BP Amoco for a third time in five years has won the annualbidding for California’s natural gas purchasing program. supplyingabout 120 facilities operated by the California General ServicesDepartment.

BP Amoco won contracts for both the northern (Pacific Gas &Electric) and southern (Southern California Gas) state facilities.Sempra Energy Trading will remain the current supplier of bothcontracts until the end of this month.

“We’re very pleased,” Marshall Clark, the state’s gas buyingdirector, said last week in announcing the contract award. Clarksaid he received four bids to supply gas in the north and three inthe south from among a list of state-qualified bidders. “BP Amocoover the past four years had contracts with us twice, so they are afamiliar supplier. They have been very good in the past, and we’relooking forward to the new deal.”

Due to market uncertainties, the bidding last month was delayeduntil June 7, and as a result the contracts are for nine monthsrather than the usual 12-month period. So the usual total of about14 Bcf in volumes has been lowered to about 8.5 Bcf for the shortercontracts (July 1 through March 31, 2001), Clark said.

“We’re hoping to see a gas market that is a lot friendlier inApril,” Clark said. “Nobody seems to know what is going to happen.For the last three days, the market has looked like hopefully wehave seen the top and we’re finding a new plateau. It is going tobe higher, but hopefully we don’t go into $5/mcf country any timesoon.”

California state facilities, including hospitals, prisons,universities and major office complexes, are expecting fuel billincreases in the range of 50% to 70% for their next fiscal year,2000-01, Clark said. The normal “saddle” for annual gas buyingprovided in May and June — after the winter heating load andbefore heavy summer air conditioning demands — has disappearedthis year with gas prices climbing steadily this spring.

“We’ve come to the conclusion that the May-June period when wehave traditionally bought our gas is not the best time for usanymore,” said Clark. California sought bids for indexed supplydeals with none of the floors and ceilings that have become commonin its annual fuel contracts. Clark would not discuss the specificterms of the contract, but he said it is a standard state contractthat is posted on the California web site under the GeneralServices Department.

Richard Nemec, Los Angeles

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