Williams and AES Corp. re-lit the flame under their cozyrelationship last week. Williams signed a 20-year agreement withAES to supply gas and market 832 MW of generating capacity andassociated energy and ancillary services from AES’ planned Red Oakpower facility in Sayreville, NJ. Financial terms of the agreementwere not disclosed. Red Oak will generate power to be sold to thePennsylvania-New Jersey- Maryland (PJM) markets. Construction onthe gas-fired, combined cycle plant began earlier this month andoperations are scheduled to begin in the first quarter of 2002. Itis the third deal between the two companies. In May 1998, theysigned a similar agreement under which Williams provides fuel toand markets 4,000 MW of capacity and associated energy andancillary services from three of AES’ southern Californiagenerating stations. And in February 1999, Williams reached anagreement to supply fuel to and market 700 MW of capacity andassociate energy and ancillary services from AES’ Ironwood facilityin South Lebanon, PA, which is currently under construction. AESRed Oak completed a $384 million non-recourse project bondfinancing yesterday for the construction of the New Jerseyfacility. AES’ total investment in the plant will be $440 million,which includes an equity contribution of $56 million. RaytheonEngineers & Constructors, Inc. began construction earlier thismonth.

Williams Gas Pipeline-Central received a certificate from theFederal Energy Regulatory Commission to provide up to 55,000 Dth/dof additional firm gas transportation service to the EmpireDistrict Electric Company State Line Plant in Jasper County, MO.Williams plans to uprate its Blackwell-Cotton Valley pipeline inWashington County, OK, from 500 psi of maximum allowable pressureto 690 psi. It also will lay 37 miles of 20-inch pipe in Labetteand Cherokee Counties, KS, to extend to its Southern Trunk loopline. And it will add measurement facilities at the Empire Plant.Empire is installing an additional gas turbine, two heat recoverygenerators and a steam turbine generator to create a 500-plus MWcombined-cycle plant. Williams currently provides up to 28,800Dth/d of gas to the plant.

Coastal Corp. said its Gulfstream Natural Gas System LLC hashired Berg Steel Pipe of Panama City, FL to manufacture and delivermost of the steel pipe needed to build the system. Gulfstream is aplanned 744-mile pipeline that would extend from Mobile Bay, AL,across the Gulf of Mexico and across the Florida Peninsula. Bergwill begin production of the pipe in the fall of 2000 inanticipation of initial deliveries prior to construction start-upin June of 2001. This timetable will keep Gulfstream on track formeeting its targeted in-service date of June 2002. Gulfstream isdesigned to transport up to 1.13 Bcf/d. Ten non-affiliated utilityand power-production customers have made long-term, bindingcommitments for the majority of the capacity on the system. InOctober Gulfstream filed an application with FERC to build andoperate the $1.6 billion system.

Kerr-McGee Corp.’s board approved development of two deepwaterGulf of Mexico fields, Boomvang and Nansen, which are expected toproduce significant quantities of gas and oil. Located in 3,700feet of water, Boomvang includes East Breaks blocks 641, 642, 643,688 and 732, and Nansen includes East Breaks blocks 601, 602 and646. The fields will be developed using two independent spars thatwould link to oil and gas export lines. The Boomvang spar will bedesigned for production of 30,000b/d of oil and 200 MMcf/d of gas.At Nansen, spar design is for production of 40,000 b/d of oil and200 MMcf/d of gas.

Seeking to improve on their various generation plays across thecountry, Panda Energy International, Inc., signed an $800 millionlong-term service agreement contract with GE Power Systems coveringsix power plants currently under development. The serviceagreements and commitment represents purchases of 24 gas turbinesand 12 steam turbines. The new power plants will be located inOklahoma, Arizona, Florida and Pennsylvania with the other sites tobe named later. Two Florida projects were announced last week (seeNGI, March 13). Both plants will generate 1,000 MW and burn 170MMcf/d. GE Energy Services now has more than $9 billion incommitments for long-term service agreements worldwide.Dallas-based Panda projects that by 2007, the demand for power inthe international market will be approximately 740,000 MW. By thatsame year, Panda estimates that around 80% of all domestic powerplants will operate as merchant facilities. Panda’s overall goal isto become one of the fastest-growing independent electricgenerators in the country. Currently, the company owns facilitiesthat produce a total of only 410 MW. However, the privately heldcompany has 10 GW of power under development across the UnitedStates. Construction is currently under way on three 1,000 MWfacilities in Marion, Paris and Odessa, TX. The company alsooperates plants in Roanoke Rapids, NC, and Brandywine, MD.

Equitable Resources combined its Gulf of Mexico exploration andproduction unit with Westport Oil and Gas Co., a privateDenver-based exploration company. Equitable will receive about $50million in cash and a large minority interest in Westport.Equitable also will name three representatives and nominate afourth to the Westport board, bringing Westport’s board membershipto nine. “We believe that Westport, with its size, balancedportfolio, and an outstanding shareholder-oriented management teamled by Don Wolf, is a prime candidate to access the public equitymarkets in the near future,” said Murry S. Gerber, Equitable CEO.Equitable will use the cash proceeds to help finance its recentacquisition of Statoil Energy Inc.’s Appalachian assets (see DailyGPI, Jan. 5) and for possible share repurchases. Equitable expectsto reflect its investment in Westport using the equity method ofaccounting. Westport has gas and oil production in the Rockies,Midcontinent and Gulf Coast and was formed in 1991 by a Europeaninvestment firm that will continue to have a significant ownershipstake. Westport CEO Don Wolf will retain his position and willremain a member of Westport’s board. As a result of thistransaction, which is expected to close in April, Westport willhave approximately 430 Bcfe proved reserves and 68 Bcfe annualproduction. The company will have a combined reserve life of 7.2years and will be equally balanced between oil and gas. Westport’sreserves will be entirely located within the United States, with60% onshore and 40% in the Gulf of Mexico. Westport’s Gulf ofMexico operations will be run from Houston, the presentheadquarters of Gulf operations for both Westport and Equitable.

Nicor Gas said gas customer participation in its Customer Selectpilot program has grown to 101,000. The program is now entering itsthird year. This year, residents of multiple new communities andall business customers throughout Nicor Gas’ territory have theopportunity to enroll. There are three weeks remaining in the signup period. “Customer Select has become one of the largest naturalgas pilot programs in the country,” said John Madziarczyk, directorrate projects for Nicor Gas. “As the energy industry deregulatesand choice becomes more familiar to customers, we expect to seeCustomer Select continue to grow.” Suppliers marketing toresidential and business customers include Corn Belt Energy, TheEnergy Cooperative, Nicor Energy LLC, Volunteer Energy Services andWPS Energy Services. Suppliers marketing only to business customersinclude AmGas/MidAmerican Energy, CMS Energy Marketing, EnergyUSA,Nicole Energy Marketing, Peoples Energy Services, Reliant Energy,Santanna Energy Services, Unicom Energy Services and UtiliCorpEnergy Solutions. Nicor Gas serves more than 1.9 million Illinoiscustomers.

Duke Energy plans to transfer its general partner interest inTEPPCO Partners LP to Denver-based Duke Energy Field Services(DEFS) by the end of March. TEPPCO’s headquarters will remain inHouston. “We believe that this transfer improves TEPPCO’s and DEFS’business position in the midstream natural gas industry andprovides significant additional flexibility in pursuingacquisitions,” said Fred Fowler, Duke Energy’s group president forenergy transmission. “We’re excited that the TEPPCO generalpartnership interest will be a part of the recently announcedcombination of the midstream natural gas businesses of Duke Energyand Phillips Petroleum,” said Jim Mogg, president of Duke EnergyField Services. TEPPCO Partners, L.P., is a publicly traded masterlimited partnership, which conducts business through two operatingcompanies. TE Products Pipeline and TEPPCO Crude Oil. DEFS is thenation’s largest producer of natural gas liquids (NGLs), one of thelargest natural gas gatherers and marketers and one of the largestNGL marketers. The company operates 52 plants today in seven U.S.states and Alberta, Canada.

Duke Energy Gas Transmission completed the acquisition of EastTennessee Natural Gas, formerly a wholly owned subsidiary of ElPaso Energy. East Tennessee owns and operates two mainline systemsin central Tennessee that converge near Knoxville, extending to apoint near Roanoke, VA. The pipeline, regulated by the FederalEnergy Regulatory Commission, has a design capacity of 700 MMcf/dand provides unbundled, open-access transportation and storageservices to 40 local distribution companies and 16 industrialcustomers in the region.

Excelergy, a software solutions company that is currentlyinvolved in projects with Altra, Southern California Gas Co. andEastern Enterprises, announced yesterday that it plans to gopublic. The Boston-based company filed its registration statementwith the SEC last week. All of the company’s shares are beingtendered for sale, Excelergy said. It intends to use the netproceeds for general corporate purposes including working capitaland potential acquisitions. The company specializes in billing andcustomer information software applications. Current products on themarket include the ABP 3000 customer relationship management andbilling software, the eXACT family of business-to-businesstransaction management solutions and the e-Choice NetInternet-based consumer choice solution. When available, copies ofthe preliminary prospectus may be obtained by the IPO’sunderwriter, Deutsche Banc Alex. Brown.

The Turbo Genset Co. Ltd.; DTE Energy Technologies, a subsidiaryof DTE Energy Co.; and Pratt & Whitney Canada Corp. arepartnering to develop a 333 kW generator set targeted tosmall-to-medium commercial and industrial distributed generationcustomers and micro-grids serving residential and commercialprojects. The companies plan to use turbine engines from Pratt& Whitney and high-speed generators from Turbo Genset. DTEEnergy Technologies would provide controls for integration intomicro-grids, utility interfaces and market the packaged systems.The systems target loads too large for reciprocating orturbocharger-based engines. Pre-commercial units are expectedwithin 12 months with commercial production beginning in 2002.

Reliant Energy has broken ground for a 340 MW gas-fired peakingplant in Illinois, the company’s first merchant power-generationproject in the state to receive all required governmentalapprovals. Known as Reliant Energy Shelby County, the plant islocated in Shelby County, near Neoga, in Central Illinois, 180miles south- southwest of Chicago. It will occupy a small portionof an 80.1-acre parcel of land, most of which will still be farmed,in Big Spring Township. “This plant will provide needed electricalpower for Illinois customers during times of peak electricitydemand and do so in an environmentally friendly manner,” said JoeBob Perkins, president and chief operating officer of the ReliantEnergy Wholesale Group. “The plant is well-positioned neartransmission lines and natural gas pipelines, and it has clearaccess to the markets that require energy,” Perkins noted. “We areparticularly pleased that the plant is on schedule to meet anaggressive target of commercial operation this June.”

LG&E Energy and PowerGen plc filed a joint application withthe Kentucky Public Service Commission seeking approval of theirdefinitive merger agreement. The company hopes to have the KentuckyPublic Service Commission issue an order by May 15. In a separateaction yesterday, the U.S. Securities and Exchange Commission (SEC)approved a merger of National Grid Group plc of the United Kingdomwith the New England Electric System of the United States-atransaction very similar to the LG&E Energy-PowerGen agreement.”This filing with the Kentucky Public Service Commission keeps uson schedule to complete the merger within nine to 12 months,” saidLG&E Energy Chairman and CEO Roger W. Hale. “In addition, theSEC’s approval of foreign ownership of a U.S. utility companyclearly helps move our approval process forward. Our transaction isvery similar to the National Grid Group-New England Electric Systemdeal.” LG&E Energy and PowerGen announced a merger agreementlast month in an all-cash transaction valued at $3.2 billion. Themerger will create a global power company with assets of nearly $12billion and total revenues of $8.7 billion, serving four millioncustomers worldwide. LG&E Energy Corp. owns and operatesLouisville Gas and Electric, a regulated electric and gas utilityserving Louisville, KY, and 16 surrounding counties; and KentuckyUtilities Company, a regulated electric utility, based inLexington, KY, which serves customers in 77 Kentucky counties andfive counties in Virginia. PowerGen is a British company and one ofthe world’s major power businesses. It is one of the UK’s leadingintegrated gas and electric companies, generating about 14% of theelectricity needs of England and Wales. The company has a growingretail customer base of over 2.6 million customer accounts.

The Midwest Independent Transmission System Operator (MidwestISO) and MAPPCOR have completed definitive agreements that providethe details of the proposed combination of their organizations. TheMidwest ISO’s board approved the agreements at the March 16meeting. The documents will now be presented for approval at theMarch 22-23 MAPPCOR board meeting. MAPPCOR, the sole contractor tothe Mid-Continent Area Power Pool, carries title to assets andemploys more than 100 people.

Nearly two years after embarking on a joint venture (JV) toexplore, drill and produce gas from a plethora of Midcontinentproperties, Gothic Energy and Chesapeake Energy announced yesterdaythat they have revised the terms of their agreement. Under theterms of the revision, Chesapeake will exchange its ownership of$61 million worth of Gothic securities for a larger role in theventure. By giving up its right to the securities, Chesapeake willgain an extension of the JV for three years. Chesapeake is alsogranted a right of first refusal on any Gothic propertydispositions and will immediately resume operations of 28 wellswhich were drilled and completed by Chesapeake under the JV, butwhich were operated post-completion by Gothic. In the future,Chesapeake will have the first right to drill, complete and operatewells in most JV areas. The properties include Amoco’s interest insome of Oklahoma’s most prolific natural gas fields, in theAnadarko and Arkoma Basins. The deal also includes some permanentassignments of Gothic wells to Chesapeake ownership. Chesapeakeestimated that the amount of proved reserves gained by thisrevision is 15 Bcfe with a book value of $10 million.

In a move that sent one of the major utilities in theIowa-Illinois area to the private sector, an investor groupincluding Berkshire Hathaway Inc. and MidAmerican Energy CEO DavidSokol completed its MidAmerican Energy purchase, after receivingfinal regulatory approval from the Iowa Utilities Board. The $9billion transaction was first announced last October. MidAmericanis now a privately-owned company with publicly traded fixed-incomesecurities. Company headquarters will continue to be in Des Moines,IA, with the office of the chairman and CEO remaining in Omaha, NE,to focus on strategic planning, mergers and acquisitions and globaldevelopment. MidAmerican Energy Holdings is the corporate parent ofMidAmerican Energy Co., a utility with 653,000 electric customersand 622,000 natural gas customers in a 10,600-square-mile area fromSioux Falls, SD, to the Quad-Cities areas of Iowa and Illinois. Thecompany employs 9,800 people.

Another Midwest merger appears close to the finish line.Sigcorp, said last week it has received final approval from the SECto merge with Indiana Energy Inc. (IEI) and form Vectren Corp. Thecompanies expect to finish the deal by March 31. Previously, thecompanies received the approval of the FERC and the Department ofJustice to proceed with the merger. When finalized, Vectren will bethe largest gas and electric utility in Indiana, service to morethan 650,000 customers in adjoining service areas that cover nearlytwo-thirds of the state. Vectren’s non-regulated subsidiaries willoffer energy-related products and services, including energymarketing, fiber-optic based communication services, and utilityrelated services including materials management, debt collections,locating, meter reading and trenching services to customersthroughout the surrounding region.

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