Less than a week after buying the gas marketing operations ofSemco Energy, MCN Energy subsidiary CoEnergy Trading announced thepurchase of Michigan-based Howard Energy Marketing’s retail gasmarketing assets for an undisclosed amount. The purchases aredesigned to bolster MCN’s unregulated marketing operations and itsinterest in the proposed Vector and Millennium Pipeline projects,which will add 1 Bcf/d of new gas transportation capacity throughthe region starting in November 2000, the company said.

The Howard Energy assets will boost CoEnergy’s retail presencein the Midwest and Northeast by about 20%. They include contractsfor delivery to 500 industrial and commercial customers, or about100 Bcf/year of gas demand. The transaction also includes marketingoffices in Madison and Green Bay, WI, Traverse City, MI, andBuffalo, NY. CoEnergy said all 16 Howard employees affected by theacquisition will be offered jobs. MCN said it plans to service thecontracts through subsidiaries’ existing or planned pipeline andstorage facilities.

The Semco Energy assets purchased last week include about 455MMcf/d in gas sales and revenues of about $398 million. Semco’sretail sales in 1998 totaled 13 Bcf and included about 140industrial and commercial customers and 4,000 other retail accountsthroughout Michigan.

“CoEnergy has grown to become a successful energy marketer inthe Great-Lakes, Mid-Atlantic and New England regions of the U.S.,as well as in eastern Canada, with annual sales volumesapproximating 500 Bcf,” said Glen Kinder, CoEnergy CEO. “These newsales volumes further strengthen the economic position of ourcompany’s interest in the proposed Vector and Millennium pipelinesystems and in our Washington 10 storage project, because we canutilize these assets in delivering gas to customers.”

An MCN spokesman said these transactions are part of CoEnergy’scontinuing effort to grow its marketing operations to support itspipeline interests and are not part of the company’s largerstrategic moves, which will include selling exploration andproduction operations and some international assets this year. TheE&ampP asset sale could begin as early as next week with a block ofwestern properties concentrated in the Jonah Field of the GreenRiver Basin in southwestern Wyoming. The other three groups ofproperties, divided into Appalachian coal-bed methane reserves,Antrim Shale reserves in Michigan and a variety of assets in theMidcontinent and Gulf Coast regions, are expected to be sold offearly this summer, along with about $130 million in internationalassets. The E&ampP assets include 1.2 Tcf of proved gas reserveswith a book value of about $800 million.

Rocco Canonica

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