Enron Energy Services inked another commodity management
agreement yesterday with Rich Products Corp. for 11 years. Under
the $130 million-plus agreement, the Enron Corp. subsidiary will
manage electricity and natural gas services. Enron said the
agreement covers Rich Products' 18 major facilities in Wisconsin,
New York, Tennessee, California, Ohio, Massachusetts, Illinois,
Virginia, New Jersey, Georgia and Texas. Along with supplying
electricity and natural gas, Enron will offer ongoing billing
services for all of the facilities. "Our partnership with Enron
allows us access to a reliable and economical supply of electricity
and natural gas," said Mike Bingham, Rich's executive vice
president, operations. "Ultimately, it's about delivering
increasing value to our customers." Rich Products is one of the
U.S.'s largest family-owned food companies, with annual sales of
$1.4 billion, and more than 7,000 employees. Regional offices are
located in 53 countries, and specialize in bakery and dessert
products and field technical support services.
DukeSolutions entered into an agreement with the Bank of America
yesterday to take over its energy management functions on 4,800
properties. The five-year contract will allow the nation's largest
bank to focus on its customers and core business, while
DukeSolutions lowers the company's annual energy costs.
DukeSolutions will provide energy supply information management to
the bank's numerous properties to help reduce the approximate $110
million in annual energy costs.
AES Corp. joined the growing number of companies to post solid
growth in the second quarter. AES's net income for the second
quarter was $111 million, a 56% increase over the $71 million
dollars posted last year for the same time period. Earnings per
share were 25 cents, 7 cents above earnings in the second quarter
last year. Revenues rose 140%, from $640 million, to $1.5 billion.
AES also announced yesterday that AES Power Direct has come to an
agreement to purchase Titan Energy for $5 million (see Daily GPI,
July 26). Titan Energy, a Toronto-based energy retail company,
currently serves natural gas to 135,000 residential and small
commercial customers in California, Virginia, Maryland,
Pennsylvania and Ohio.
Continuing the upside explosion of earnings, Questar Corp.
reported net income up 14% in the second quarter on the strength of
a 92% increase in earnings from oil and gas E&P. The company
reported net income of $26.2 million versus $23.1 million in 2Q
1999. Questar E&P increased net income to $9.6 million in the
2000 quarter from $5 million a year ealier It's average natural gas
sales price rose 28% to $2.48/Mcf, while production was 15% higher
at 17.7 Bcf. Oil and natural gas liquids prices were 45% higher at
$19.76 per barrel in the current year quarter.
Boosted by its high-flying Internet site, Enron Corp. reported
yesterday that its second-quarter earnings rose 30% to $289
million, with revenue from EnronOnline, the company's
eight-month-old energy and commodity Internet trading site, rising
92%. The site has handled transactions valued at more than $100
billion, adding $6 billion to revenue in the first half, and is
already considered the largest Internet energy trader in the world.
Net income rose to $289 million, or 34 cents, from $222 million, or
27 cents, while revenue rose 75% to $16.89 billion from $9.67
billion a year ago. Enron had been expected to make 32 cents a
share, based on analysts polled by First Call/Thomson Financial.
Enron's businesses reported its earnings as Wholesale Energy
Operations and Services, Retail Energy Services, Transportation and
Distribution and Broadband Services. The wholesale group increased
23% in the second quarter to $437 million. Retail energy reported
IBIT of $24 million compared to a $26 million loss in the same
period of 1999. The transportation group, which includes the gas
pipeline group and Portland General Electric, reported earnings of
$139 million compared with $128 million. The only loss was in
broadband services, which reported a loss of $8 million on revenue
of $151 million.
El Paso Merchant Energy Co., a business unit of El Paso Energy
Corp., is expanding its commercial platform in the electric power
industry with the formation of EP Power Finance LLC. It primarily
will focus on power and power-related opportunities in the North
American energy marketplace. The new unit will provide subordinated
debt and structured financial products to developers and acquirers
of merchant power generation assets. The group will offer debt
capital with a higher risk/return profile for transactions that
range from greenfield development projects to the acquisition of
multi-asset generation portfolios. For information on the unit,
visit El Paso Energy's web site at www.epenergy.com.
Texaco has begun commercial production of oil and natural gas
from its Petronius project in the Gulf of Mexico. The Petronius
platform was completed in early May. Texaco is the operator, and
Texaco and Marathon each have a 50% working interest. The project
is located in 1,754 feet of water in Viosca Knoll Block 786, about
130 miles southeast of New Orleans. Current production from two
pre-drilled wells is 8,700 b/d and 6 MMcf/d, and will be increasing
as production ramp-up continues. An additional three pre-drilled
wells will be brought on production over the next three months with
rates going to 40,000 b/d and 35 MMcf/d by October 2000. More wells
will be drilled and brought on-line through the remainder of this
year and into 2001, leading to peak production rates of 50,000 b/d
and 70 MMcf/d.
Santa Fe Snyder Corp. of Houston said last week that an
exploration well in Howard County, TX, Sellers 119 #1, has been
successful, and will extend the company's Lost Peak area there. The
well targeted Cisco Canyon sandstones now being exploited in the
Signal Peak field six miles northwest of the well. The Sellers well
encountered 115 of gross pay sand with productive gas shows over a
200-foot interval. Santa Fe has 80,000 gross acres (60,000 net)
under lease in the play, and through the end of this year, expects
to drill an additional 15 development and three exploratory wells.
Santa Fe plans to develop the field on 160-acre spacing, with
portions of the field on 80-acre spacing. Current plans for 2001
call for drilling up to 50 wells there. Gross operated production
from the Signal Peak field is now 25 MMcf/d and 1,300 b/d of oil.
Cost of finding and development for the area has averaged $.80 per
MMcfe, with operating costs of $.30 per MMcfe.
Texaco announced commercial production from the Petronius
project located in the Gulf of Mexico, 130 miles southeast of New
Orleans. Installation of the Petronius platform was completed in
early May. Texaco and its partner, Marathon, each have a 50%
working interest and Texaco is operator. Petronius project, located
in 1,754 feet of water in Viosca Knoll Block 786, began production
of oil and gas on July 9 at 8,700 b/d of oil and 6 MMcf/d of gas
and will be increasing production through three other wells over
the next three months, leading to rates of 40,000 b/d of oil and 35
MMcf/d of gas by October. Additional wells will be drilled and
brought on line through the remainder of 2000 and 2001, leading to
peak production rates of 50,000 b/d of oil and 70 MMcf/d of gas.
"Petronius is an important part of our growth plan for the
deepwater Gulf of Mexico, which is a focus area of our worldwide
upstream strategy," said Robert A. Solberg, president of Texaco
Worldwide Upstream Commercial Development. "Texaco worked with
Marathon and numerous contractors, most of which are
Louisiana-based, to move this $500 million project on a fast-track
construction schedule, positioning Petronius to play an important
role in helping us achieve our production growth targets."
Elizabethtown Gas Company, the New Jersey division of NUI Corp.,
filed a request with the New Jersey Board of Public Utilities for
an increase in its Gas Adjustment Clause (GAC) of $46.7 million, or
approximately an 18 percent overall increase in customers' bills.
The company said the increase "reflects the higher supply costs
that Elizabethtown Gas, like other natural gas utilities throughout
the nation, is experiencing." If the board approves the increase,
the company's GAC charge would rise from $12.36 per therm to $26.65
a therm. The average non-heating residential customer would pay
$3.57 more on a 25 therm gas bill. For a typical residential
heating customer, the average monthly bill would rise $14.29 for
100 therms. Elizabethtown Gas has requested the increase to take
effect on Oct. 1.
A Baltimore City circuit court granted a two-week stay of
Baltimore Gas and Electric's (BG&E) customer-choice plan for
electric customers in central Maryland. This is "a temporary
setback for 1.1 million [BG&E} customers," said Christian H.
Poindexter, chairman and CEO of Constellation Energy Group,
BG&E's parent. "While we are disappointed that an interim stay
has been put into effect for two weeks," he noted, "we are
encouraged that Judge [Albert J.] Matricciani did so in such a
limited fashion." The stay was sought by the Mid-Atlantic Power
Supply Association, a New Jersey-based group representing
out-of-state retail marketers. The association is challenging the
Maryland's Public Service Commissions November 1998 settlement
order that outlined how customer choice is to be implemented in
Maryland. The case was remanded to the Baltimore circuit court
after an appellate courtrescinded a prior stay last week.