Rep. Steve Largent (R-OK) circulated for comment last week adiscussion draft of new comprehensive legislation that calls forstates to enact retail choice for electricity customers by no laterthan Jan. 1, 2001. It would give the Federal Energy RegulatoryCommission the authority to preempt states that fail to comply withcustomer choice within one year after the date of enactment of therestructuring legislation. It also would require retail reciprocitybetween states, and would grandfather any state customer-choiceprogram adopted prior to Jan. 1, 2001. The bill would provide forrepeal of the Public Utility Holding Company Act of 1935 18 monthsafter enactment, and prospective repeal of the Public UtilityRegulatory Policies Act of 1978. This latest piece ofcustomer-choice legislation was submitted early last week to Houseenergy leaders. “We’re trying to shop it around to the differentoffices 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 &amp Gas (NYSEG) will conduct anonbinding open season for firm storage from a proposed expansionof its Seneca Lake storage facility near Watkins Glen, NY. The openseason will begin May 1 and continue through May 22. The proposedexpansion would add 3.6 MMDth of storage capacity to the only highdeliverability facility in the Northeast, bringing its totalcapacity to 4.65 MMDth. The facility’s deliverability wouldincrease to 465,000 Dth/d. The Seneca Lake storage facility hasprovided interstate and intrastate firm storage service since 1996and 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 systemfrom production fields in Wyoming to the Rockport Hub in northcentral Colorado. The open season to obtain new or additional firmcapacity begins today and continues through May 8. The pipeline isprepared to move additional supplies from the Wind River, PowderRiver and Big Horn basins in Wyoming to Rockport, located justsouth of Cheyenne, WY, in Weld County, CO. At Rockport, shipperswould have access to multiple companies and pipelines, including KNWattenberg 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 ofawarded capacity. Precedent agreements, once completed, will bereturned to successful bidders by June 19. If approved, KN intendsto have the project completed in October 1999.

PaineWebber’s gas research group raised its spot wellhead priceforecast for 1998 to $2.35/MMBtu from $2.15 and bumped up theaverage for 1999 to $2.40 from $2.35. PaineWebber said the current”street estimates” for both years average $2.15, but will have torise because of the convincing evidence that the gas market isgoing 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 coaldelivery problems, near normal hydroelectric conditions in contrastto the previous 150% above normal conditions last summer, a solidstorage refill season, increased possibility of hurricanes becauseof an El Nino winter and more normal temperatures next winter.

The Minerals Management Service published in the FederalRegister April 8 a proposed regulation that would require gas andoil companies to submit royalty payments and production reportselectronically. Currently about 80% of royalty data and 60% ofproduction data is submitted electronically, but MMS said it wants100% participation because of the significant benefits. “Electronicreporting provides more timely and accurate data at significantlyless cost than paper reports,” said MMS Director CynthiaQuarterman. MMS said it reduces error correction costs 20%, manualdata entry costs 60% and file maintenance cost by 24%. Companiesreporting electronically have reported 50% savings. Electronicfiling can be done on the day the reports are due. As a result, MMSis proposing to extend by 10 days the deadline for productionreports. 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 withprivately held Vista Resources Partners, an oil and gas explorationand production company in Midland, TX, with operations throughoutthe Permian Basin. The transaction, which will be structured as atax-free exchange for both parties, will form a new company to benamed Vista Resources Inc. Midland’s security holders will own27.5% of the combined entity, and Vista’s owners will own theremainder. The company will be headquartered in Midland, andVista’s current management team will run the new company. It isanticipated that the transaction will be subject to, among otherconditions, the approval of Midland stockholders and Vista limitedpartners and the delivery of a fairness opinion. The deal isexpected to close during the third quarter.

Pioneer Natural Resources, the company resulting from the mergerof Mesa and Parker &amp Parsley last year, announced that effectiveMay 15 Chairman Jon Brumley will be retiring from his day-to-dayduties and will become an outside director. He will continue toserve as Chairman of the Board and as a member of the Board’sExecutive Committee.

KN Interstate has requested FERC authorization to acquire theIvanhoe Compressor Station and related pipeline facilities inHempshill and Limscomb counties, Texas, and Beaver and Roger Millscounties, Oklahoma, from Transwestern Pipeline. The facilities,which are valued at $9.6 million, include two compressor unitscapable of providing 2,100 hp of compression, 118 miles of 12 and16-inch diameter pipeline and several delivery point facilities. KNI said the facilities will receive and deliver 65 MMcf/d ofAnadarko Basin gas.

NorAm Energy Services Inc. (NES) opened a regional marketingoffice in Denver. “The opening of our Denver marketing officedemonstrates NES’ commitment to grow our gas marketing presence inthe western U.S.,” said Dan G. Tipton, newly named vice presidentof Energy Origination for NES.

“Our expansion into Denver will enhance our abilities to providea comprehensive portfolio of energy commodity services to westernU.S. markets.” NES operates as a strategic business unit of HoustonIndustries Incorporated (HI) and provides energy services,including gas, power and financial trading through its pipeline,gathering, trading and marketing affiliates. Its interstatepipeline and gathering affiliates move more than 3 Bcf/day of gas,providing a link between central and southern U.S. supply basinsand northeast markets. Immediately prior to joining NES, Tipton wasmanaging director of fuel and IPP development for Duke Energy PowerServices in Houston. Prior to Duke, Tipton served as vice presidentof fuels management for U.S. Generating Co. in Bethesda, MD, thenational independent power subsidiary of PG&ampE Corp. He has alsoheld various managerial positions since 1981 with Tennessee GasPipeline, Entex and Pacific Gas Transmission. Jack Haake, who willreport to Tipton, will head the Denver office. Haake, formerlydirector of NES’ regional marketing office in Boulder, CO, will beresponsible for expanding supply opportunities and enhancing marketdevelopment in the Western Region.

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