Vancouver-based Epic Oil and Gas Ltd. said that AEC Storage and Hub Services Inc., a subsidiary of Alberta Energy Co. Ltd., has given notice to Epic’s U.S. subsidiaries Rival Resources Inc. and American Safari Resources Inc. that it is terminating its letter of agreement on the Birch Bay Gas Storage Project in northwest Washington State. In October 2000, Epic said AEC completed a four-mile seismic survey over part of the project area. The results of this work did not meet AEC’s expectations and consequently AEC suspended work on the project. In accordance with the terms of the agreement, AEC will pay to Rival and American Safari a substantial portion of a $50,000 “Success Fee.” In conjunction, Rival and American Safari have assigned to AEC thirty-eight oil and gas mineral leases covering 621 acres in the project area. Epic said the AEC decision will not negatively affect progress on Rival and American Safari’s ongoing natural gas exploration program in the same general area of Washington State; in fact the receipt of the Success Fee will assist work. The companies said results of recently completed programs in the area are “very encouraging.” The companies are scheduled to drill some of the best shallow natural gas targets this winter, Epic said.

CMS Energy Corp.’s energy marketing unit, CMS Marketing, Services and Trading (CMS-MST) reported that it has signed an agreement with Gas Natural Trading of Spain whereby CMS-MST will become Gas Natural’s exclusive agent to market cargoes of liquefied natural gas into North America. “We believe this contract will be the beginning of a long and fruitful relationship involving additional areas of mutual interest,” said Tamela Pallas, president of CMS Marketing, Services and Trading. “This agreement will bring additional LNG to the North American market and ensure the optimum value for that commodity.” CMS Energy owns and operates North America’s largest LNG import facility located at Lake Charles, La. CMS-MST has 11,000 customers throughout the eastern and central United States and Canada. CMS-MST markets annually more than 600 Bcf of physical natural gas, 3.7 Tcf of financial gas, 37,781 GWh of electricity, 31 million barrels of oil and 9 million barrels of liquids. CMS Marketing, Services and Trading also provides energy management services.

Denbury Resources said it has reduced its projected 2002 development and exploration budget by $25 million (20%) to $95 million to adjust for the loss in potential revenue and cash flow during 2002 from its natural gas hedges with Enron Corp. and for the general decline in commodity prices. The spending cut is expected to reduce its 2002 production only 2%, from its previously announced target of 36,000 boe/d to 35,250 boe/d. The company said it currently is pursuing legal remedies to protect itself as a creditor in the Enron bankruptcy proceedings and is reviewing other options available. The spending cut partly reflects cost savings because of lower oil field costs, but also the postponement of various projects from 2002 to 2003. About one-third of the reductions relate to natural gas projects offshore, 20% relate to CO2 projects and the balance to the company’s other core areas of eastern Mississippi and southern Louisiana, together with overall anticipated cost savings. The company also repositioned its gas hedges by securing collars for 2002 with a floor price of $2.50/MMBtu and an average ceiling price of $4.15/MMBtu covering 90 MMcf/d, which represents 75% of the company’s anticipated gas production for 2002. The cost of this hedge was $5.2 million and has been secured from four separate counterparties. “We are committed to maintaining a strong balance sheet, which also allows us to preserve our bank credit line ($89 million) for potential acquisitions, which should be attractive in a weak commodity price environment,” said CEO Gareth Roberts.

Piedmont Natural Gas is planning to build a new pipeline to deliver gas supplies to Duke Power’s Mill Creek gas turbine electric generation facility, which is scheduled to go into service by June 2003. The peaking plant will use eight simple cycle turbines to generate 640 MW of power. It will be located in Cherokee County, SC. The agreement marks the fifth contract for power generation-related pipeline investments by Piedmont in the Carolinas, and its second such project with Duke Power. Piedmont already serves Duke Power’s Lincoln County plant in North Carolina. Through these five agreements, Piedmont will have invested over $10 million dollars to deliver natural gas to over 4,500 MW of generating capacity in the Carolinas by 2003. Duke Power, a division of Duke Energy, provides electricity to two million customers in North Carolina and South Carolina. It operates 19,300 MW of power generation. Piedmont distributes gas to 710,000 residential, commercial and industrial customers in North Carolina, South Carolina and Tennessee.

Calgary-based Canadian Superior Energy Inc. said that it has commenced drilling of the first of three deep gas wells it proposes to drill over the next 90 days in the Farmington, Umbach and Altares areas of northeast British Columbia. The first test well on this new 5,120-acre prospect is targeting the highly prospective Kiskatinaw formation at a cost of approximately C$1.5 million and it will be drilled to a total depth of 2,500 meters. The company estimated reserves range up to 20 Bcf per well with deliverability in the area ranging from 8 to 10 MMcf/d per well. Several follow-up locations are present on this new play. Furthermore, Canadian Superior’s President Greg Noval said that in the Umbach area, approximately 80 miles northwest of Fort St. John, operations are currently underway to drill a 1,160 meter test well targeting the lower Cretaceous Cadomin and Gething formations. Canadian Superior is the operator of this 1,250-acre prospect with a 62.5% working interest. The new Umbach well is a follow-up well to a recent Canadian Superior discovery at a-45-F/94-H-3, which was put onstream by the company at 1.5 MMcf/d in late November. In addition, in the Altares area approximately 45 miles west of Fort St. John, Canadian Superior is preparing to drill a 2,525 metre Debolt test targeting large reserves estimated at from 100 to 500 Bcf in the Mississippian formation.

A unit of Williams announced that it has completed facilities necessary to transport natural gas to the Bluegrass Generation Facility being built by Dynegy Inc. about 20 miles northeast of Louisville, KY. Williams said the 500 MW power plant, which is scheduled to begin commercial operation during the second quarter of 2002, will be able to receive up to 165,000 Dth/d of natural gas through a meter station recently completed on Williams’ Texas Gas pipeline system. “We look forward to providing reliable, cost-effective natural gas service to Dynegy’s Bluegrass Generation Facility,” said Dean Jones, vice president of customer services and rates for Williams’ Central and Texas Gas pipeline systems. “Service to this plant is part of Williams’ growing nationwide commitment to the fast-emerging power generation market.”

Oil exploration and refining company Amerada Hess Corp. said it is expecting higher 2002 production, but will take a fourth-quarter $50-$75 million charge related to the collapse of Enron and other one-time expenses. Hess forecast 2002 hydrocarbon production would be 475,000 boe/d, up 9% from 2001. Earlier this year, Hess bought oil producer Triton Energy for $2.7 billion, shifting its emphasis from refining to the more profitable exploration and production side of the business. It 2002 capital expenditures are expected to be $1.75 billion, slightly higher than the $1.65 billion forecast in November. Its 2001 spending will be about $5.2 billion, including $3.7 billion in acquisitions. Excluding acquisitions, 2001 spending was $1.5 billion.

Pursuing a strategy to expand non-utility energy infrastructure businesses alongside its core utility operations in the Pacific Northwest, Bellevue, WA-based Puget Energy announced that it has bought Skibeck Pipeline Co., which it described as a “leading East Coast provider of natural gas transmission pipeline construction.” Skibeck will retain its name and 200 employees, operating regionally out of its headquarters in Randolph, NY, under Puget’s non-utility division, InfrastruX. This is the eighth energy construction firm Puget has purchased, said a corporate spokesperson, who noted that none of the construction firms do business with Puget Sound Energy, the combination natural gas and electric utility operating in northwestern Washington state. The other companies it purchased handle distribution and transmission construction for both electric and natural gas facilities in the Mid-Atlantic and Midwest regions of the country. Puget Energy did not disclose the purchase price and would not say how much it has spent on its eight energy contractor acquisitions so far, but it has said that it expects $200 million in revenue from the firms collectively as they are integrated under InfrastruX.

Tri-Valley Oil & Gas Co. (TVOG) has begun farming out working interest units in its Oil Creek play near Coalinga, CA. TVOG said it has mapped a potential of six separate pay zones to 12,500 feet in the exploratory wildcat prospect, which is north along the trend of the giant Kettleman North Dome Field. The company speculates an unproved potential of up to 125 million barrels of oil and up to 375 Bcf of natural gas from the multiple targets. Project costs are estimated in the range of $3.5 million, including drilling and completing the initial test well. “It’s a wonderfully prospective area where the 1 billion barrels of oil equivalent Coalinga Field was discovered in 1890 by drilling near oil seeps. New technology as well as downhole information from thousands of wells drilled in the area vastly enhances our present search data now,” said Joseph R. Kandle, TVOG president. The Oil Creek Prospect is located in the middle of a horseshoe-shaped configuration of huge producing oilfields surrounding Coalinga, which have given up nearly 1.5 billion barrels of oil and 887 Bcf of gas, according to TVOG. Just eight miles to the south, Kettleman North Dome has produced 458 million barrels of oil and nearly 3 Tcf of natural gas.

Quanta Services Inc. announced that its subsidiary, Haines Construction, has been contracted by Enbridge Midcoast Energy to build over 50 miles of natural gas pipeline in northwestern Alabama. Enbridge Midcoast Energy is a subsidiary of Alberta-based Enbridge Inc. Under the $23 million contract, Quanta said it will install the 30-inch pipeline and all associated metering and delivery facilities.

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