El Paso Natural Gas last week said it awarded only a smallfraction of the 1.35 BBtu/d of soon-to-be available firm capacityon its system to one shipper — Williams Energy Marketing andTrading — following its recent open season. “There were no bigwinners,” noted El Paso President Richard Baish. The pipelinerejected the majority of shipper bids because they failed to meetthe “minimum revenue threshold” requirements for the capacity.

As a result, El Paso has initiated a second open season throughOct. 13th for the remaining available 1,254,089 MMBtu/d of BlocksI, II and III firm capacity for delivery to California. And as anadded bonus, none of the available capacity — including the largeamount (1.2 BBtu/d) that’s committed to Dynegy until the end of theyear — will be subject to right-of-first refusal in the secondround. Bidders can bid for all of the capacity in a total packageor for part of the capacity.

During the first round, “that right-of-first-refusal I expectprobably discouraged some potential bidders because they knew thatDynegy could come back in, and by matching their bid, could takethe capacity away from them,” Baish said. But the ROFR won’t be athreat in the second open season, he noted.

If there had been valid bids in the first round, then Dynegywould have had the right to match those, but since there were none”there was nothing for Dynegy to match,” one source said. Dynegynow “is welcome to bid like everybody else, but they do not haveany priority to come back in at a later date and match bids andtake capacity away from someone else.”

“People were very cautious in their bidding in the first round,and I think they now have a better sense of where those [minimumrevenue] thresholds will be. As a consequence, I expect we’ll havea lot more interest” in the second round, Baish noted. There havebeen “a couple of bids to date,” but it couldn’t be learned ifDynegy was one of them.

In the first open season, Williams Energy was the only shipperwhose bid met the minimum revenue threshold, meaning that it wouldgenerate enough revenue annually to either meet or exceed an”undisclosed” threshold. Williams bid 21.5 cents/MMBtu cents at 95%load factor for 101,585 MMBtu/d of Block II firm capacity, withprimary delivery point rights to PG&E Topock, SouthernCalifornia Gas Topock and Mojave Topock. The capacity currently isheld by Burlington Resources until the end of the year.

El Paso Natural Gas said it plans to award the capacity that hasbeen posted in the second open season by Oct. 18th, finalize thecontracts between Oct. 19-22, with the capacity becoming availableon Jan. 1, 2000.

Susan Parker

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