NGI Staff Reports

ANR Pipeline Company’s long-standing rate settlement won approval from the Federal Energy Regulatory Commission last week, but without FTS-3 short-term service rates, and without the Commission agreeing to lift the “at-risk” condition on several projects, as the pipeline had hoped it would.

Rep. Ralph Hall, D-TX, said he believes this Congress will votestand-alone legislation to repeal the Public Utility HoldingCompany Act (PUHCA) as hopes for a comprehensive electricrestructuring bill fade. Talking to reporters after addressing theNatural Gas Roundtable in Washington Tuesday, Hall said the longerCongress puts off comprehensive legislation, the better theprospects get for piecemeal measures.

In a deal that could be the first of its kind in the nation,Pacific Gas and Electric is locked in serious negotiations withnorthern California natural gas producers to sell them itsextensive utility gas gathering system linked to in-state wells,most of which are in the dry gas fields of the greater SacramentoValley. The deal being sought, which is expected to take the betterpart of 1998 to gain final regulatory approvals, is an offshoot ofthe omnibus Gas Accord unbundled intrastate transmission andstorage services that start March 1.

Two new gas-fired power stations announced last week will jointhe 18,300 MW of planned gas-fired power plants in the Northeastregion recently tallied by Resource Data International (RDI) ofBoulder, Colo. (see NGI, 02/09/97).

In announcing a $891 million net loss in 1997 ($17.14 pershare), Pioneer Natural Resources said it plans to sell off 95% ofits domestic fields in 1998 to “unlock the value” contained in itslong-lived reserve base and acreage position. The fields represent10-12% of its total reserve base and the sale is estimated to bringin $375-$550 million. About 95% of its domestic fields generateonly 15% of the company’s total cash flow, said CEO ScottSheffield. “Most of Pioneer’s domestic value is attributable toabout 25 of the company’s 450 fields. The purpose of this programis to shed non-strategic properties, redeploying the proceeds intohigher return assets. Exact timing of the sales will depend onmarket conditions.” The vast majority of these fields were acquiredby Parker and Parsley prior to 1995.

Any hopes the Federal Energy Regulatory Commissioners may havehad they could finally bury the controversy over the agency’soffshore jurisdiction were dashed by the Fifth Circuit Court ofAppeals earlier this month.The court, without discussion, refusedthe Commission’s rehearing petition in Sea Robin Pipeline v. FERC(96-60536), letting stand the court’s decision vacating andremanding the case.

A Mexican pipeline subsidiary of Tejas Gas is squaring offagainst a pipeline company owned by Nova Corp. and NGC Corp. Bothfirms have competing gas pipeline projects designed to bring about90 MMcf/d of gas nearly 80 miles to the Toluca metropolitan area,50 miles west of Mexico City, from a point of origination inQueretaro, north of Mexico city.

The way FERC figures pass-through of costs in oil pipeline ratecases could hamper future use of converted lines, according toCommissioner Vicky A. Bailey, who issued dissenting opinions in twooil pipeline cases involving Rio Grande and Longhorn PartnersPipelines [OR97-1-001 and OR95-7]. In both cases the Commissionruled that the companies would not be allowed to pass through thefull purchase price of the pipelines, only the depreciated originalcost of the line. “In an area where Congress has asked us toexercise regulatory restraint we turn around and apply textbookprinciples in a manner that may discourage future conversions ofoil pipelines to new uses,” Bailey said. The orders examine thecorporate relationships between the companies to arrive at theconclusion that the companies are selling assets to themselves. ButBailey believes arguments about corporate ties in these cases don’tapply. She was joined by Commissioner Curt Hebert.

Season Deemed a Success