OIL EXECUTIVES SEE GRADUAL RISE IN PRICES

  Top executives with Tenneco Corp &lt;TGT>
  and Sabine Corp &lt;SAB> said they expected world oil prices to
  gradually increase over the next two years as U.S. reliance on
  imports of oil from the Middle East grows.
       "I believe we have bottomed out and can look forward to a
  trend of gradually increasing prices," C.W. Nance, president of
  Tenneco Oil Exploration and Production, told a meeting of the
  Petroleum Equipment Suppliers Association.
       Nance predicted that by 1990, the Organization of
  Producing and Exporting Countries would be producing at the
  rate of 80 pct of capacity.
      The gain will come largely through increased imports to the
  United States, he said.
      "They will be able to raise the price again but I do not
  think they will raise it as much as they did in 1979," Nance
  said. He did not say how much of a price hike he expected.
       Andrew Shoup, chairman of Dallas-based Sabine, predicted
  that world oil prices would increase from a range of 15 to 20
  dlrs a barrel in 1987 to a range of 17 to 22 dlrs a barrel in
  1988. Natural gas prices, Shoup said, should similarly climb
  from a range of 1.30 to 1.70 dlrs per mcf this year to between
  1.50 and 1.90 dlrs per mcf in 1988.
       "Fuel switching could help us as much as five pct in
  increased demand," Shoup said, referring to the gas industry's
  outlook for 1987. Repeal of the Fuel Use Act, a federal law
  prohibiting the use of natural gas in new manufacturing plants
  and utilities, could increase demand for gas by as much as 15
  pct, he said.
       Tenneco's Nance also said that some U.S. cities may
  experience peak day shortages in natural gas supplies next
  winter because of the industry's reduced deliverability.
       Tenneco's gas deliverability, for example, dropped by 20
  pct during 1986, he said.
       "This does not mean the gas bubble is gone," Nance said.
  "We believe gas prices have bottomed out. The real question is
  how broad the valley is -- is it one year, two years or three
  years before we start to climb out?"
        J.C. Walter of &lt;Walter Oil and Gas Corp>, said the recent
  improvement in oil prices was not enough for independent
  producers to begin new onshore drilling projects.
       "If crude oil stays below 20 dlrs a barrel and 1.50 dlr
  per mcf for natural gas prevails, the prospects for onshore
  exploration at deeper depths in the Texas Gulf Coast by
  independents in the 1990s are pretty dismal," Walter said.
       He suggested that some independents may instead turn to
  exploration in shallow federal offshore leases. Farm-out
  agreements, cheap rig rates and less competition have held
  finding costs in those areas to five or six dlrs a barrel,
  Walter said.
  

