Industry Briefs

PG&E Gas Transmission, Northwest announced plans to construct a gas pipeline lateral across Washington state that would bring gas to new power plants and LDC load from GTN's mainline. The project, called the Washington Lateral (WL), would begin at GTN's mainline in eastern Washington, bear west toward central Washington and terminate at or near Northwest Pipeline's mainline system in western Washington's Interstate-5 corridor. The WL is intended to serve developing electric generation projects and local gas distribution needs along and at the terminus of the route, PG&E said. The WL also may have the capability to deliver gas to NPC's Spokane and Wenatchee Laterals as well as to its mainline south of Seattle. For more information contact GTN's Dave Van Driel, Randy Hunter, Dave Sloan or Jim Schoene.

ISO New England Inc., the Maine Public Utilities Commission and Massachusetts Attorney General Tom Reilly recently disclosed that they have commissioned a study to determine the competitiveness of the New England wholesale power market. The intent of the study will be to determine the existence and extent, if any, of market power within the region's wholesale energy market. The study will calculate hourly estimates of the difference between wholesale market prices and system-wide marginal costs over a certain period. The study will be performed by Dr. James Bushnell, a lecturer at the Haas School of Business at the University of California at Berkeley and a co-director of the California Energy Institute. Bushnell was a member of the California Power Exchange's Market Monitoring Committee and a co-author of a similar study on the California wholesale power market that was released in August 2000. Under his contract with the Massachusetts attorney general, Bushnell is to provide a preliminary report within three months of receiving the necessary data and a final report two months later.

TransCanada PipeLines Limited and PetroCanada announced an agreement to build the MacKay River Cogeneration Project, a 165 MW natural gas-fired cogeneration power plant near Fort McMurray, Alberta. The facility will be developed and owned by TransCanada. The company said it will provide electric power and steam to Petro-Canada's MacKay River in-situ oil sands project, located 45 kilometres northwest of Fort McMurray. The power plant will be operated as part of the MacKay River development. Ten MW of power will be provided to the MacKay River site and an additional 60 MW will be sold under long-term contracts. Surplus power of approximately 95 MW is expected to be supplied to the Power Pool of Alberta. "Power is one of our two core businesses and Alberta is one of our core markets," said Hal Kvisle, TransCanada's CEO. "The MacKay River plant marks a milestone for our power business in the province. It will be our largest power plant in Alberta so far and will increase the total amount of power managed or controlled by TransCanada in the province to nearly 1000 megawatts. An equal amount of power can meet the needs of approximately one million average households. TransCanada said the capital cost of the MacKay River power plant is estimated at $135 million. Construction of the facility is anticipated to begin this fall, pending regulatory approvals. It is expected the plant will be in service no later than 2004, with the possibility of an earlier in-service date.

Tennessee-based independent producer Energy Search Inc. announced it has agreed to be bought by EOG Resources for $8.22 per share or about $37.6 million, a premium of $1.40/share (21%) over the average closing price of Energy Search common stock during the previous 20 trading days. The merger is expected to be completed in the early part of the third quarter of 2001. The Tennessee-based independent producer holds 75 Bcfe of reserves and produces about 7 MMcf/d of Appalachian natural gas. Its proven reserves increased 17.9% in 2000 compared to 1999.

Neptune Regional Transmission System LLC filed with FERC for tariff approval to provide electric transmission services over a new marine network linking the northeast and mid-Atlantic United States with Atlantic Canada. When completed, the 4,800 MW marine network would have three 1,200 MW transmission lines from New Brunswick, Nova Scotia and Maine connected to markets further south in Boston, the Connecticut Shore and New York City. Another segment most likely to be constructed first is planned to link New Jersey with New York City and Long Island, possibly as early as 2003. The FERC filing is just one step in establishing the feasibility of the system, noted Charles Hewett, CEO of Atlantic Energy Partners LLC, which is managing Neptune Regional Transmission System. The first Canadian link for the network is scheduled for late 2004 with a transmission line connecting New Brunswick with New York, which would be New York's first direct interconnection with Atlantic Canada. Neptune Regional Transmission System is working jointly with NB Power of New Brunswick to pursue the development. Other links are contemplated for 2005 and 2006 that would connect Nova Scotia and Maine with the Boston area and Connecticut and, through the original New Brunswick link, to New York. Along with the FERC tariff, the project also requires review by U.S. and Canadian agencies with respect to various technical, environmental and international aspects of the project. The entire project comprising the various Canadian and U.S. segments making up the Neptune system represents a potential investment of U.S. $2-3 billion.

A multi-year alliance will give Constellation Power Source the right to manage the Texas power resource needs for TNP Enterprises Inc.'s Texas-New Mexico Power Co. (TNMP) and First Choice Power. The Constellation Energy Group unit will manage about 1,100 MW under an agreement made through a competitive selection process begun by TNP last October. No financial details were disclosed. First Choice Power is TNMP's competitive affiliate that will begin serving customers in Texas' electric market when it opens to competition in January 2002. The company also will serve customers during the pilot program that kicks off in July. Under the alliance agreement, Constellation will serve as TNMP's Qualified Scheduling Entity, manage all of TNMP's generation assets, including TNP One and existing supply contracts for Texas, and provide energy requirements for TNMP's existing ERCOT load. Along with serving TNMP's existing load, Constellation also will serve as a pricing desk to provide flexible pricing structures to support First Choice Power's retail expansion.

EnronOnline completed its one-millionth transaction, surpassing any of the other online exchanges with its commodity trading. It began transacting natural gas and electricity in November 1999 and since then has extended its platform to about 1,500 wholesale commodity products ranging from energy-related commodities to bandwidth, metals, forest products, plastics, petrochemicals and weather and credit derivatives. About 60% of all Enron transactions now are conducted online, and the cost of processing the transactions has been reduced by 75%, said the company. To date, the notional value of all transactions on the exchange exceeds $590 billion.

Global Marine Inc.'s worldwide Summary of Current Offshore Rig Economics (SCORE) was up 7.2% in April, the 20th consecutive month-to-month increase --- an indication that dayrates will go up as international drilling attempts to move equipment out of the Gulf of Mexico. SCORE compares the profits of current mobile offshore drilling rig rates with those of the 1980-81 peak, a time of speculative rig construction. Basically, the Houston-based offshore drilling contractor's SCORE shows the current rig dayrates as a percentage of what would be required to justify building new rigs on speculation. The worldwide SCORE for April was 50.3, which is 82.9% higher than a year ago, but down 4.2% from five years ago. In the Gulf of Mexico, the SCORE for April was 53.9, up 3.5% from March and 71% from April 2000. Gulf of Mexico drilling is also up 23.7% from five years ago. Areas expected to compete for Gulf rigs include the North Sea, where the April SCORE was 44.4, up 17.9% from March and 122.1% from April 2000. Also competing will be offshore West Africa, where the SCORE was 53.7, up 4.9% from March and 53% from a year ago. It also is up 6% from five years ago. Southeast Asia's SCORE was 48.1, up 14.7% from March and 69.2% from April 2000. Global Marine also reports that the April SCORE for jack-up rigs was 62.7, up 7% from March and 102% from April 2000. The number is down 5.2% from five years ago. Semi-submersible rigs' rating was 36.4, up 6.4% for March and 52.5% from a year ago. It is down 28.8% from five years ago.

In an offer expected to be quickly picked up by one of the many natural gas-thirsty majors or independents, Tulsa-based Kaiser-Francis Oil Co. put nearly one-third of its Canadian production up for sale. The gas fields in northeastern British Columbia hold an estimated 55 Bcf, worth about C$202.5 million ($131 million). The fields' 2001 net income is expected to be C$45.3 million. Kaiser-Francis opened the books on the selected properties to bidders on Wednesday and will take offers for the Canadian fields until June 19, according to the company. Most of the company's Alberta fields will remain with the company because they are less expensive to develop and operate. Its Houston-based oil exploration company, PetroCorp Inc., also will not be sold. Oklahoma billionaire George B. Kaiser, who owns Kaiser-Frasier, was named one of Forbes Magazine's 400 wealthiest Americans in 2000, with a net worth of $1.7 billion. He also owns about 71% of BOK Financial Corp., the largest bank in Oklahoma.

St. Louis-based Laclede Gas Co. has filed a request with the Missouri Public Service Commission to increase a portion of its general rate structure to allow it to recover increased distribution costs for its 633,000 customers in Eastern Missouri. Laclede noted that the proposal would not affect customers' wholesale gas costs, local gross receipt tax rates or interstate pipeline and storage costs. If approved, the higher rates would most likely not affect customers until the winter of 2002-2003, Laclede estimated, because the PSC "usually suspends the implementation of generate rate increases until the utility's filing has been thoroughly audited and reviewed." Laclede customers were last hit with a general rate increase in December 1999. Under Laclede's filing, the increase applies only to the distribution cost portion of a customer's total bill, which it said was "typically" about one-fifth of the total in the winter heating months. Company officials said the increase was necessary to cover its costs of operating and maintaining its 15,000-mile gas distribution and storage system, and includes the state and federal taxes Laclede pays. Customers' bills would on average rise about $4.90 a month, said Laclede, and would apply throughout the company's system, which includes operating divisions known as St. Charles Gas, Midwest Missouri Gas and Missouri Natural Gas. The PSC recently approved Laclede's hedging program, which is designed to offset wholesale prices for customers. The commission is still considering the company's request for a gas supply incentive program and a weather mitigation proposal. Hearings on the newest proposal have so far not been scheduled.

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