While an agreement is still under discussion and nothing hasbeen finalized, a Coral Energy official confirmed Friday thatparent company Royal Dutch/Shell and U.S. construction giantBechtel Enterprises will fold InterGen, InterGen North America andcertain assets of Coral Energy into one business.

Jimmy Fox, a spokesman for Houston-based Coral Energy, said thathe was unsure of the timetable, but knew that Royal Dutch/ShellChairman Mark Moody-Stuart had said there could be an announcementof a deal in about four weeks. Moody-Stuart told Reuters in aninterview that he expects to announce news of a $3 billion projectwith 50-50 power generation partner Bechtel “in a month or so.”

Shell and Bechtel formed InterGen North America last year todevelop, finance, own and operate large-scale independent powerprojects and co-generation facilities in the United States and Canada(see Daily GPI, March 15). InterGen isan international power generation venture owned by Shell GeneratingLtd. and a subsidiary of Bechtel Enterprises Holdings Ltd., which wasfounded in 1995. Coral is an affiliate of Shell, first formed by Shelland Tejas Gas in 1995. Shell bought Tejas in 1998, and last year,rolled all of its assets into Shell’s.

The deal to form one company will more closely align Coral’s gasand power assets with InterGen’s and InterGen North America’sdownstream gas division, Fox said. A separate stock marketflotation also could follow next year, according to Moody-Stuart.

In June, Bechtel and Royal Dutch/Shell agreed on a U.S. venturethat would give Shell 75% and the possibility of a separate stockmarket listing in 2001. Most of the start-up assets are expected tobe the United States, with long-term plans to grow globally, bothinternally and by acquisition. Bechtel would use the joint ventureto obtain construction contracts for combined cycle gas turbinepower stations.

Shell had previously announced that it would expand InterGen’sone gigawatt generating capacity by 2002, with growth in the UnitedStates, Europe, Argentina, Brazil, South Africa, India, China andMalaysia. How the deal is structured with Coral’s assets remains tobe seen, said Fox.

“Coral mostly has gas pipeline and storage facilities, and Coralalso has a certain amount of power generation assets,” Fox said.”But I cannot comment on what assets Shell would have in theagreement.” He said the new company would only involve some assetsof Coral’s, and not the entire company.

Coral has quite a few assets to choose from – pipeline, gastransmission, gas storage, gas reserves and power generationcapacity. Its onshore pipeline system includes 6,100 miles ofdedicated unregulated intrastate pipelines, with an averagecapacity of 5.5 Bcf/d and more than 300 pipeline interconnects.

The Coral Gas Transmission Co. is a 900-mile network ofgathering lines and interstate transmission systems, making it oneof the largest gas transporters in the Gulf of Mexico. Coral alsohas 128 Bcf of gas storage capacity, 460 MMcf/d injection capacity,and 1,325 MMcf/d withdrawal capacity. Along the Gulf Coast, Coralhas three storage facilities and 800 MMcf/d interconnects todeepwater production in Louisiana.

Coral also has access to gas reserves in South Texas, the GulfCoast and the Gulf of Mexico, which jointly produce more thantwo-thirds of the U.S. natural gas supply. The company also hasaccess to 2.5 Bcf/d of gas from Shell. Onshore access, combinedwith access to the Gulf of Mexico, contributes to Coral’s salesvolumes, which are in excess of 10 Bcf/d. It also controls powergeneration capacity through ownership, tolling and other allianceswith power generators.

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