Rep. Steve Largent (R-OK) circulated for comment last week a discussion draft of new comprehensive legislation that calls for states to enact retail choice for electricity customers by no later than Jan. 1, 2001. It would give the Federal Energy Regulatory Commission the authority to preempt states that fail to comply with customer choice within one year after the date of enactment of the restructuring legislation. It also would require retail reciprocity between states, and would grandfather any state customer-choice program adopted prior to Jan. 1, 2001. The bill would provide for repeal of the Public Utility Holding Company Act of 1935 18 months after enactment, and prospective repeal of the Public Utility Regulatory Policies Act of 1978. This latest piece of customer-choice legislation was submitted early last week to House energy leaders. "We're trying to shop it around to the different offices to get input," said Terry Allen, Largent's chief of staff. He was unable to say when the bill would be introduced.
New York State Electric & Gas (NYSEG) will conduct a nonbinding open season for firm storage from a proposed expansion of its Seneca Lake storage facility near Watkins Glen, NY. The open season will begin May 1 and continue through May 22. The proposed expansion would add 3.6 MMDth of storage capacity to the only high deliverability facility in the Northeast, bringing its total capacity to 4.65 MMDth. The facility's deliverability would increase to 465,000 Dth/d. The Seneca Lake storage facility has provided interstate and intrastate firm storage service since 1996 and is connected to the CNG Transmission system near Elmira, NY. For details contact Anthony J. Ricca at 607-762-4490.
KN Energy is holding an open season for expansion of its system from production fields in Wyoming to the Rockport Hub in north central Colorado. The open season to obtain new or additional firm capacity begins today and continues through May 8. The pipeline is prepared to move additional supplies from the Wind River, Powder River and Big Horn basins in Wyoming to Rockport, located just south of Cheyenne, WY, in Weld County, CO. At Rockport, shippers would have access to multiple companies and pipelines, including KN Wattenberg Transmission's proposed Front Runner Pipeline project, the KN Interstate Rockport Pipeline and the Trailblazer Pipeline. If the project is a go, shippers will be notified by May 27 of awarded capacity. Precedent agreements, once completed, will be returned to successful bidders by June 19. If approved, KN intends to have the project completed in October 1999.
PaineWebber's gas research group raised its spot wellhead price forecast for 1998 to $2.35/MMBtu from $2.15 and bumped up the average for 1999 to $2.40 from $2.35. PaineWebber said the current "street estimates" for both years average $2.15, but will have to rise because of the convincing evidence that the gas market is going to be stronger than most observers expect this year.
The evidence includes a tight balance between supply and demand, an expected warmer than normal summer, numerous nuclear outages, increased demand for power generation in Texas because of coal delivery problems, near normal hydroelectric conditions in contrast to the previous 150% above normal conditions last summer, a solid storage refill season, increased possibility of hurricanes because of an El Nino winter and more normal temperatures next winter.
The Minerals Management Service published in the Federal Register April 8 a proposed regulation that would require gas and oil companies to submit royalty payments and production reports electronically. Currently about 80% of royalty data and 60% of production data is submitted electronically, but MMS said it wants 100% participation because of the significant benefits. "Electronic reporting provides more timely and accurate data at significantly less cost than paper reports," said MMS Director Cynthia Quarterman. MMS said it reduces error correction costs 20%, manual data entry costs 60% and file maintenance cost by 24%. Companies reporting electronically have reported 50% savings. Electronic filing can be done on the day the reports are due. As a result, MMS is proposing to extend by 10 days the deadline for production reports. MMS proposes to have a final rule take effect Dec. 31, 1998. Public comments will be accepted until June 8.
Midland Resources' board approved a plan to combine with privately held Vista Resources Partners, an oil and gas exploration and production company in Midland, TX, with operations throughout the Permian Basin. The transaction, which will be structured as a tax-free exchange for both parties, will form a new company to be named Vista Resources Inc. Midland's security holders will own 27.5% of the combined entity, and Vista's owners will own the remainder. The company will be headquartered in Midland, and Vista's current management team will run the new company. It is anticipated that the transaction will be subject to, among other conditions, the approval of Midland stockholders and Vista limited partners and the delivery of a fairness opinion. The deal is expected to close during the third quarter.
Pioneer Natural Resources, the company resulting from the merger of Mesa and Parker & Parsley last year, announced that effective May 15 Chairman Jon Brumley will be retiring from his day-to-day duties and will become an outside director. He will continue to serve as Chairman of the Board and as a member of the Board's Executive Committee.
KN Interstate has requested FERC authorization to acquire the Ivanhoe Compressor Station and related pipeline facilities in Hempshill and Limscomb counties, Texas, and Beaver and Roger Mills counties, Oklahoma, from Transwestern Pipeline. The facilities, which are valued at $9.6 million, include two compressor units capable of providing 2,100 hp of compression, 118 miles of 12 and 16-inch diameter pipeline and several delivery point facilities. KNI said the facilities will receive and deliver 65 MMcf/d of Anadarko Basin gas.
NorAm Energy Services Inc. (NES) opened a regional marketing office in Denver. "The opening of our Denver marketing office demonstrates NES' commitment to grow our gas marketing presence in the western U.S.," said Dan G. Tipton, newly named vice president of Energy Origination for NES.
"Our expansion into Denver will enhance our abilities to provide a comprehensive portfolio of energy commodity services to western U.S. markets." NES operates as a strategic business unit of Houston Industries Incorporated (HI) and provides energy services, including gas, power and financial trading through its pipeline, gathering, trading and marketing affiliates. Its interstate pipeline and gathering affiliates move more than 3 Bcf/day of gas, providing a link between central and southern U.S. supply basins and northeast markets. Immediately prior to joining NES, Tipton was managing director of fuel and IPP development for Duke Energy Power Services in Houston. Prior to Duke, Tipton served as vice president of fuels management for U.S. Generating Co. in Bethesda, MD, the national independent power subsidiary of PG&E Corp. He has also held various managerial positions since 1981 with Tennessee Gas Pipeline, Entex and Pacific Gas Transmission. Jack Haake, who will report to Tipton, will head the Denver office. Haake, formerly director of NES' regional marketing office in Boulder, CO, will be responsible for expanding supply opportunities and enhancing market development in the Western Region.
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