Bad weather back East means good times for Southland gas producers.

The cold front enveloping the East Coast and Midwest is providing a warmly welcomed mini-boom in natural gas sales for at least one local production conglomerate.

"It would appear that January send-outs of gas to the market could well be the highest monthly level ever," said Tom Fisher, who heads L.A.-based Unocal Corp.'s natural gas marketing efforts.

Fisher said his company increased its output from 956 million cubic feet a day in the third quarter of 1993 to well over a billion cubic feet per day during the fourth quarter. The increase is more than just a seasonal fluctuation, he said, noting Unocal sold only 921 million cubic feet per day in fourth-quarter 1992.

Price increases on the natural gas spot and futures markets have spiraled in tandem. Last Tuesday, NYMEX trader Todd Appelbaum reported the near date March futures contract hit this year's high of $2.66 per million BTUs (or just under $2.70 per 100,000 cubic feet).

In 1993, the high for the March contract was $1.95, according to NYMEX statistics, though the April contract set a new record of $2.80 shortly thereafter, during last March's cold snap.

"That's the number technical traders are looking for as a projection for where the March (1994) contract could go to," said Appelbaum.

In addition to causing last year's springtime spike in prices, the 1993 frost caused a huge drawdown on reserves, which made it that much harder to replenish inventories in preparation for this year's chill.

Unocal's Fisher estimated that at the end of last month, overall inventory levels were about 300 billion cubic feet below year-earlier levels. He calculated that if the cold weather continues, Easterners may push overall demand up by as much as 10 billion more cubic feet of natural gas a day from what they purchased last year.

Given this large demand and the country's first winter of price deregulation, Greg Craig, president of Century City-based trading company Cook Inlet Energy Supply, concluded, "as much gas that can go East will find its way East."

Prior to the Nov. 1 implementation of the federal government's deregulation order, natural gas traded at discounts or premiums to the NYMEX benchmark rates depending on the needs of the region.

In fact, said Craig, as late as this January, gas from the San Juan and Permian Basins in New Mexico to destinations in California was selling at daily spot prices that were 30-40 cents lower than spot prices offered from the NYMEX's Henry Hub reference point. Now, he said, the differential between the NYMEX spot and regional spot prices has shrunk to less than 10 cents.

Producers also acknowledge the change. Right now "about 70 percent of Unocal's domestic natural gas goes to the East Coast and Midwest markets," said Fisher.

Barry Kellogg, who oversees gas marketing for the Oxy USA Inc. subsidiary of West Los Angeles-based Occidental Petroleum Corp., also reported that about 80 percent of the 600-700 million cubic feet of gas that his company sells on domestic markets each day is eastward bound.

But, he said, "the vast majority of our production has always gone to the upper Midwest and to the Northeast, so you're not going to see much change from us" in terms of customers or in amount produced.

In fact, Kellogg said, this year's only big news was how well deregulation has worked. "We haven't seen any emergencies," he recounted, "we haven't had anyone come to us and say, 'Hey, we need gas right now.'"

In fact, buyers are soberly assessing the market and adjusting accordingly.

SCEcorp suppliers boosted prices by more than 25 percent over the past two weeks, said Jim Yee, gas procurement manager for the Rosemead-based parent of Southern California Edison. "We've opted not to pay the higher prices and will rely on our inventories for March and April," he said.

Generally, Yee explained, "about 40 percent of our gas is purchased on a daily basis." The other 60 percent is purchased via 30-day indexed contracts.

In addition to the contracted amounts, he said, SCEcorp has an inventory of more than 6 billion cubic feet. With an average daily usage of about 439-487 million cubic feet, the stored reserves alone equate to about 12 days of supplies. Downtown Los Angeles-based Pacific Enterprises, which owns the Gas Co., has pursued a similar policy. "We've backed away from the daily spot market purchases," said Herbert Emmrich, supply planning and forecasting manager for the Gas Co.'s gas supply department. "We're buying under longer term contracts based on first-of-the-month indices."

He quoted last Tuesday's Permian Basin one day spot price at $2.45-55 per million BTU vs. the basin's monthly index price for February of $1.88.

Emmrich also acknowledged that his company was drawing down reserves. "Storage is down to about 50 billion cubic feet," he said, "a little bit more than average because it's been unusually warm in Southern California."

Average daily usage right now is about a billion cubic feet a day, he added.