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Industry Briefs

Industry Briefs

Sierra Pacific Resources announced that higher fuel and power costs are expected to cause a dip in corporate earnings. The company blamed it's two Nevada utility subsidiaries, Nevada Power, and Sierra Pacific Power for the estimated $70-80 million in over budget fuel expenses. "Similar to other electric utilities in the West, we have confronted an unprecedented and extremely volatile energy market over the last several months," said Mark Ruelle, senior vice president for Sierra Pacific Resources. "As a result, we've been forced to pay significantly more for fuel and purchased power than we had budgeted at the same time that above-normal temperatures increased the demand for electricity, particularly in southern Nevada. "We expect fuel and purchased power expenses to have a negative impact on second quarter earnings and an ongoing negative earnings impact for the remainder of the year," Ruelle added.

Conectiv Energy Supply signed a letter of intent to acquire a 30-acre plot of land from Bethlehem Steel within the Bethlehem Commerce Center in Pennsylvania for the construction of a 500 MW gas-fired power plant. Conectiv will build the $300 million generating plant on the site and have it operational as early as 2002. Although the plant will initially be a 500 MW plant, it sits on a piece of land adequate for an 1100 MW generating facility.

Hanover Compressor completed its acquisition of Stewart & Stevenson Services's natural gas compressor leasing business, an established market leader in the Powder River Basin of Wyoming, for $60 million in cash and notes. Under terms of the agreement, Hanover will purchase gas compression equipment and related support from Stewart & Stevenson, and Stewart & Stevenson will refer subsequent compression leasing business to Hanover. "The acquisition of Stewart & Stevenson's PAMCO Services International (PSI) unit is another step in our strategic plan to extend Hanover's leadership of the compression rental services market," said Hanover CEO Michael J. McGhan. "This acquisition adds outstanding personnel and equipment to Hanover's existing operations and establishes for our Company a major base of operations in the rapidly growing Powder River Basin of Wyoming, one of the major coal-bed methane-producing regions of the U.S."

Dynegy and NRG Energy completed a 100 MW expansion of the Rocky Road Power Plant, a gas-fired peaking facility in East Dundee, IL. The installation of an additional 100 MW turbine increases the facility's generating capacity to a nominal 350 MW. "The expansion of the Rocky Road Power Plant, which was in direct response to open market forces, pricing signals during the last two summers and critical wholesale market demand in the Midwest, will enable us to provide solutions to a constrained electrical system," said Dynegy COO Steve Bergstrom. The first phase of the plant began commercial operation on June 30, 1999. NRG acquired a 50% interest in December, making it the third asset alliance between the two companies. The expansion of the Rocky Road plant is the second of Dynegy's three new generation projects coming on line this summer, totaling 1,055 MW of gross capacity. It began commercial operation at the Calcasieu project near Lake Charles, LA, on May 31, and is scheduled to start up the Rockingham plant in Rockingham County, NC, this month.

Houston-based El Paso Energy Partners LP last week said it will pay $170 million in partnership preference units to buy two gas storage subsidiaries of Crystal Gas Storage Inc., a division of parent El Paso Energy Corp. El Paso Energy Partners, which is 35% owned by El Paso Energy Corp., said the preference units will be used to pay for two natural gas storage facilities in Hattiesburg, MS, and they will be non-voting. The units will accrue dividends at an annual rate of 10%, and will not require payment of cash distributions until 2010. The deal is expected to close in the third quarter. Crystal Gas was acquired in October 1999 by El Paso Energy Corp.

Unocal Corp.'s Spirit Energy 76 unit has reached an agreement with Mad Dog field owners that creates a 15.6% working interest for Unocal for an expanded area covering the entire Mad Dog field in the deepwater Gulf of Mexico. Before the revised equity distribution, Unocal held a 25% working interest in the original 2 ® block unit, covering Green Canyon blocks 825, 826 and the southern half of block 782. The agreement also expands Mad Dog field to include Green Canyon blocks 738, 739, 781, 783, 827 and the northern half of block 782. Additional appraisal drilling is planned. BP Amoco is operator. Unocal announced its initial oil discovery there on April 12, 1999, calling Mad Dog a discovery that could represent a "trend opening" discovery for the deepwater fold belt subsalt play where the company has significant interests. Unocal is headquartered in Sugar Land, TX.

Maine Natural Gas (MNG), a joint venture between the CMP Group and Energy East, has signed a multi-year contract with the University of Maine to supply natural gas delivery services to the University of Southern Maine campus. The university located in Gorham, would be supplied by the transmission jointly owned by Maritimes and Northeast Pipeline, and Portland Natural Gas Transmission System. Construction of the low-pressure distribution system should be complete and operational by early fall. MNG recently signed a multi-year deal to supply natural gas to the Brunswick Naval Air Station and is currently building a lateral feed to a new 540 MW plant which is being built in Westbrook by Calpine (see Daily GPI, June 27). CMP Group and Energy East announced the merging of their two companies last year. The Securities and Exchange Commission is the only remaining approval necessary to complete the merger.

DFD California Operations, a Duke/Fluor Daniel (D/FD) affiliate has been granted a five year contract by Duke Energy North America (DENA) to supply plant services for four power generation facilities around California. The four plants, located in Morro Bay in San Luis Obispo County, Moss Landing in Monterey County, Oakland in Alameda County, and South Bay in San Diego County, have a combined capacity of 3,351 MW. DFD California Operations will take on the day-to-day operations of the plants, providing maintenance and outage management. Morro Bay, Moss Landing and Oakland were previously owned and operated by Pacific Gas & Electric, while South Bay used to be operated by San Diego Gas & Electric.

Reliant Energy's Shelby County, IL, peaking power plant has started commercial operation. The 340 MW natural gas-fired facility marks Reliant's first power generation project to be built in Illinois. The facility which is located about 180 miles south of Chicago began construction in late February. The plant will operate on its five current turbines until they are ultimately replaced by eight General Electric LM 6000 natural gas turbines. The plant is expected to operate a maximum of four months during the summer each year.

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