Gulf Midstream Services (GMS), a partnership between KeySpanEnergy Development Co. (KEDC) and Gulf Canada Resources, enlargedits Canadian midstream presence last week by announcing anagreement to buy Barrington Petroleum’s 38% interest in the PaddleRiver gas plant and related gas gathering systems. The $9 millionpurchase gives the partnership 76% interest in the only plant thatwill be directly connected to both the ATCO Pipeline system and theAlliance Pipeline. The Paddle River facilities are located 62 mileswest of Edmonton, AB. The plant is capable of processing up to 82MMcf/d of raw sour gas. With current throughput of about 42 MMcf/d,the plant’s unutilized capacity represents a significantopportunity, GMS said. “With increased industry activity in thearea and the Alliance Pipeline connection, we expect this plant tobe an attractive long-term investment for KEDC,” said GMS presidentJim Bertram.
Altra Energy Technologies Inc. and Junot Systems Inc., anenterprise application integration (EAI) solutions provider, madean alliance to provide gas pipelines with Altra Web as astand-alone GISB-compliant web-based electronic bulletin boardsolution. Using Junot’s NLINK product to connect Altra Web toexisting bulletin boards allows pipelines to streamline GISBcompliance. Benefits are improved scheduling and management ofpipeline operations data. “This alliance will offer our customers afast, easy and cost-effective way to establish GISB-compliancewhile maximizing their investments in their existing back-enddatabases and systems,” said Paul Bourke, CEO of Houston-basedAltra. “Altra Pipeline, which provides customers with a completeturnkey solution, was the first software product on the market toachieve GISB product certification. Altra Web provides a solutionto those customers that want to retain their existing back-endsystems but still need GISB compliance.”
Forcenergy Inc. reported a blowout last week on an exploratorywell at West Cameron Block 317, located 65 miles south of LakeCharles, LA, in the Gulf of Mexico. The blowout occurred duringcompletion operations, but it has not ignited. All personnel havebeen safely evacuated from the Marine Drilling Rig No. 4. Wellcontrol specialists, including Boots & Coots, arrived on thescene and preparations began to bring the well under control.Marine Drilling, based in Sugar Land, TX, owns the jack-up riginvolved in the blowout. Because it was an exploratory well, RussPorter, a Forcenergy spokesman, said there are no estimates as tohow much gas the well could produce. In addition, the situation isstill being played out, Porter said, so cost estimates on fixingthe problem are not available either. “Right now, we expect to beable to recover the well,” Porter said. “Hopefully, this will justbe a small incident.” The blowout is an addition to the problemsthat have plagued the company for the past year. In March of 1999,Forcenergy declared bankruptcy. At the time, the company owed $315million from a $320 million credit facility as well as $50 to $60million of payables to vendors.
Oneok Inc. closed its $307.7 million acquisition of Dynegy’smidstream assets last week, and now is focusing on its other majorMidcontinent deal with Kinder Morgan. The assets involved in theDynegy deal include eight gas processing plants, interests in twoother plants and 7,000 miles of gas gathering and intrastatetransmission systems in Oklahoma, Kansas and the Texas Panhandle.Current processing plant throughput is 240 MMcf/d with a capacityof 375 MMcf/d. Gas liquids production averages 25,000 b/d, morethan doubling Oneok’s existing production. About 75 employees willbe added to the ONEOK workforce as part of the acquisition. Oneokalso has pending a definitive agreement with Kinder Morgan Inc., topurchase all of KMI’s gas gathering and processing in Oklahoma,Kansas and West Texas for $114 million. Through the KMI deal, Oneokwill assume the operating lease associated with the Bushton, KS,gas processing plant; and assume long-term capacity commitments onNatural Gas Pipeline Co. of America and on Kinder Morgan InterstateGas Transmission. It represents in excess of 12,000 miles ofpipeline, six gas processing plants with capacity of 1.26 Bcf/d and10.5 Bcf of storage. The deal also includes KMI’s (former KNEnergy’s) entire marketing and trading operation. Closing isexpected in a few weeks.
PECO Energy Co. of Philadelphia, PA, submitted a joint petitionfor settlement to the Pennsylvania Public Utility Commission forits proposed merger with Unicom Inc. The settlement involves nearlytwo dozen parties. It includes rate reductions and extended ratecaps, electric reliability and customer service standards,mechanisms to enhance competition and customer choice, nuclearsafety research funds and customer protection against nuclear costsoutside of Pennsylvania. Ken Lawrence, PECO Energy Distributionpresident, said the settlement agreement balances the interests ofall parties, contains major customer benefits, avoids extended,costly litigation and is consistent with PUC policies promotingnegotiated settlements.
The Edison Electric Institute’s Alliance of Energy Suppliers andthe National Energy Marketers Association (NEM) recently introducedenergy and financial professionals in the Southwest to the newStandardized Master Power Contract for the nation’s wholesaleelectricity market. The Master Contract will help to increase theliquidity of the nation’s wholesale power markets by eliminatingthe array of power contracts and tariffs now being used around thecountry. The next workshop on the Contract will be held in New YorkApril 25. “Numerous players are participating in today’scompetitive wholesale power markets,” said Richard F. McMahon Jr.,Group Director, EEI’s Alliance of Energy Suppliers. “Many differentcontracts and tariffs are in place. This makes trading across thecountry more risky and complicated. As the Standardized MasterPower Contract gains wider acceptance, we will see powertransactions simplified with less risk and uncertainty.” Thecontract is available on EEI’s Web site atwww.eei.org/alliance/new.htm.
Almost a year after it entered Chapter 11 bankruptcy,Houston-based TransTexas Gas Corp.’s reorganization plan tookeffect as the company arranged $52.5 million in exit financing.TransTexas amended its existing DIP Credit Agreement and RevolvingAccounts Receivable Credit Facility, cancelled existing securitiesand issued new securities. This is the final step in emergence fromChapter 11, which began April 19, 1999. TransTexas voluntarilyfiled for Chapter 11 and said it expected a successfulrecapitalization with parent TransAmerican Energy Corp. For thenine months ended Oct. 31, 1998, including the effect of assetimpairments of $186.7 million, TransTexas reported a net loss of$155.4 million on revenues of $137.7 million compared to net incomeof $247 million on revenues of $695 million for the year-agoperiod, which included a gain of $540.4 million on the sale of thecompany’s Lobo Trend subsidiary. On the effective date of thebankruptcy, existing securities, including a $450 million seniorsecured note, $115.8 million of subordinated notes and all of itsissued and outstanding shares of common stock were cancelled. Thecompany issued $200 million in new senior secured notes, $222.46million of new senior preferred stock, $20.72 million of new juniorpreferred stock, 1.250 million shares of new common stock, 625,000warrants to purchase additional shares of new common stock, and$21.84 million in cash to the holders of the senior secured noteclaim.
Financially troubled energy producer Coho Energy Inc. announcedthat after several modifications, its plan for a bankruptcyreorganization was approved earlier this month by the U.S.Bankruptcy Court for the Northern District of Texas. The confirmedplan is anticipated to begin March 31. The modifications includethe retention by the common shareholders as of Feb. 7, of 20% ofany proceeds from Coho’s lawsuit against Hicks, Muse, Tate &Furst as well as 40% of any net sale proceeds from the company’sTunisia permit. Coho is suing the firm because of a failed attemptby Hicks Muse to buy Coho. Also as part of the plan, JeffreyClarke, Coho president and CEO, is expected to resign once thereorganization becomes effective. The CEO change results from therequest of the majority holders of Coho’s 8 7/8% bonds and was nota decision taken by the board of directors, the company said in astatement. Once the reorganization goes into effect, Mike McGovern,a managing director of Pembrook Capital Corp. and formerly CEO ofEdisto Resources Corp., is expected to be elected as the new CEO.
Continuing with efforts to shed non-core assets and improve itsbalance sheet, CMS Energy Corp. announced an agreement last week tosell its 80% ownership of the 236 MW Lakewood Cogeneration ventureto Consolidated Edison for $94 million. The sale will result in a$182 million reduction of project debt from the CMS balance sheet.The sale was made to ConEdison’s generation subsidiary,Consolidated Edison Development. The deal is subject to FERCreview, and the parties expect to complete it in the secondquarter. The Lakewood Cogeneration plant, located in Lakewood, NJ,has been operating for several years, said CMS spokesman KellyFarr. It is the only gas-fired plant on the East Coast that CMS hasinterest in. None of the plant’s gas contracts will be affected. AJapanese firm called Tomen Corp. owns the other 20% of the plant.
Dynegy announced the second phase of development on theCalcasieu Generation Project, a gas-fired peaking facility nearLake Charles, LA. The addition of a 165 MW combustion turbine willbe completed during the second quarter of 2001, bringing the powerplant’s total generating capacity to a nominal 320 MW. Constructionon the initial 155 MW phase began during the fourth quarter of1999. Commercial operation will begin on June 1, 2000. “We’vedecided to expand the facility’s generating capacity in order tomeet the rapidly growing demands of the wholesale energy market inthe state of Louisiana and throughout the Southeast. If marketconditions warrant, this site could potentially see furtherexpansion beyond 2001,” said Steve Bergstrom, Dynegy president andCOO. The Calcasieu Generation Project is constructed on a 20-acresite within the Rose Bluff Industrial Area near Lake Charles. Gaswill be delivered through Koch Gateway and Sabine Pipe Line.Transmission access for power transactions will be delivered via a230-kV Entergy Services transmission line. In addition, Dynegyannounced it signed a five-year power purchase agreement with ClecoCorp., a regional energy services company based in Pineville, LA,to supply up to 310 MW of capacity and energy. The majority will besupplied by the Calcasieu Generation Project.
According to remarks made last week at The New England GasAssociation’s annual conference, the region’s gas industrycontinues to add customers and new supply capabilities. Growth isreflected in such developments as: 25% growth in the region’spipeline infrastructure over the last year with two new pipelinesfrom Canada – the Portland Natural Gas Transmission System (PNGTS)and the Maritimes & Northeast Pipeline from Nova Scotia; systemexpansions by the region’s transmission and local distributioncompanies; a new supply of liquefied natural gas (LNG) from CabotLNG’s Atlantic LNG Project, which made first deliveries to NewEngland in May 1999; more gas customers in New England than everbefore, more than 2.2 million; and the region’s gas utilitiesreached a new record sendout of gas Jan. 17, reaching 3.4 Bcf, a13% increase over the previous record.
Energycentric.com of Chicago has formed what it says is thefirst online business-to-business marketplace dedicated to theequipment and services side of the energy industry — an estimated$30 billion market. “By applying the strengths of the Internet tothe energy equipment industry, Energycentric.com will improveprocurement cycles, tighten inventories and extend the buying ormarket reach of individual companies,” said Susan Craft,Energycentric.com founder and CEO. “Based on the experience ofother industries, this could mean an estimated industry savings of20%, freeing energy companies to invest more in their corecompetencies. “The energy products and services industry is highlyfragmented on both ends of the buying and selling process, and wehave a technology solution that creates a one-stop digitalmarketplace, which handles everything from research and planning toprocurement and fulfillment.”
Group 8760’s GISBAgent, was certified by the Gas IndustryStandards Board (GISB). GISBAgent is the second product to receiveGISB’s technical standards certification, which began as avoluntary program in September. “Customers of Group 8760 can now beensured that the critical elements of GISB’s Electronic DeliveryMechanism standards are supported,” said Rae McQuade, GISBexecutive director. GISBAgent is an electronic delivery mechanismfor secure Internet transactions. GISBAgent provides data exchangeregardless of data format, is browser independent, and is based onnon-proprietary, open standards. Group 8760 of Birmingham, AL, is aprovider of e-commerce solutions for the energy and healthcaremarkets.
A partnership between Anadarko Petroleum Corp., Shell and OceanEnergy Inc., announced the successful completion of drillingoperations on a field development/delineation well at the 1998Hickory discovery offshore Louisiana. Construction of the Hickoryproduction platform continues and is on schedule for installationthis summer, the partnership said. The platform has been designedto handle 300 MMcf/d of gas and 15,000 b/d of oil. First productionfrom the Hickory Field is scheduled for the fourth quarter of 2000.”This well was drilled in about half the time and at half the costof what we expected,” said John Seitz, Anadarko COO. Anadarko isthe operator of the project and owns a 50% working interest inGrand Isle Blocks 110, 111 and 116. Shell owns 37.5% and OceanEnergy owns 12.5%.
Columbia Energy Group has restarted its open market sharerepurchase program, with the concurrence of NiSource Inc. Theprogram had been suspended since October, when Columbia’s boardauthorized the company’s management to explore strategicalternatives to enhance shareholder value. Under the recommencedprogram, originally authorized by Columbia’s board of directors in1999, Columbia may repurchase up to $300 million of common shares.Columbia and NiSource signed a definitive merger agreement on Feb.27. The merger, subject to approval by shareholders and regulatoryagencies, is expected to be completed by the end of 2000. Therepurchase program authorizes Columbia Energy Group to makepurchases in the open market or otherwise.
The nation’s biggest municipal utility, the City of Los AngelesDepartment of Water and Power, has signed 27 of its largestcustomers to discount contracts valued collectively at $1.2 billionover their seven- and 10-year lives. The deals represent about 8%of the departments electricity sales which are projected to be 25GWh this year, according to Randy Howard, LADWP’s manager of thelong-term contracts. LADWP on Monday celebrated its latest 10-year,5% discount deal with the Getty Center art museum and culturalcomplex as part of energy and environmental joint events at the24-acre, $1 billion hillside campus tucked on a 110 acres in WestLos Angeles. The deal is valued at $2 million, according to LADWP.Last year the large muni utility, which under California’selectricity restructuring is not required at this point to open itsmarkets to retail choice, embarked on an aggressive effort to signits 50 largest customers to long-term deals. Among its 27 deals 23are for 10-year durations, with the others covering seven-yearperiods, said Howard, adding that the department has 14 or 15outstanding offers to some of the other largest customers, and itshould wrap up those deals by June 1. The deals represent $134million of locked-in annual revenue for LADWP, Howard said. Thecustomers vary from major university campuses, such as theUniversity of Southern California, to governmental departments,hospitals, large retailers and business operations.
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