Industry Briefs

Detroit-based MichCon said its customers will continue to receive a fixed price of $2.95/Mcf through the end of the year, after it withdrew its requests before the Michigan Public Service Commission to eliminate the fixed price and implement a permanent customer choice program. MichCon had wanted to begin the choice program April 1, but said it would continue the current program instead. It will file an application this summer with MPSC to set a gas cost recovery factor, based on market-price forecasts, which would go into effect with customers' Jan. 2002 bills. The gas distributor, a subsidiary of MCN Energy Group Inc., serves 1.2 million Michigan families and businesses.

Anadarko Petroleum Corp. has completed its acquisition of Calgary-based Berkley Petroleum Corp. after purchasing 100% of the company's shares for C$1.2 billion. Anadarko, based in Houston, paid about C$11.40 per share and assumed about C$400 million of Berkley's debt in the deal. The acquisition was made by Anadarko Canada Acquisition Corp., an indirect subsidiary of Anadarko. Berkley's business unit will be combined with Anadarko's and will continue as Anadarko Canada Energy Ltd. Anadarko played white knight to Berkley in early February, announcing it had signed an agreement to purchase the company and thus prevent a hostile takeover by Dallas-based Hunt Oil Co. (see NGI, Feb. 19). Anadarko's bid exceeded Hunt's by about 10%, and was unanimously approved by the Canadian company's board.

Calpine said it acquired the development rights from Enron North America for the 750 MW gas-fired Pastoria Energy Center planned for Kern County, CA. The $500 million project was licensed by the California Energy Commission in December 2000 and construction is expected to begin this summer. Energy deliveries are scheduled to begin by summer 2003 in time to help meet Southern California's growing peak summer power demand. "This project significantly advances Calpine's $4 billion energy initiative to bring 8,000 MW of new generating capacity to the California market in the next four years," said Calpine's Vice President --- Business Development John King. Pastoria will be built about 30 miles south of Bakersfield on property leased from the Tejon Ranch Corp. The facility will feature three General Electric Frame 7FA gas combustion turbines in combined-cycle with two steam turbines, representing 750 MW of capacity.

Kinder Morgan Energy Partners LP (KMP), owner and operator of one of the largest product pipeline systems in the country, reported on Thursday that it expects to substantially exceed the consensus first quarter earnings per unit estimate of $0.71 and year 2001 earnings per unit estimate of $2.98. The company also said it expects to increase the cash distribution per common unit for the first quarter from $0.95 to $1.00. "We are experiencing a very strong first quarter due to increased throughput on our pipelines and the initial success of the recently acquired GATX pipeline and terminal assets," said CEO Richard D. Kinder. "We expect to make another distribution increase later this year even without additional acquisitions, and our $4.10 guidance assumes only a modest amount of contribution from additional acquisitions. We remain committed to increasing the cash distribution as soon as our performance allows." Kinder Morgan Inc., the general partner of KMP, also reported on Thursday that it expects to meet or beat the consensus full year 2001 estimate for recurring earnings per share of $1.78. The estimate represents almost a 40% increase over year 2000 recurring earnings per share of $1.28. The company said it expects approximately 25% of these earnings will come in the first quarter, right in line with current consensus estimates of $0.45.

Sithe Energies revealed that landowner opposition has forced the company to downsize its proposed power plant in Ramapo, NY. The alternative currently under review is a smaller peaking facility that would use no water for generation and operate only during times of peak electricity use and emergencies to help ensure reliability of the region's electricity supply. The plant originally was to be an 827 MW combined cycle facility fueled by natural gas. The alternative is a 510 MW peaking unit also powered by gas. "Sithe has a strong history of working closely with local communities and inviting their input to ensure their major issues are addressed," said Jim McGowan, Sithe senior vice president for development. "Since our initial proposal more than a year ago, we've met many times with local officials, community organizations and residents. We've listened carefully to their concerns and are addressing them by considering a facility that is clean, less visible, and uses no water for generation." He said the company continues to believe the site is a good location. Company representatives will be meeting with local and regional officials and community organizations to discuss the alternative facility over the next several weeks. "Countless studies, including one released just last week by the New York Independent System Operator, have shown that New York State needs new power generating facilities to meet increased consumer demand for clean electricity, particularly downstate," McGowan said. "This region cannot afford to fall behind in meeting its energy requirements --- a mistake for which California is now paying a tremendous price. The strategic location of the existing Ramapo substation is ideal and will enable Sithe's facility to provide an adequate supply of clean electricity to consumers when they need it most."

A unit of Williams has sold an interest in a central Utah natural gas property to Texaco Exploration and Production Inc. for approximately $8 million. The non-operated interest includes 32 producing wells and more than 30,000 net acres in the Ferron coalbed methane play in Emery and Sevier counties. Williams said that Texaco is already the operator on most of the properties included in the transaction. "We're designing our reserve base around Williams' infrastructure and merchant activities," said Bryan Guderian, vice president of exploration and production for Williams. "This allows us to support other parts of Williams' energy business, such as gathering and processing and trading. The Ferron assets simply fell outside our plan."

TECO Power Services (TPS), a subsidiary of TECO Energy, reported Tuesday it has completed the acquisition of American Electric Power's (AEP) Frontera Power Station near McAllen, TX for $265 million. The plant - located about two miles from the Mexican border - is capable of selling power into ERCOT as well as the Mexican power grid. The deal was originally announced last month. The 500 MW natural gas-fired facility began simple-cycle operation in July 1999 and combined-cycle operation in May 2000. AEP was required to divest the facility by the Federal Energy Regulatory Commission as part of the company's merger with Central and Southwest Corp. TPS President Rick Ludwig said the acquisition provides TPS with an "unrivaled opportunity to serve both the continental United States and Mexico from one facility, and we're actively pursuing contracts in both markets. In fact, this opportunity appears to have the potential to benefit from the proposed North American energy system integration that (Mexican) President (Vicente) Fox and President Bush announced during their joint meeting on Feb. 16." TPS plans to finance the acquisition through a combination of non-recourse debt and equity. It is expected to be immediately accretive to TECO Energy's earnings.

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