Industry Briefs

The various owners of the Black Marlin Pipeline System, a 75-mile long natural gas and condensate gathering system in the Gulf of Mexico, have sold the line to Williams Field Services for $9.25 million. The line was purchased from Blue Dolphin Energy, a 50% owner, MCNIC Pipeline & Processing Co., a 33.33% owner, and WBI Holdings, Inc., a 16.67% owner. The sale includes related shore facilities servicing the High Island area. Ivar Siem, chairman of primary owner Blue Dolphin, said the company had purchased Black Marlin in early 1999 "during a period when the system had experienced lower throughput volumes due to limited drilling activity in the High Island area. Since then the activity level has been very high and significant additional reserves have been discovered," Siem added. "This is an opportunity for us to realize good value for the asset. We can re-deploy a portion of the sale proceeds to other niche pipeline opportunities in the Gulf."

Northern Border Partners L.P. (NBP) entered an agreement to purchase Bear Paw Energy, LLC from a consortium of investors for $370 million in cash and stock. Bear Paw Energy has gathering and processing operations in the Powder River Basin (PRB) in Wyoming and the Williston Basin in Montana, North Dakota and Saskatchewan. The company has about 226,000 acres under dedication and 600 miles of gathering pipelines in the PRB. Bear Paw holds over 2,800 miles of gathering pipoelines and four processing plants with a capacity of 90 MMcf/d in the Williston Basin. "Once completed, we will have added over $625 million in non-regulated assets to the partnership with our third major acquisition in a little over one year. Our total mix of non-regulated businesses will be slightly over 25%," said Bill Cordes, CEO of NBP. "These strategically located assets will fit, both commercially and operationally, with Crestone Energy Ventures and Northern Border Pipeline." NBP said $185 million will be paid in its own common stock, with the remainder paid in cash and assumption of liabilities. Pending shareholder and regulatory approvals, the acquisition is targeted for completion by the end of the first quarter.

Enron Energy Services and Owens-Illinois, Inc., a leading producer of glass and plastics packaging, have announced a 10-year energy management agreement covering 53 Owens-Illinois (O-I) manufacturing facilities in 20 states and energy purchases in excess of $2 billion. Under the initial agreement, Enron will work with Owens-Illinois to manage the supply of electricity and natural gas to O-I facilities and will continue to look for ways to reduce O-I's aggregate demand. Owens-Illinois is the largest manufacturer of glass containers in the United States, North America, South America, Australia, New Zealand, and China and one of the largest in Europe. O-I also is a worldwide manufacturer of plastics packaging. Enron currently manages energy at over 28,500 customer sites.

Sempra Energy completed the sale of its stake in retail marketer Energy America to Centrica plc, the British energy and home services company. The transaction was finalized following receipt of all required state and federal regulatory approvals. The $56 million sale was announced on Dec. 12, 2000. Sempra held a 72.5% ownership in the company. Energy America sells gas and electricity to about 400,000 residential and small-business customers nationwide. In August 2000, Centrica purchased Direct Energy Marketing, Canada's largest independent gas marketing company. The purchase included Direct Energy Marketing's 27.5% stake in Energy America.

Sempra Energy Solutions, meanwhile, announced it has signed a three-year agreement to provide energy services to members of AmeriNet, Inc., the nation's largest membership-based health care group purchasing organization. The contract, which became effective last June, is worth an estimated $85 million. Sempra will provide a choice of energy services for AmeriNet members to individually tailor their own programs, including: commodity supply, energy efficiency auditing, infrastructure ownership and management, and operations and maintenance. Sempra Energy Solutions' offerings include long-term gas or electricity commodity contracts.

DPL reported yesterday that it has notched a record for earnings per share before extraordinary items in 2000 at $1.56, a 15% increase over the $1.35 mark the company posted for 1999. Likewise, the company beat 1999's fourth quarter level of $0.27 per share by $0.10. For the fourth quarter, the company posted net income of $45 million, compared to the 1999 level of $40.6 million. For the year 2000, DPL's net income was $199 million, which shows a slight decrease from the $204.2 million the company showed in 1999. "Our 2000 financial and operating results reflect the significant steps we took in preparing the company for the deregulated energy market," said CEO Allen Hill. "In addition, our focus on merchant generation expansion will lead to continued industry leading growth." DPL expects 2001 earnings per share to increase more than 20% from the $1.56 in 2000 to $1.90. In addition, DPL forecasts that its earnings are expected to increase at an annual rate of at least 10% after 2001, and could reach a rate of up to 15%. Ohio-based DPL has two subsidiaries, DPL Energy and Dayton Power & Light Co.

A strong performance in the fourth quarter from its Aquila Energy subsidiary will lift UtiliCorp United's full-year 2000 earnings higher than estimated just three months ago, company officials said this week. The Kansas City, MO-based company now estimates 2000 earnings per share will be about $2.20, a 25.7% increase over the $1.75 earned in 1999. "Aquila's energy merchant business continued to be very strong through the fourth quarter," said President Robert K. Green. "Aquila's performance clearly enabled us to raise our expectations regarding year-end results." The company will give a 2000 earnings update on Feb. 8. CEO Richard C. Green Jr. said the company began reducing its exposure in the California market several months ago, and added, "today, we have no material exposure there."

Texas Railroad Commissioner Charles Matthews last week proposed that the commission look into "all possible solutions" regarding the high cost of natural gas. Discussions with representatives from the exploration and production sector, gas utilities and customer groups had convinced him that the state has to consider long-term solutions to ensure the gas supply is reliable and affordable. Along with the supply problem, Matthews said he also wants to research how to encourage more workers to enter the oil and gas industry, which has faced severe declines in the past few years. So far this winter, gas bills for Texas customers have been about 50% higher than they were last year. In June, the state begins its pilot deregulation program, which becomes a state-wide program next January. "Natural gas consumers have been calling with their complaints," said Matthews. "We have got to address this issue and work toward solutions in avoiding gas spikes." Matthews said he would work with Texas Rep. Steve Wolens, who chairs the House State Affairs Committee, on policies to increase drilling in Texas. He also wants to address the decline in the workforce on all levels of the oil and gas industry, from roughnecks to geoscientists to petroleum engineers. Education grants from federal agencies like the Departments of Energy and Labor also may be explored, he said.

Mississippi River Transmission (MRT) is considering construction of a new pipeline lateral from Horseshoe Lake, in Madison County, IL, to a connection with Natural Gas Pipeline Company of America in Clinton County, IL. The new line would be designed to provide firm transportation capacity of 230,000 Dth/d. MRT intends to construct the facilities under Section 311 (NGPA), but depending on the nature of the requests for capacity MRT may consider proceeding under Section 7c (NGA). The in-service target date for such capacity is June 2002. The solicitation will close on Feb. 19. For more information, contact Bob Derickson (314) 991-7373, Denise Fetsch (314) 991-7426 or Mike Stoll (314) 991-7405.

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