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Industry Briefs

Industry Briefs

PPL Global, a subsidiary of Pennsylvania based PPL Corp. announced plans to build a 600 MW natural gas-fired generation plant on Long Island, NY. The proposed $300 million facility will be located on a 15 acre site in Smithtown, which is currently being used as a sand and gravel operation. PPL Global is planning to build up to 12 gas-fired units for this project. "With the continued growth of Long Island, there is an acknowledged need for additional competitive electricity sources. These proposed units will provide significant additional electricity to these residents in a way that is environmentally and aesthetically sensitive for area residents and cost effective for PPL Global," said Paul Champagne, PPL Global president. The facility site is positioned near the Iroquois pipeline, as well as other major transmission lines. Pending approvals from state and local agencies, ground-breaking is expected to begin in 2001, with an approximate operational date of June, 2002.

The Pennsylvania Public Utility Commission (PUC) approved the proposed merger between PECO Energy of Philadelphia and Unicom of Chicago by a 5-0 vote. Peco Chairman Corbin A McNeill and Unicom Chairman John W. Rowe will become co-CEOs of the newly formed Exelon Corp. The terms of the merger as agreed upon by the PUC provides for comprehensive customer benefits including $200 million in rate reductions from 2002 through 2005. Additionally, Peco committed to keep the company headquarters in Philadelphia until 2008, retain a minimum of 1,100 employees there, and maintain charitable contributions and community service at least at current levels. The merger has been approved by the Department of Justice, the Illinois Commerce Commission, the Federal Energy Regulatory Commission (see Daily GPI, April 13). Shareholders, the Nuclear Regulatory Commission, and the Securities and Exchange Commission still must approved the deal. Completion remains on target for September, the companies say.

Ultra Petroleum said yesterday that proved reserves have increased by 67%, or 50 Bcfe, to 125 Bcfe up from 75 Bcfe in 1999 as a result of the downspacing order approved by the State of Wyoming and the Bureau of Land Management in the Jonah Field. Since June 1999, Ultra's proved reserves have almost tripled, increasing 184% from 44 Bcfe to 125 Bcfe. Additionally, the company has 125 Bcfe of low-risk probable reserves resulting in total proved plus probable reserves of 250 Bcfe as of this month. "This decision allowing increased density of Jonah Field wells enables Ultra to proceed with the drilling of 22 in-fill locations at a time of very attractive natural gas prices," said Michael D. Watford, CEO.

Daugherty Resources said it has made a discovery of a significant new oil and gas field in the Appalachian Basin, in the Fonde Oil and Gas Field in Bell County, KY where the company has drilled six successful wells in its 5,000-acre lease block. Wright & Co., an independent engineering firm with offices in Houston and Nashville, estimated that the six wells and 11 proven undeveloped locations have reserves of 4.9 BCFE. Daugherty owns one third of the drilled wells and expects to maintain similar interests in subsequent wells. The natural resources development company also announced yesterday that it has completed the acquisition of a 12,300 acre oil and gas lease adjacent to the new discovery from the J. M. Huber Corp.

Allegheny Power, the Ohio utility subsidiary of Allegheny Energy Inc., of Hagerstown, MD, reached a stipulated agreement with major parties on a transition plan to bring electric choice to its 28,000 Ohio customers. The settlement benefits shareholders by allowing the company to recover regulatory asset costs through a transition charge and authorizing the transfer of 325 MW of generating capacity to an unregulated affiliate at book value. Allegheny Energy expects to have more than 6,000 MW of low-cost generating capacity in the deregulated marketplace by Jan. 1, 2001. Customers will benefit from a combination of rate reductions and rate freezes during the transition to competition, called the "market development period," and will be able for the first time to shop for the company that supplies their electricity beginning next year, when the generation portion of the electric industry is opened to competition. The Public Utilities Commission of Ohio is expected to approve it during the third quarter.

Ivanhoe Energy Inc. acquired rights to participate in the development of a 7,300-acre oil and gas project in the Spraberry trend of the West Texas Permian Basin. Drilling of the first well began June 13, and the development plan provides for the use of two rigs to drill up to 15 wells on the Spraberry project this year. The Canadian oil and natural gas exploration and development company has obtained a working interest of 62.5% in the project through an operating agreement with Discovery Operating Inc., a Texas-based, independent oil and gas company, and Ivanhoe's interest will revert to 50% after payback of development costs. The Spraberry project acreage could eventually accommodate as many as 90 new wells. Based on production data from existing wells in the area, and current oil and gas prices and costs, Ivanhoe estimates that the payback period for each new well drilled would be approximately 18 months.

Chevron cleared a regulatory hurdle in its proposed acquisition of a portion of Pacific Gas & Electric Corp.'s retail energy services business, the Federal Trade Commission said yesterday. Earlier this month, Chevron announced that it had agreed to acquire assets from PG&E's Energy Services unit, including energy management, energy efficiency, billing and information services for major commercial, industrial and institutional customers, as well as related infrastructure. Terms of the deal, which is expected to close in mid-July, were not disclosed. The FTC said it granted the acquisition early termination approval of the required waiting period under the Hart-Scott-Rodino Antitrust Act on June 20.

TransCanada Energy announced plans to build two gas-fired cogeneration plants, one an 80 MW plant near Carseland, AB for $75 million, and a 40 MW plant near Redwater, AB for $37 million. The Carseland plant will provide power and steam to Agrium's Carseland nitrogen operations under a 20-year agreement. Surplus power will be sold into the Alberta Power Pool. The Carseland project was one of three successful proposals selected by the Province of Alberta's transmission Administrator as part of an initiative to attract new generation to the Calgary area in order to resolve the voltage constraint problem on the transmission system. The two other projects approved Wednesday were sponsored by PanCanadian and Canadian Occidental Petroleum (see separate story). TransCanada's Redwater cogeneration plant, located near Edmonton, AB, will provide power and process heat to the company's Redwater natural gas liquids fractionation and storage facility. Surplus power will be sold into the provincial power pool. The cogeneration plants are expected to be in operation by November 2001.

PanCanadian Petroleum and Canadian Occidental Petroleum won the bidding for two new 106 MW power plants to be built Alberta. The proposed plants were selected after an open solicitation for proposals to build one or more plants up to 500 MW of electricity in a 80 km radius of Calgary. The first plant, which will be built in Calgary, will be a 50-50 venture between PanCanadian and Canadian Oxy. It will be located on the site of Canadian Oxy's 75 MMcf/d Balzac natural gas plant. The proposed facility is due to be completed by November 2001. The second plant, will be built and operated solely by PanCanadian, will be located on the site of PanCanadian's existing Cavalier compressor station in Strathmore, AB. The plant is projected to be fully operational by December 2001. The proposed projects must still seek approval from the Alberta Energy Utilities Board. Each plant is expected to burn 18 MMcf/d.

RedMeteor.com, a global, online, open commodities exchange for crude oil, refined products, natural gas, LNG, and electricity announced that it has acquired the international energy brokerage firm TCT Energy of Houston. This follows RedMeteor.com's recent purchase of the domestic oil broker TCT Crude, which added human interaction to the online commodity exchange. TCT Energy's brokers will be able to help and advise traditional traders as they make the transition from conventional to online trading. RedMeteor.com does not charge monthly user fees, or require credit lines, but claims to offer access to the 300,000 market and corporate energy traders in today's $1 trillion energy trading marketplace, charging a small commission on each trade from both the buyer and the seller. RedMeteor.com began operation this Spring with $15 million in venture capital from Mayfield Fund and Fremont Ventures.

Dynegy Inc. announced Wednesday that Executive Vice President John U. Clarke has resigned in order to pursue personal and other business interests. Most recently, Clarke was responsible for Dynegy's retail, technology, strategic investments, telecommunications and branding activities. For the immediate future, Clarke's responsibilities will be assumed by Chairman and CEO Chuck Watson. Of Clarke's tenure at Dynegy, Watson said, "John has made many valuable contributions to the company's success and in building a strong team that will lead Dynegy to the next level. We want to thank John for his service to Dynegy and wish him well in his future endeavors."

The members of the New York Mercantile Exchange voted 97.5% in favor of a demutualization plan yesterday that will make the exchange the first in New York to convert from a not-for-profit membership structure under New York law to a for-profit organization under Delaware law (see NGI, May 8). The demutualization plan calls for the equity in the exchange to remain with the seat-owners of its Nymex Division. "Today's approval, is just the first step in repositioning the Exchange as a 21st century business enterprise that will create and pursue profitable new opportunities, react rapidly and decisively in an increasingly competitive marketplace, and explore interest by outside investors," said Exchange Chairman Daniel Rappaport. The plan has already received approval from the Securities and Exchange Commission and the Exchange anticipates approval shortly from the Commodity Futures Trading Commission. It is also seeking a favorable tax ruling from the Internal Revenue Service. A new stock-holding company named Nymex Holdings, Inc., will be formed to own all of the economic interests and most of the voting control in the for-profit membership corporation. Each existing Nymex Division membership will be converted into one share of common stock in Nymex Holdings. The Exchange is the largest physical commodity exchange in the world, with volume reaching close to 110 million contracts in 1999.

Remington Oil and Gas Corp. plans to drill 11 wells by the end of this year with an unrisked net resource potential to the company of more than 100 Bcfe, officials said at the company's annual meeting Friday. The wells will be drilled in the company's three core areas of Mississippi, South Texas and offshore Gulf of Mexico. Remington also has been awarded all eight new leases that it bid on in the federal offshore lease sale held last March. Working interests in the new leases range from 75% to 100%, and will provide the core of the 2001 exploratory program. In the offshore business, platform fabrication is under way for operated discoveries in East Cameron 364 and East Cameron 344, and production from both of these developments is expected to begin in the first quarter of 2001. The Dallas independent also announced that its capital expenditures for the year are expected to be approximately $55 million, up from the originally budgeted figure of $37 million - mostly because of the company's drilling success in the first half of this year. The increased capital will come from internal cash flow and a bank line of credit.

NewEnergy, a subsidiary of The AES Corp., has been granted a license to sell electricity to retail customers in Delaware's electric market. Already the company sells electricity to commercial and industrial customers in Pennsylvania, New Jersey, New York, Massachusetts, Illinois and California. It will continue to focus on commercial and industry electricity users, and will serve its Delaware customers through its regional subsidiary, NewEnergy East LLC. Initially, the Dover, DE-based company will focus on consumers in Conectiv's territory. The AES subsidiary was formed in 1995 specifically to serve customers in the emerging retail electricity market. See its website at www.newenergy.com.

After buying Energymarketplace.com from SoCalGas last month and renaming it e-choicenet.com, Excelergy Corp. has relaunched Energymarketplace as a new Internet energy portal, designed to enable energy companies to build a customized site that can be personalized by business, municipal and residential customers. Sempra Energy Trading has signed a contract to use Energymarketplace to launch a custom energy portal service for its customers. "The portal provides an innovative combination of third-party web applications with our own internal data applications for our customers," said David Messer, president of Sempra Energy Trading. "We chose this solution because these unique, value-added services will allow us to attract and serve customers with a convenient and efficient means of communication." While still allowing end-use customers to choose a different energy supplier, Energymarketplace also enables energy companies to offer their customers a wide variety of products and services - such as energy news, weather, energy pricing, asset management, presentation of energy usage data, and account review - from a menu of choices. For more information, visit the website at www.excelergy.com. Also see www.e-choicenet.com.

Mariner Energy announced a successful appraisal well at its deep-water project, Devils Tower, which confirms the company's previously announced discovery. Devils Tower is located about 140 miles southeast of New Orleans in 5,610 feet of water at Mississippi Canyon Block 773. The appraisal well, Mississippi Canyon 773 #3, was drilled to a total depth of 15,000 feet and encountered hydrocarbons in three zones in a separate fault block northeast of the discovery well. A sidetrack of the appraisal well will commence immediately to further delineate the discovery. Mariner is operator and has a 20% working interest. Dominion Exploration & Production owns a 60% working interest and will assume operatorship after rig release following the sidetrack. Other partners are Pioneer Natural and Westport Oil and Gas.

Baltimore Gas and Electric was granted a 2.69% increase in gas distribution rates by the Maryland Public Service Commission (PSC). The raise translates to an additional $0.33 a month for the average residential customer. It is substantially less than what the company originally requested in November 1999. "We are disappointed with the commission's decision, which could affect our ability to keep pace with the growing demand for natural gas services in central Maryland," said D. Douglas DeWitt, BGE director of gas regulatory planning. The increase, which will be effective immediately, will apply to all BGE natural gas customers, including those who buy their gas from a supplier or broker.

Houston's Torch Energy Advisors Inc. announced Monday that it formed a wholly owned subsidiary, Torch Energy TM Inc. (TETM). Natural gas marketing, along with refined products, derivatives marketing and specialty product transactions will now be handled by TETM. Torch and its subsidiaries provide extensive outsourcing services, including financial and accounting services, oil and gas operations, hydrocarbon marketing and property acquisitions and divestitures. Contact Blake Beyer at (713) 756-1881 for information.

Bighorn Gas Gathering LLC has signed an agreement to provide gas gathering services for the coal bed methane operations of J.M. Huber Corp. in the Wyoming Powder River Basin. Bighorn, whose partners are affiliates of CMS Energy, Northern Border Partners and Enron North America, will build a 56-mile, 20-inch extension of its gathering system in Sheridan County. Huber is in the process of completing 150 coal bed methane wells in the Prairie Dog prospect area and expects to complete an additional 100 wells by the end of the year. The gathering system extension will cost $17.8 million and should be in service by this winter.

In response to the growing demand for natural gas drilling, well completion, and workover services, Key Energy Services has announced that it will undertake several new strategic projects at a cost of about $25 million. Key Energy believes the projects will significantly expand its ability to serve its customers in natural gas markets where backlogged orders exist. Key Energy also announced it will issue about 10 million shares of common stock to go along with the projects. Most of the proposed projects will be focused in the U.S., Canada, and Argentina.

Key plans to refurbish 50-60 deep gas workover/completion rigs, expand the number of drill and well refurbishment facilities, open at least two more employee training and safety centers, and reallocate equipment to higher demand and pricing level areas. Work will begin in the fiscal year 2001, and will be completed by Dec. 31, 2001.

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