After rejecting a sale of the entire company to Electricite de France (EDF) in October in favor of a deal with MidAmerican Energy Holdings Co., the Constellation Energy board said it is willing to talk with the French company about its proposal to acquire Constellation nuclear assets. Constellation's board has authorized discussions and an exchange of information with EDF related to an unsolicited proposal received from EDF on Dec. 2. Constellation said the decision to talk with EDF is consistent with its merger agreement with MidAmerican. The Constellation board has not changed its recommendation that shareholders vote in favor of the merger with MidAmerican. A special meeting for a vote remains scheduled for Dec. 23. EDF's proposal provides for an up-front $1 billion cash investment in Constellation to be credited against the purchase price for EDF's interest in the nuclear generation business, and an option under which Constellation could sell nonnuclear generation assets to EDF that have an aggregate value of up to $2 billion. The joint venture would run five of Constellation's nuclear reactors, including the two at Nine Mile Point and the one at the Robert E. Ginna plant in New York, and the two at Calvert Cliffs in Maryland. Constellation and EDF are already in a 50-50 joint venture that was created in the summer of 2007 called UniStar Nuclear Energy LLC to develop new nuclear reactors in the U.S. using Areva SA's Evolutionary Power Reactor design.
GMX Resources Inc. and Penn Virginia Corp., independents that have both found success in U.S. onshore natural gas basins, have joined the growing chorus of producers announcing drastic reductions to their capital expenditure (capex) programs in 2009. Oklahoma City-based GMX and Radnor, PA-based Penn Virginia have earned success in, among other onshore regions, the emerging Haynesville Shale and Bossier Sands of Louisiana and East Texas. However, with economic projections uncertain, GMX has cut its projected capex in 2009 by 45%. GMX now plans to spend $220 million, down from an earlier capex plan of $400 million. The cuts are needed "due to the continued peril in the global and domestic credit markets and lower commodity prices," GMX stated. Penn Virginia also will operate on cash flow in 2009, and it cut its capex budget to about half of what it had originally planned. Capex now is set at $250 million for 2009, with about $225 million for development and exploratory drilling. Most of the funds will be for core areas that include East Texas, the Midcontinent, Mississippi and Appalachia. And around 6%, or $14 million, will be spent on exploration, including prospects in southern Louisiana and the Marcellus Shale in Pennsylvania.
An extended deadline for troubled Commerce Energy to close a deal selling most of its remaining gas and electric retail customer base to Universal Energy Group Ltd. (UEG) passed Dec. 6 without comment from the company. Last month Commerce Energy, which began its operations a decade ago in California's fledgling retail electricity market as Commonwealth Energy, announced the agreement with UEG. The original deadline to close a deal was Nov. 26, but it was later extended to Dec. 6. Under the proposed terms, UEG would end up owning two thirds of the natural gas and electricity service provider by providing $16 million in cash and purchasing 49% of Commerce common stock. UEG would purchase Commerce's retail gas customers in Ohio and its electricity customers in Pennsylvania, New Jersey, Maryland and Michigan. These customers represent 60,000 of Commerce's current 100,000 customers. Commerce said previously that the time was extended to "allow time for discussions between the parties to continue and for exploration of alternative structures."
Palomar Gas Transmission LLC, a joint venture of TransCanada Corp. and Northwest Natural Gas Co., filed an application at FERC to build a natural gas transmission pipeline to move Rocky Mountain gas into markets in the Willamette Valley of northwest Oregon and the West Coast's I-5 corridor. If the certificate is approved by FERC by the end of 2009, Palomar said it could begin construction in 2010 with a target in-service date of November 2011. Palomar would be only the second interstate gas pipeline to serve customers in Oregon's Williamette Valley and southwestern Washington state. The project calls for the construction of a 217-mile, 36-inch diameter pipeline that would connect TransCanada's existing Gas Transmission Northwest pipeline in central Oregon with Northwest Pipeline's Grants Pass Lateral and Northwest Natural's distribution system near Molalla, OR, approximately 30 miles southeast of Portland. The project also would include a western segment to allow deliveries along Northwest Natural's distribution system west and north of Molalla. It would have the capability to transport up to 1.3 Bcf/d, according to Palomar. Palomar would provide Northwest Natural with additional access to the interstate pipeline grid via an interconnect near the town of Molalla and would also connect it with the facilities of the proposed Bradwood Landing liquefied natural gas terminal in Clatsop County, OR. An open season was held in May-June (see NGI, June 2).
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