runaway electricity market" allowed them to pass the costs through to customers, the report said. "These factors would have been exacerbated by the tight infrastructure conditions," the report noted. The report recommended various actions to increase instate pipeline capacity and stepped-up monitoring of market conditions to provide warnings of future shortages. The report also called for greater natural gas storage and increased instate production of gas, as well as development of a curtailment program to reduce demand during shortages. NGI's Daily Gas Price Index published : September 26, 2001 Producers See Sept. 11 Effect on Winter Gas Demand Fueled by a weakened appetite for natural gas in the industrial sector, forecasts of normal weather for winter, bulging storage stocks and a grim economic fallout from the Sept. 11 terrorist attacks, the Natural Gas Supply Association projected Tuesday that gas demand will be flat this winter compared to last year. Based on a combination of these fundamentals, "we estimate that natural gas demand for this winter will range from a decrease of 2.1% (250 Bcf) to an increase of 1.5% (175 Bcf) compared to last year," forecasted the trade group, which represents major gas producers, in its annual Winter Outlook. "Our analysis reveals a dramatically different natural gas market than this time last year, when we were expecting and experienced a rough winter heating season. While the fundamentals that drive the natural gas market all pointed toward higher prices last year, this year's fundamentals reveal a much improved scenario for this winter's consumers," said NGSA President Skip Horvath at a press briefing in Washington, DC. In short, gas consumers can expect much lower utility bills this winter, according to the NGSA. Although certain "wildcards" exist for the short term that could alter some of its forecasts -- such as the prospect of war in the Middle East -- the producer group said it doesn't anticipate these will lead to "sustained price volatility" for gas. The projection for a 1.5% increase in overall gas demand this winter, to 11.87 Tcf from 11.69 Tcf last winter, was made prior to the terror assaults, NGSA said. But it adjusted its demand figures downward in the wake of the attacks to account for the expected negative impact on industrial gas demand. It now predicts that overall winter gas demand will dip this year by 2.1% to 11.44 Tcf. "The events of Sept. 11 will have the greatest impact on natural gas demand in the industrial sector. Before Sept. 11, we estimated an increase in industrial demand of 5.8% (216 Bcf) as industrial operators fuel-switched back to natural gas and increased their output. But in light of these events, it appears that industrial demand could decrease [by] as much as 4.8% (176 Bcf) from last year due to sluggish economic growth," the NGSA said. For this winter, it projects industrial gas demand will fall to 3.52 Tcf from 3.7 Tcf last year. Due to forecasts of normal weather this winter, residential and commercial demand also is expected to drop by 6.6%, according to the NGSA. The group projects that demand for this sector will dip 395 Bcf to 5.59 Tcf during the winter months. It cautions that the demand figures for the residential/commercial sector could fall further -- by an additional 150-500 Bcf -- if this winter is a mild one. However, "a repeat of last winter could increase demand for these two sectors [by] an additional 400 Bcf," it said. The one bright spot, the NGSA believes, will be the gas demand by the electric generation sector. It expects this to rise 338 Bcf to 1.48 Tcf, partially offsetting the losses in gas demand in other areas. "This increase in demand is due in large part to electric generators switching from distillates back to natural gas because of low prices, environmental compliance requirements, and new electric generation plants coming on line." While coal is a "strong competitor" of natural gas in the power generation market, Horvath said he didn't see coal cutting into gas's share of the market in the short term. "It is not a short-term issue. Coal plants take as long as 16 years to site. Natural gas [plants] take 18 months to two years to site. So natural gas has a strong competitive advantage there...and the price of coal has gone up as well" in relation to gas. The anticipated flat gas demand this winter, combined with high storage levels (estimated to be 500 Bcf higher than last year at the start of the winter season) and a modest rise in production, are sure to put greater downward pressure on gas prices this winter compared to last year, NGSA said. Horvath, however, shied away from forecasting gas prices for the winter period. "We're not going to predict the actual price because nobody knows that." But he said he doesn't believe the current price below $2 will last long. "We do not anticipate that the lower prices indicating oversupply of natural gas [are] sustainable. The economy will come back. The U.S. will get back on its feet, and we will have that fundamental tightness of natural gas supply," Horvath predicted. The "seeds in a way have been sown" already for tighter gas supply later. Given the prospect for higher gas prices, he believes that projects to import liquefied natural gas (LNG) and to transport gas from Alaska to the Lower 48 states "will largely go forward." Horvath sees two potential trouble spots this winter -- California and the Northeast. Although California has promised to have its in-state pipeline capacity expanded by the start of winter, he said he still believes "that's an area to watch." The Northeast bears watching as well because of the "colder-than-normal temperatures" anticipated for that region this winter, he noted. Despite current low prices for gas, he said he'd be "surprised to see many shut-ins" by producers. What the industry will see, however, is producers "not exploring as vigorously [or] pouring a lot of money [into] exploration, because that money just isn't there," he told reporters. The NGSA acknowledged that there are a couple of "wildcards" that have the potential to change its projections. "If military action occurs, it is not clear how it would affect the market. The current [deregulated] natural gas market has only been in place since 1993, after the Persian Gulf War, which provides us with little for comparison," the group said. A war in the Middle East would have a significant upward effect on crude oil prices rather than gas prices, the NGSA said, but it noted that "sometimes oil prices can pull natural gas prices up with them." Should another "traumatic event" occur in the United States, "we do not know how it would affect the market," the producer group said. Since Sept. 11, natural gas prices have trended downward.
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