NGI The Weekly Gas Market Report / NGI All News Access

Industry Briefs

Industry Briefs

Alliance Pipeline said it received notice from both the National Energy Board (NEB) and the Federal Energy Regulatory Commission (FERC) that its tariffs have been accepted as filed. Alliance currently expects that its in-service date will be Oct. 30. "On Oct. 9 we plan to begin operation of the electronic systems which implement the various business procedures outlined in the tariffs. At that time, Alliance will facilitate capacity release and assignment transactions for our shippers, with full nomination procedures being implemented on our in-service date," said Jack Crawford, vice president of public, government and regulatory affairs. Alliance is designed to deliver 1.325 Bcf/d of gas from the gas producing regions of northeastern British Columbia and northwestern Alberta to the Chicago, IL, area where it interconnects with the North American pipeline grid.

Five former energy trading executives from Avista Energy and Vitol Gas & Electric have formed Derigen Consulting to offer the energy trading industry "expert level consulting and software development Services." Heading up the firm is Jeffrey MacInnis, formerly the CIO for Avista Energy. Other founding members include Peter Siciliano, previously Avista's vice president/controller; Robert Jacobs, formerly he was the position manager for Avista and head gas trader for Vitol; Michael Mudge, former senior oracle DBA and project manager with Avista; and Suzanne Carroll, who used to be the director of contracts administration for Vitol Gas & Electric. "We formed Derigen in order to offer the energy trading industry management services that provide the same stable and trusted policies that we developed to navigate Vitol Gas & Electric," said Jacobs, vice president consulting services. To learn more about Derigen, visit its web site at www.derigen.com.

Austin, TX-based Southern Union Co. completed its mergers with Providence Energy Corp. and Fall River Gas Co. It completed its merger with Valley Resources Inc. on Sept. 20. The three mergers, which first became public a year ago, increase the company's New England division to nearly 300,000 customers. Providence Energy shareholders will receive $42.50 cash for each share of common stock they own, while Fall River Gas customers will receive the equivalent of $23.50 per common share in cash and/or Southern union common stock. Southern Union now serves nearly 1.6 million customers in Texas, Missouri, Pennsylvania, Rhode Island, Massachusetts, Florida and Mexico. Its natural gas operating divisions include Southern Union Gas, Missouri Gas energy, PG Energy, Atlantic Utilities and the New England division.

OGE Energy Corp. subsidiary Enogex Inc., announced plans to expand its Harrah Gas Processing Plant in eastern Oklahoma County, doubling the plant's capacity to 38 MMcf/d. The expansion at Harrah is expected to be complete and in service by January 2001. The idle Burns Flat processing plant, acquired by Enogex in 1999 through its acquisition of Transok LLC, will be moved from its present location in western Oklahoma to the existing Harrah plant site. The expansion will be accomplished in large part by the relocation of the plant. Plans also call for some associated pipeline expansion on the Enogex system to accommodate the additional volumes of natural gas. "We continue to find ways to maximize the value of the Transok acquisition," said Enogex President Roger A. Farrell. "Moving this idle Transok asset to a location on the Enogex system where volumes have grown significantly over the last 18 months is another example of that ongoing effort."

El Paso Merchant Energy and PSE&G announced the restructuring of a long-term power sales agreement between the utility and the Newark Bay generating project. The New Jersey Board of Public Utilities (BPU) has approved the agreement. The Newark Bay project is a 135 MW gas-fired cogeneration facility managed by El Paso and located in Newark. PSE&G is required by law to buy the plants power and has been under a long-term agreement at prices that are now often above market. Under the new agreement, El Paso will supply a fixed amount of electricity to PSE&G at reduced rates. PSE&G expects that the new agreement will save its customers $75 million over the remaining 13-year term of the agreement. El Paso Merchant Energy will be able to minimize the costs associated with servicing the agreement, and obtain greater flexibility in supplying energy to PSE&G under the contract, by potentially delivering power from alternative sources.

Nicor's recent environmental problems with old gas regulators in Illinois have put MichCon on edge about its own mercury clean-up efforts. The Michigan utility has voluntarily launched a program to ensure its mercury handling procedures are safe, effective and ensure public health. MichCon said no public health problems have occurred in Michigan, but recent events in Illinois have brought the issue public attention. Nicor earlier this week announced plans to inspect 248,000 homes for possible mercury contamination from mishandled gas regulators following a court order and monitoring by the EPA. Mercury once was used in gas regulators to help measure the pressure of gas flowing into a meter. Between 1936 and 1950, some of the regulators MichCon installed in customer homes contained mercury. "We believe the likelihood is extremely remote that any of our customers have been exposed to levels of mercury from our equipment that could cause health problems," said Fred Shell, vice president of public affairs. However, MichCon did have to clean up 35 homes in the 1990s in which an accidental release of mercury occurred.

TransCanada PipeLines said it is selling Cancarb Limited (Cancarb) and an associated power plant to Sid Richardson Carbon Co. for $160 million, including working capital. The sale is expected to close by the end of this year, pending necessary consents and approvals. Located in Medicine Hat, AB, Cancarb produces thermal carbon black, a specialty grade of carbon black used in industrial applications. The associated power plant is in the final stages of construction and is expected to have generating capacity of 45 MW.

Quicksilver Resources said it bought substantially all of the natural gas assets that make up Dominion Reserves-Indiana Inc.'s Corydon Project in Harrison County, IN, and Meade County, KY. The assets include 22 producing gas wells and corresponding gathering systems, 50% interest in more than 20,000 undeveloped leasehold acres and 80% of the GTG Pipeline, an eight-mile, 12-inch diameter gas transmission pipeline running from southern Indiana to northern Kentucky. Dominion owns a 95% interest in the producing properties with the remainder belonging to Mercury Exploration, the operator and an entity controlled by Quicksilver's primary shareholders. Quicksilver will take over the operations from Mercury and expects to close on the purchase of Mercury's interest during the next few weeks. The Corydon Project presently produces 2 MMcf/d from the New Albany Shale formation.

Global Industries Offshore LLC, a subsidiary of Global Industries Ltd., has installed seven miles of 14-inch diameter pipe for Unocal Corp. to support natural gas production from the Muni development in Ship Shoal block 295 offshore Louisiana. Global, headquartered in Carlyss, LA, also provided tie-in services, and completed the testing and commissioning of the pipeline in August. Global used the pipelay/derrick barge Iroquois to lay the pipe in 240-foot depths between the Ship Shoal 295 "A" platform and a subsea tie-in location at Eugene Island block 302.

BP said it has found the largest gas field to date offshore Trinidad and Tobago, which has become a major source of liquefied natural gas for the U.S. market. BP's initial well on the Red Mango field, located 35 miles east of Galeota Point, indicated 3 Tcf of gas reserves and about 90 million bbl of condensate. It's BP's second major gas find in the area this year. The company said it would shortly begin appraisal work to define the exact size of the find. BP also reiterated its strong drive to grow its North American gas position, as part of a three-year target - first outlined in July - to grow worldwide gas production by 8-10% per year. It plans to spend $1.5 billion/year to find and develop North American gas. Its overall exploration and production spending in the U.S. and Canada over the next three to four years is expected to total $3 billion a year.

Northern Border Partners, LP, announced it has completed its previously announced acquisition of gas gathering facilities in the Powder River and Wind River Basins in Wyoming for $200 million from Enron North America Corp. The purchase includes ownership positions in Bighorn Gas Gathering and Fort Union Gas Gathering in the Powder River Basin and Lost Creek Gathering in the Wind River Basin. In conjunction with the acquisition, NBP and ENA have agreed to provide complementary services in the Basins. NBP will own and operate physical assets and will provide gathering and transportation services. ENA will continue to provide gas purchase and sales, finance, risk management and producer outsourcing services. The partnership also declared an increase in cash distribution yesterday to $0.70 from $0.65 per unit. The indicated annual rate is now $2.80 per unit. The increase becomes effective with the third quarter distribution payable on Nov. 14. It is the partnership's fourth increase in the last three years. Northern Border Partners, LP owns a 70% general partner interest in Northern Border Pipeline Co., which owns a 1,214-mile interstate pipeline system that transports approximately 23 percent of all Canadian natural gas imports into the United States.

Nicor Gas reported that a total of 248,000 homes will be inspected for possible mercury contamination from mishandled gas regulators. The company announced plans last month to voluntarily inspect the homes and then came under state and federal regulatory investigation. It came under court order to inspect the homes earlier this month. To date, nearly 27,000 homes have been visited. Nicor's plan calls for an initial visit to all of the homes by mid-November. The company's field inspectors are conducting several thousand residential visits per day. As more people are trained and certified, the number of inspections will increase. Nicor Gas has contacted all 15,000 customers that potentially had old style mercury regulators removed between 1995 and 2000. This is the company's first phase of its work plan submitted to the Office of the Illinois Attorney General. Nicor Gas has sent letters to all customers in the second phase of its plan. This includes all residences that have had mercury regulators removed between 1990 and 1994. This is the primary focus of field visits beginning Sept. 25.

BP is funding a 10-year, $20 million research grant to study how to catalytically convert methane, sharing the grant equally between the California Institute of Technology and the University of California, Berkeley. The grants from BP will study how to convert the large reserves of natural gas found in methane into useful products. The funding will support faculty, research staff, graduate students and fellows at the two universities, and information will also be shared. UC Berkeley will focus on heterogeneous catalytic approaches for producing liquid fuels and chemicals. The Caltech team will develop homogeneous catalytic approaches. BP set up a similar program at England's Cambridge University. Sir John Browne, group chief executive of BP, said that the "next breakthrough" in natural gas to liquids research "will come from catalysis combined with process engineering," toward the next generation of cleaner burning fuels.

FERC issued a favorable environmental assessment on Central New York Oil & Gas Co.'s (CNYOG) Stagecoach Natural Gas Storage Facility, which is to be located near Binghamton, NY. CNYOG, an affiliate of eCORP LLC, filed its application for the project last November. It is proposing to construct a storage facility with up to 13.6 Bcf of working capacity, 250 MMcf/d of injection capacity and 500 MMcf/d of deliverability. Tennessee Gas Pipeline filed with FERC in January to expand its 300-Line to connect with Stagecoach. The $86.5 million pipeline expansion is expected to be approved in December and in place when the storage field begins operation Aug. 1, 2001. The 30-inch lateral would have a capacity of 500,000 Dth/d, and expansion capabilities of up to 1 Bcf/d. "We believe these projects, taken together, represent one of the best available options to significantly enhance and reinforce natural gas delivery infrastructure in the northeastern United States, an area of the country very much in need of relief in terms of such energy resources," said eCORP CEO John F. Thrash.

Atlanta-based Southern Co. upped its service agreements with General Electric Co. to more than $1 billion last week after signing a multi-year service agreement with its GE Power Systems unit for $575 million for its new combined-cycle power plants. The contracts, which are staggered for commercial projects scheduled between 2001 and 2004, will cover the facilities being built by Southern affiliates in the southeastern part of the United States. So far, two GE combined-cycle systems have been officially announced: the Wansley Power Station in Roopville, GA and the Goat Rock Power Station in Smith, AL. Several other plants also will be built, according to Southern. The GE service agreements support the company's 7FA gas turbine-generators, GE D11 steam turbines, Mark V Speedtronic control systems and other auxiliary equipment. Orders or commitments to supply the equipment were obtained by GE in the past year. Between 1998 and 1999, GE and Southern put together several other service agreements valued at $450 million for five new power plants. The contracts, said officials, are based on the concept of shared goals for the two companies, with both equally committed to the "continuous improvement of plant performance over the life of the contracts."

Atlanta-based power marketer Southern Energy Inc. raised the estimated price range of its initial public offering last week, and expects net proceeds from the deal to reach $1.05 billion - 19% more than the previously expected $884 million in net proceeds. Its price rose nearly $3, to $18 to $20 per share from $15 to $17 per share. The Southern Co. spinoff, with target markets in North America, Europe and the Asia-Pacific region, has received approval for a New York Stock Exchange listing under the symbol "SOE." It will still offer 58 million common shares in the $15 to $17 per share range, as well as offer six million convertible trust preferred securities that could net $290 million more, according to an amended prospectus filed with the U.S. Securities and Exchange Commission. When the IPO is completed, the company would have 330 million common shares of stock outstanding, with 272 million held by Southern Co. With a median price of $19 a share, Southern Energy would have an initial market capitalization of $6.27 billion. Southern Co. plans to spin off the marketer within a year following the IPO by distributing the remaining shares of common stock to Southern Co.'s common stock shareholders. A portion of the money raised will be used to repay nearly $839 million in short-term debt, and the remainder will be used for general corporate purposes. Goldman Sachs and Morgan Stanley Dean Witter are the lead managers. Banc of America Securities, Credit Suisse First Boston, J.P. Morgan, Lehman Brothers and Salomon Smith Barney are assisting. They have an option to buy 8.7 million additional shares if the 58 million shares first offered are oversubscribed.

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus