Industry Briefs

The State of Alaska has hired Petrie Parkman & Co. of Denver to act as a financial adviser to evaluate the state's potential participation in owning an interest in or financing a North Slope natural gas pipeline project. Alaska Gov. Tony Knowles has proposed federal legislation that would mandate a natural gas pipeline along the Alaska Highway, and called for federal tax incentives to enable companies to bring North Slope gas to market. Petrie Parkman will assist the Alaska commissioner of revenue in preparing a comprehensive report addressing options for and analysis of the state's potential participation in a gas pipe project. The assistance was provided under the authority of Alaska's Senate Bill 158. The report, when completed, would be presented to the governor and the state legislature and would include an examination of each of the announced North Slope pipe proposals. The report also would analyze whether and how the state could take an equity ownership or other financial interest in the project.

Western Gas Resources Inc. said that its coalbed methane (CBM) gas production from the All Night Creek pilot project in the Big George area of the Powder River Basin began flowing into a sales line on Aug. 21. Fifty-three wells already have been drilled and connected, with 39 producing gas. Production volumes have increased steadily since hookup and are currently producing at least 2.5 MMcf/d. Two of the wells already are producing 250 Mcf/d and 230 Mcf/d, well ahead of forecasts, said the company. An additional 45 wells are scheduled to be drilled in All Night Creek by Western and its partner by next June, and 121 more wells are in the review process by the Bureau of Land Management under its federal drainage environmental assessment. Western is providing all gathering and compression services to the pilot area. While not disclosing its partner, Western and Barrett Resources are 50-50 partners on several projects in the region and are the largest Powder River CBM operators. Barrett was purchased by Williams Cos. earlier this year. Last January, Western and Barrett announced that their gross production hit their year-end target of 200 MMcf/d in mid-December 2000, then exceeded that goal by producing 206 MMcf/d in the last two weeks of the year. The Denver-based producers hold approximately 531,000 net acres under lease in the basin, and the companies drilled about 950 gross wells in 2000. Another 800 gross wells already have approval from the Wyoming Department of Environmental Quality for production through this year. Eight other Big George pilot drilling areas also are under development by Western and its partner, and are in various stages of testing, drilling or de-watering. All together, 203 Big George wells have been drilled, with another 24 planned through the rest of 2001.

Dynegy Inc. has expanded its e-commerce site, Dynegydirect.com, into the United Kingdom energy market, reflecting the "increasing demand for Dynegy's products in Europe as well as the successful launch...in North America last year," said Gary Cardone, president of Dynegy Europe Ltd. UK customers will have self-service access to Dynegy's bid and offer prices for UK power in the English and Welsh electricity markets and UK natural gas at the National Balancing Point. It also will enable additional markets, products and services from Dynegy's business segments to be continuously added to the portal's portfolio. For example, when Dynegy closes on its acquisition of BP Storage Ltd. later this month, it will add gas storage services to Dynegydirect's product offering in the UK. Since launching Dynegydirect in North America in 2000, Houston-based Dynegy has recorded almost $30 billion in notional transactions, with approximately 40% by new customers, said Blake Young, president of Dynegy Global Technology. Through Dynegy Europe, Dynegy has participated in UK energy markets since 1994. In 1999, Dynegy entered the UK and Nord Pool electricity markets.

Mexico's national oil company, Petroleos Mexicanos SA (Pemex), next year plans to offer more multiple service contracts, similar to one it did this year with a U.S. and Canadian company, to encourage more exploration and production in the country, Pemex Director General Raul Munoz Leos told analysts in New York City on Thursday. Munoz said that even though the Mexican constitution limits foreign investment in the country's energy industry, he is confident that contracts could be written to improve investments by service companies and integrated energy companies. In his plan, Munoz said he would like to see foreign investment grow to $2 billion a year to build up the country's crude oil production as part of a long-range plan by Pemex to invest about $33 billion over the next five years in its energy businesses. Before the middle of the decade, Munoz said he wants to double Mexico's crude oil production to 4 million bbl/d and at least double its natural gas production. By 2008, the country is expected to be about 2 Bcf short of demand.

PanCanadian Petroleum said its Musquodoboit E-23 exploration well, in a carbonate reef play about 155 miles southeast of Halifax, Nova Scotia, was a dry hole, and the company is moving its operation to a different location offshore Nova Scotia. It holds a 74% interest in the well and was the operator. Murphy Oil holds the remaining 26% in the well. The company said its rig, the Rowan Gorilla V, which started drilling the Musquodoboit well (EL2360) on June 30, will be moved to the Southampton A-25 exploration well about 93 miles off the eastern shore of Nova Scotia. In addition to Southampton, PanCanadian will drill another two exploration wells offshore Nova Scotia this year. In November, the company will drill an exploration well just south of the Panuke Production License to test a different play style associated with the Jurassic carbonate bank margin. PanCanadian will also drill a deepwater well with partners on the Annapolis license, which is operated by Marathon. The drilling locations are testing four geological plays in close proximity to PanCanadian's Deep Panuke Field, which is expected to begin production at up to 400 MMcf/d in 2005.

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