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Industry Briefs

Industry Briefs

Alaska's North Slope area-wide 2000 lease sale has been put on hold due to the pending merger of BP Amoco and Atlantic Richfield Co. (ARCO). Alaska Department of Natural Resources Commissioner John Shively said, "[T]here are too many uncertainties in future leaseholdings to proceed with a sale at this time. Until their aggregate onshore holdings have been reduced to 500,000 acres, as required by Alaska law, I believe it will be difficult for prospective bidders to properly evaluate oil and gas opportunities on the lands we can offer. "Should the merger be finalized by the end of the year, BP-Amoco must make their seismic and well data available for purchase by the end of March. These data should increase the interest in state lease sales. We are tentatively rescheduling the North Slope sale for late October or early November of 2000, at which time we intend to include with it the postponed Beaufort Sea area-wide sale." The North Slope sale includes all available state acreage lying north of the Umiat Meridian, between the NPRA and ANWR.

Primary Energy, the NiSource subsidiary dedicated to investing in and managing projects that optimize energy productivity while reducing operating cost, announced two different cogeneration projects last week. In total, Primary Energy has initiated seven power plant projects over the past two years. In the first deal, Primary Energy, along with BP Amoco, selected Duke/FluorDaniel to provide turnkey engineering, procurement and construction services for a 525 MW, gas-fired cogeneration facility at BP Amoco's Whiting Refinery in Indiana. Construction of the $250 million plant began this year, with completion planned for the second quarter of 2001. In the second deal, Primary Energy announced an agreement with LTV Steel Co. to develop, engineer and construct a blast furnace gas-fired cogeneration facility at LTV's East Chicago plant. The project cost is estimated at $60 million and is scheduled for construction in the spring of 2000, with completion in late 2001. The plant, to be built at LTV's Indiana Harbor Works, will generate 50 MW primarily from by-product fuels, but also will utilize some natural gas.

Indiana Energy Inc. said last week that a special meeting of common shareholders would be held on Dec. 17 at its headquarters in Indianapolis to consider the previously announced merger with SIGCORP. The merger would create a new $1.9 billion holding company called Vectren, which would serve gas and electricity to more than 650,000 customers in adjoining areas that cover nearly two-thirds of Indiana. Vectren's non-regulated subsidiaries will offer energy-related products and services, including marketing, performance contracting, coal mining, telecommunications, meter reading, and materials management. Under the merger agreement, Indiana Energy shareholders will receive one share of Vectren's common stock for each share of Indiana Energy stock. SIGCORP shareholders will receive 1.333 shares of Vectren's common stock for each share of SIGCORP stock.

Shell Exploration & Production said during a shutdown of a well last week it detected a pressure buildup in the production casing at its Alex gas development, located on Brazos Block A-19 in the Western Gulf of Mexico, about 75 miles south, southwest of Galveston, TX. The well remained shut-in and secure while Shell investigated the situation. Shell has received permission from the Minerals Management Service to temporarily resume flow from the well, which is expected to bring the pressure down to normal. Pumping equipment has been deployed to the site and was expected to arrive over the weekend. Plans were to shut down the well and pump fluids to further stabilize the pressure between the tubing string and the outer casings. Diagnostic work to determine the cause of the pressure buildup and to develop plans to permanently resolve the situation is expected to continue. Prior to shut-in, Alex was producing about 84 MMcf/d since its startup on Oct. 16.

ANR Pipeline signed agreements with Wisconsin Public Service Corp. (WPSC) that will result in the extension to 2010 of firm natural gas transportation and storage service agreements that were scheduled to expire over the next three years. "These contract extensions reinforce the strong relationship that Wisconsin Public Service and ANR have shared for many years," said Jeffrey A. Connelly, president and CEO of ANR and senior vice president, natural gas, of parent Coastal Corp. "Wisconsin Public Service is confident these contracts will continue to provide our customers with reliable natural gas service at competitive rates into the next millennium," said Patrick D. Schrickel, president and chief operating officer of Wisconsin Public Service Corporation. The agreements are subject to regulatory approvals. WPSC is a combination gas and electric utility serving about 225,000 gas customers and 380,000 electric customers in Wisconsin and upper Michigan.

Columbia Energy Group said its Columbia Energy Services (CES) unit is close to completing an evaluation of offers for its wholesale and energy trading operations, but the bids came in much lower than expected - $13 million (16 cents/share) lower to be exact. Columbia said it was forced to more than double the net loss from discontinued operations in its third quarter earnings to $23.5 million from the $10.5 million reported late last month. It's revised third quarter earnings show a $22.7 million net loss ($0.28/share) including discontinued operations. It previously had reported only a $9.7 million net loss ($0.12/share). The sale still is expected to occur before the end of the first quarter of 2000, the company said.

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