NGI Staff Reports

The Minerals Management Service published final rules implementing provisions of the Deep Water Royalty Relief Act of 1995 in the Federal Register Jan. 16. The act mandates volumes of royalty-free production from fields in water depths exceeding 200 meters, both for new leases (after Nov. 28, 1996) and for existing leases if production from those existing leases would not be economic without royalty relief. The act, which was enacted Nov. 28, 1995, has led to a surge of activity along the Offshore Continental Shelf of the Gulf of Mexico.

Attorneys for Granite State Gas Transmission and the Town of Wells squared off against each other last week at FERC over the merits of siting a controversial liquefied natural gas (LNG) facility in the Maine community.

While the Energy Information Administration (EIA) is bullish ongas production capacity, at least one analyst group holds a morereserved view. And 1997 year-end production data released last weekby two independents, while up, isn’t enough information to predictfuture production trends.

EOG reported net income of $43.2 million, or 28 cents/share for Q4 1997, up from $35.1 million, or 22 cents/share, for Q4 1996. Net operating revenues totaled $238 million, up from $204.3 million in Q4 1996. Discretionary cash flow totaled $173.6 million, up from $153.2 million for Q4 1996.

While the deep-water Gulf of Mexico continues to be a hot spot for E&P spending in the U.S., analysts are expecting a sharp slowdown in spending growth at most other domestic locations next year, a significant contrast to the record spending growth in the U.S. over the past two years. According to Salomon Smith Barney’s 16th annual survey of worldwide E&P expenditures, there will be a general shift toward greater spending overseas in 1998.

Cogeneration has hit the single family home market with a new system that produces electricity every time the heater kicks in. Now available in New England and eastern Pennsylvania, the 5 kW units can be powered by fuel oil, propane or natural gas and in many cases wipe out electric bills altogether.

Hoping to continue 1997’s over-book-value bidding on fossil-fuel plants, Pacific Gas and Electric will auction four more natural gas-fired power plants and one geothermal power plant later this year. The plants collectively represent $850 million in book value, 4,712 MW of capacity and a total natural gas load (on the four gas-fired plants) of 273 MMcf/d.

The Midwest ISO, now consisting of nine companies covering eight states, 32,000 miles of transmission and 63,000 MW of electric power, has made its initial filing at the Federal Energy Regulatory Commission, just a month after some onlookers thought the plan was dead. In December major participants backed away from a five-year commitment to consider joining an alternative plan (see NGI, 12-15).

The Michigan Public Service Commission (PSC) completed final action on rehearing orders required to introduce competition to the state’s electric utilities. By a 2-1 vote, the commission adopted a phase-in schedule to allow 2 «% of customers of Consumers Energy and Detroit Edison to select a supplier as early as March 31 if federal regulatory approvals are obtained.