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Industry Briefs

Industry Briefs

FERC Chairman James J. Hoecker said the Commission will open a new office, called the Office of Energy Projects, which will have the engineering and environmental expertise to certificate new gas pipelines and authorize and monitor hydroelectric projects. The new office will include the functions formerly conducted by the Office of Hydropower Licensing and most of the certification functions of the Office of Pipeline Regulation. Another new office, the Office of Markets, Tariffs and Rates (OMTR), also will handle some of the certification duties. "Energy Projects and Markets, Tariffs and Rates effectively represent two major and distinct areas of the Commission's technical expertise and statutory responsibility," Hoecker said, adding that Energy Projects will focus on siting and environmental aspects of projects while OMTR will focus on promoting competition and protecting against market power.

Chevron Corp. warned investors yesterday that its second quarter earnings will take a hit from severance costs and a recent fire at its Richmond, CA, refinery. CEO Kenneth Derr said the fire would shave $100 million from second quarter earnings and the company would eat $150 million because of severance charges. Chevron is cutting 2,500 jobs, or about 7% of its workforce, as part of a $500 million cost-reduction initiative launched during the fourth quarter of last year that is expected to be completed by the end of this year. Derr, however, said he expects significant production improvements this year and an improving return on capital. Chevron expects to meet its volume growth targets of 8-9% for international liquids and 4-4.5% for worldwide production on an oil equivalent basis. The production growth will help it meet the 12% return on capital employed that Chevron expects will put it in the No. 1 position among its peers in total shareholder return over the next four years. The company recently broke off merger talks with Texaco Inc. but Derr said the company remains on the watch for key assets and will be able to compete effectively against the "supermajors" by increasing production and reducing costs.

The Reliant Energy Wholesale Group signed an agreement to sell 60 MW of capacity and energy to the Alabama Electric Cooperative. The power will be supplied from the Sabine cogeneration plant, which is under construction near Orange, TX. Sabine is owned jointly by Reliant Energy and Air Liquide America Corporation. In addition to producing electricity, the facility will provide virtually all of the power and steam needs for Bayer Corporation's synthetic rubber manufacturing facility in Orange. The project is scheduled for completion in October. The power sales to AEC will begin Jan. 1, 2000 and continue for three years. Energy sales plus demand charges for this transaction are estimated at $40 million over the three-year period. AEC, headquartered in Andalusia, AL, is a generation and transmission cooperative providing wholesale electricity to 21 member owners in 39 counties in South and central Alabama and 10 counties in Northwest Florida. Members distribute energy to more than 340,000 residential, commercial and industrial customers.

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