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Dynegy Winning Bidder in MMS Gas Pilot

Dynegy Winning Bidder in MMS Gas Pilot

Houston-based Dynegy Marketing and Trade has beat out some of the top natural gas producers in the nation in the latest round of bidding for Minerals Management Service's royalty-in kind gas produced from federal leases in the Gulf of Mexico.

As a result, Dynegy Marketing has won the right to take custody of about 180 MMcf/d of royalty gas produced from properties connected to Stingray Pipeline, the High Island Offshore System, the U-T Offshore System, Pelican Gas Gathering System, ANR Pipeline and Transcontinental Pipe Line's North High Island system during the period between Nov. 1, 2000-March 31, 2001.

Under the agreement with MMS, Dynegy will take possession of the royalty gas at federal offshore leases in the Gulf, and will re-deliver a "very large portion" of gas as payment to the agency at two onshore delivery points - ANR and Natural Gas Pipeline Co. of America (NGPL) Louisiana pools. "I'm not at liberty to say exactly how much" of the gas will be returned to MMS as payment, said Gregory Smith, manager of the Interior Department agency's RIK operations.

MMS then will sell part of the delivered gas to the federal General Services Administration to supply the energy needs of federal facilities. The remainder will be sold in the spot market in either monthly or term transactions, he noted. In fact, Smith said MMS will post a monthly sale during the October bid week, and possibly a five-month term sale for delivery to the ANR and NGPL pools.

Currently, Smith estimated that MMS has 20 to 30 pre-qualified buyers for its RIK natural gas. Most of them tend to be gas marketers, he said, but the agency is seeing more and more interest from end-users, especially utilities.

Susan Parker

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