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Industry Briefs

Industry Briefs

El Paso Energy Corp. will sell its 35% stake in Oasis Pipe Line, a 1 Bcf/d line in Texas, according to a disclosure in a securities filing made last week. El Paso said that the sale, which was negotiated in October, would result in a $20 million loss. The 36-inch intrastate gas line runs 608 miles from the West Texas Waha market to the Katy hub outside of Houston. The pipeline provides a link between El Paso Natural Gas and Tennessee Gas Pipeline, and is the principal route for Permian Basin supplies to access the Houston Ship Channel. Oasis completed a substantial upgrade in 1998, installing 9,400 horsepower of compression, and new interconnects to increase deliveries to eastern markets. Dow Hydrocarbons and Aquila Energy, a unit of Utilicorp United, also own stakes in the line. Along with its 35% ownership, Aquila also has firm transport rights on 280,000 Mcf/d. Before El Paso's sale is complete, it still needs approvals from the Federal Trade Commission and the Texas Attorney General.

SCANA and Fayetteville Public Works Commission (PWC) reported they have entered into a joint agreement to build and share ownership of a natural gas-fired 500 MW power plant that will supply electricity to Fayetteville, NC, residents and businesses beginning during the summer of 2004. Scana also will build a 106-mile gas pipeline lateral from its existing pipeline system in South Carolina to supply the plant. Under the agreement, The PWC will own a 60% interest in the estimated $265 million facility, while SCANA will hold the remaining 30%. SCANA will build and own the projected $90 million natural gas pipeline expansion, and ensures that the plant will receive 80,000 Dth/d of firm delivery. SCANA will also provide gas procurement, transportation, scheduling, power scheduling and control area services. "This public/private partnership is a tremendous plus for Fayetteville's long-term energy needs," said Berry Gibbes, president of South Carolina Pipeline Corporation. "In addition, the new interstate gas pipeline project will provide a valuable second source of firm natural gas transmission capacity into eastern North Carolina. This will provide a strong incentive for future economic development in the eastern part of the state." SCANA plans on offering the additional firm capacity on the 16-inch line to shippers in South Carolina and eastern North Carolina. For more information on firm capacity on SCANA's new interstate natural gas pipeline, contact Devy Traylor, manager of market and business development, at (803) 217-7900.

Shell Energy will be selling gas to Georgia retail customers through Essential.com, according to a partnership the two companies announced. Essential.com already provides a one-stop shop for a broad range of energy and communications services. "Our partnership will increase Shell Energy's reach to Web-savvy customers while Essential.com provides a low cost, online customer acquisition channel for Shell Energy," said Leo Desjardins, Essential.com's director of business development/energy. By simply typing in a zip code, business and residential customers can locate energy and telecommunications offerings available in their area. In all 50 states, customers have the opportunity to shop for long distance services, Internet access, wireless phone services and satellite TV services. In some areas, customers also can buy power, propane, heating oil, gas and local telephone service from alternate suppliers. Essential.com is based in Burlington, MA.

CMS Energy's marketing subsidiary signed a long-term agreement to provide 10 Bcf of gas over 10 years to various facilities owned by the County Commissioner's Association of Ohio (CCAO). The agreement includes a prepayment of an undisclosed sum to CMS-MST funded by bonds issued by Hamilton County, OH, and underwritten by Seasongood & Mayer LLC of Cincinnati. "This agreement illustrates a marketing arrangement that is tailored to our customer's needs," said Tamela W. Pallas, president of CMS-MST. "The agreement gives the County Commissioner's Association of Ohio a secure supply of natural gas for 10 years at market-based pricing. The association, in turn, will provide the natural gas to over 30 Ohio county governments, reducing natural gas costs and saving taxpayer money."

Virginia Gas Co.'s shareholders approved a merger plan which would allow the company to fold under Bedminster, NJ-based NUI Corp. as a wholly-owned subsidiary. Under the terms of the merger, NUI Corp. will acquire all of Virginia Gas' shares of common stock for $4.00 per share in NUI common stock. The exchange ratio will be established at a time more near the merger's completion. Based on Virginia Gas' outstanding shares, the transaction value of the company's equity is placed at $22 million. "We are excited that our shareholder vote has moved us a step closer to becoming a member of the NUI family of companies," explained Michael L. Edwards, Virginia Gas' CEO. "We are bringing together talents from our two companies that will create a strategically important energy asset in this region." NUI will benefit from Virginia Gas' significant underground storage and pipeline facilities. The Abingdon, VA-based company also focuses on natural gas exploration, production, gathering, marketing and distribution. "Virginia Gas will be key to our energy trading strategy in the mid-Atlantic markets by further strengthening our natural gas trading and wholesale activities in the region to meet the demand for natural gas and power generation," said John Kean, Jr., NUI's CEO. The union still awaits approvals from state regulatory agencies in Virginia, New Jersey and North Carolina and could be completed as early as the end of 2000.

The $525 million face lift started on Duke Energy North America's (DENA) Moss Landing power plant. "We are removing 19 massive oil tanks and eight 225-foot stacks, reducing the existing plant's air emissions and building a modern power plant to help California meet its needs for more electricity," said Mark Seedall, DENA director of electric modernization. The power plant site, which first produced electricity in 1950, currently generates 1,500 MW. When the modernization is completed by summer 2002, the site will generate 2,560 MW and be the largest power plant in California and one of the cleanest and most efficient power plants in the nation.

SkyGen Energy LLC, a subsidiary of Calpine Corp., will use power from its Broad River Energy Center expansion project to supply CP&L Energy's growing customer base. Northbrook, IL-based SkyGen developed the center before its acquisition by San Jose, CA-based Calpine earlier this month. The center, a natural gas-fired project, is being constructed in two phases. The first phase, which consists of three combustion turbines capable of producing 540 MW, began commercial operation last June. The second phase, announced, involves installing two additional combustion turbines capable of producing an additional 350 MW. Construction of the second phase should be completed next summer. Production from all five units will be sold to CP&L under long-term power agreements. Tom D. Kilgore, president of CP&L Energy Ventures, the company's non-regulated arm, said the addition of capacity from units 4 and 5 would bolster the company's asset base in a fast-growing region. "The additional capacity from Broad River, coupled with the extensive generation we're building in the Carolinas and Georgia, will help us in continuing to meet our retail customers' needs, while opening up new opportunities for us in the competitive wholesale markets," said Kilgore.

Chicago powerhouse Exelon announced new earnings targets for its three principal businesses, setting targets to grow at a rate of about 10% a year through 2003. The company projected earnings per share of $4.50 for 2001; $4.95 in 2002; and $5.40 in 2003. Previous earnings per share had been $4.20 for 2001; $4.60 in 2002; and $5.10 in 2003. Reduced amortization, partially offset by higher spending for operations in its energy delivery business, is the principal driver for the earnings increase said Exelon officials. Exelon was formed in September 1999 in the merger of PECO Energy Co. and Unicom Corp., and is one of the largest electric utilities and the largest nuclear operator in the United States.

The Gas Technology Institute (GTI), formed by the merger earlier this year of GRI and the Institute of Gas Technology, released a 104-page report that presents an overview of the key gas supply trends from the 2000 GRI Baseline Projection. The 2000 Gas Supply Insights report outlines the sources of gas supply and projects what each region will contribute to the anticipated 30 Tcf gas market of the future. The Gulf of Mexico and Western Canada are projected to be the two largest incremental production contributors, followed by the Rockies. The report includes detail on the Gulf of Mexico by water depth interval for both the shelf and slope, and it includes an overview of gas supply trends in Alaska and Canada, and a summary of Mexico. John Cochener, GTI project manager and principal analyst - resource evaluation, also said GTI will release a comprehensive report soon on Mexico's gas resources, including projections on development and imports/exports. He said a preliminary conclusion is that rapid gas demand growth in Mexico likely will soak up Mexico's increasing gas supply from the Burgos Basin and Cantarell area offshore. For more information contact Cochener at GTI's Baseline Center in Arlington, VA, (703) 526-7834. The report is $250 for GTI members and $325 for nonmembers, plus shipping and handling.

Denver-based Amalgamated Explorations Inc. and Barrett Resources Corp. have agreed to drill oil and natural gas wells in the Boone Dome Gas Field area of Wyoming. Under the agreement, Barrett and its partners have the right to drill on Amalgamated leases to earn rights subject to royalty and/or working interest that will be retained by Amalgamated. Also, Amalgamated will have access to the seismic data within one mile of the leases for its own exploratory and drilling operations. Amalgamated CEO Christian F. "Ted" Murer said the alliance was a "positive move" that would benefit employees and shareholders of both companies. Amalgamated recently acquired an additional 539 acres in the Boone field, bringing the company's total land position to 1,800 acres there. The acreage is within a 100 square mile 3-D shoot under way with Barrett, the operator, for exploration in the area.

Carbon Energy Corp. is selling its working interests in 40 natural gas wells in the Kutz Field in San Juan County, NM to MarkWest Hydrocarbon Inc. for $7.5 million. The sale is expected to close in early January 2001. Carbon's net working interest production from the property is nearly 2.1 MMcf/d and 6 bbl/d. Its average working interest is approximately 60%. Carbon plans to use the sale's proceeds to continue its development drilling program in the Piceance Basin of Colorado and the Uintah Basin of Utah.

Skipping Stone Inc., based in Houston, has introduced e-Complete, an e-commerce development service for the energy industry that allows companies to establish a strategy, design an e-commerce system based upon the strategy and launch a Web site. CEO Peter Wiegand said e-Complete is available only from Skipping Stone, which is an independent energy consulting firm. See the Web site at www.skippingstone.com for more information.

MCN Energy reported a third-quarter loss of $24.9 million or $0.28 per share compared with a net loss of $23.2 million or $0.27 per share, in 3Q99. Both periods were affected by unusual items, as well as recently adopted accounting treatment of non-regulated storage activities. Before unusual items and costs related to the company's proposed merger with DTE Energy, the loss totaled $17.4 million or $0.19 per share, and compared with $19.4 million or $0.22/share in 3Q99. Gas distribution reported a third-quarter operating and joint venture loss of $11.8 million, which includes a $9.7 million pre-tax charge related to the decision to sell its heating, ventilation and air conditioning business, as well as $1.8 million of merger-related costs. Pipelines and processing had operating and joint venture income of $5.4 million. Electric power's operating and joint venture income was $0.9 million, down from $6.6 million in the 1999 third quarter due to asset sales required to complete MCN's pending merger with DTE. Energy marketing reported an operating and joint venture loss of $3.4 million. Exploration and production had operating income of $4 million. MCN's largest subsidiary is Michigan Consolidated Gas, a gas utility serving 1.2 million customers in Michigan.

Avista-STEAG LLC and NRG Energy have entered into a partnership in the hopes of adding 633 MW of power generation to Texas' power pool in 2003. The partnership will build, manage and operate the natural gas-fired Brazos Valley project to be located in Fort Bend County, TX, about 30 miles southwest of Houston. The project, which has already received its major permits, will be owned by Avista-STEAG with a 51% holding, and NRG Energy with the remaining 49%. Construction is scheduled to begin in the first part of 2001. "The Brazos Valley project represents an important step toward increasing the efficiency of the ERCOT (Electric Reliability Council of Texas) generation fleet, 63% of which is between 21 and 40 years of age," said Eberhard Schmidt, president of Avista-STEAG LLC. "One estimate puts total ERCOT generation shortfall at over 10,000 MW in the year 2005 at a 15% reserve margin. This project will help reverse that trend."

Public power utilities are jumping into the B2B act too - more than 225 community-owned electric utilities have committed up to $1.2 billion in purchasing power to UtilityFrontier.com, a national exchange launched earlier this year. The utilities will use the B2B as a purchasing exchange to serve more than 6.7 million electric meters - about one third of all public power customers. UtilityFrontier.com is a service of Hometown Connections, a subsidiary of the American Public Power Association (APPA) and KnowledgeA-Z, a software technology firm. It is expected to provide the marketplace with savings on all types of electric power products, including transformers, poles, vehicles and conductors. It also will offer office supplies and equipment. Overall, the public power market share is about 14% of the $220 billion electric utility industry. One of the new members, the Los Angeles Department of Water & Power, plans to improve its supply chain management with the new exchange. Raman Raj, assistant general manager of the utility, said the partnership "represents an endeavor to increase competition and drive down prices that will ultimately benefit the entire public power community." APPA Executive Director Alan H. Richardson said the response to the B2B has exceeded expectations, and he said that the summer's "dysfunctional electricity markets in California and other states appear to have spurred public power systems to explore" opportunities. APPA, based in Washington, D.C., represents more than 2,000 community- and state-owned electric utilities. It launched Hometown Connections in 1998 to provide competitive advantages to public power systems.

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