Columbia Gas of Ohio has dropped two marketers from its retail choice program in the last three weeks after the marketers failed to deliver gas into Columbia’s system to serve their customers. The defaults are the latest of several small marketers across the country to succumb to the volatility and high prices in the natural gas market. The current market “is accelerating the evolution of the marketplace,” said Columbia spokesman Steve Jablonski. “We’re seeing a shake-out in one winter that otherwise might have taken years.” Columbia has continued to deliver gas to customers of the marketers, Summit Natural Gas and Power Solutions and Nicole Energy Services. The customers will now go back on tariff rates. One other Ohio marketer has dropped out since the program started. Energy Max was terminated last Aug. 30. “We tried to work with all three,” Jablonski said, but were unsuccessful. Columbia’s Ohio choice program currently has 14 marketers and about 500,000 customers, out of 1.3 million Columbia customers. Nicole had about 300 mostly small commercial customers and Summit had 3,800. Columbia of Ohio’s current tariff rates are $7.30 an Mcf. The company has made a gas cost recovery filing to raise the rate to $8.60 in February.
The problem is not natural gas pipeline capacity going ‘to’ California, rather it is a lack of pipelines ‘within’ the state, particularly to power generation plants, that is aggravating problems in the state electric power market, according to Kevin Petak, director of Energy and Environmental Analysis Inc. (EEA). Petak noted FERC’s recent request that El Paso consider adding capacity to California, specifically by using a crude oil pipeline it recently bought and is planning to convert to gas as a supplement to its system, rather than as replacement capacity. El Paso seeks to convert a 785-mile segment of the oil lne from McCamey to Ehrenberg, AZ, to gas. The pipeline proposed the Line 2000 project as a loop line to replace existing compression, and not as a system expansion. However, shippers have protested having to pay for it as a replacement project and suggested both converting the line and replacing the compressors on the old line. El Paso is said to be considering that option. “But the discussion has yet to focus on the need for additional intrastate transportation capacity, which is critical to ease the bottlenecks that are creating the current conditions in the gas market,” Petak said. The analyst for EEA, based in Arlington, VA, also suggested that “development of new California deep gas production at East Lost Hills would assist in easing some of the pressure on California gas supply and therefore on gas prices, but only if intrastate pipeline capacity is available to move the gas to end-users.” Developing the in-state gas supplies, however, would take time.
Upon completion of its much awaited drilling operations at its deepwater exploration well on the Dana Point prospect in the Gulf of Mexico, Unocal Corp. announced that its $36 million investment in the $51 million well drilling project produced nothing but a dry hole. The company said that even though the well reached its depth objectives, and penetrated hydrocarbon zones, it does not appear to contain commercial quantities of production. Unocal said it will temporarily plug and abandon the well while it conducts a full evaluation of existing well data. The Dana Point well, which was drilled in 7,036 feet of water to a depth of 26,850 feet, took 119 days to complete from start to finish. Unocal holds an 80% interest in Walker Ridge block 678 the block that contains the Dana Point well. The company included its costs related to the well in its revised fourth quarter 2000 earnings estimate released on Jan. 4. Ocean Energy holds the remaining 20% interest.
Panda Energy International announced that it will build a $400 million natural gas fired electric power plant in West Point, MS. The 1,300 MW Panda Black Prairie Project is expected to be in commercial service in 2004. “This is an excellent location for a power plant,”stated Garry Hubbard, Panda’s senior vice president of development. “There is immediate access to electric transmission facilities and we are close to water and natural gas. This combination will play a key role in helping us meet the energy needs of the state.”
Allegheny Technologies Inc. and DukeSolutions have signed a comprehensive energy alliance agreement for long-term energy supply and demand management. Under terms of the contract, DukeSolutions will help ATI implement company-wide initiatives to reduce domestic energy costs in 12 states. Although no cost savings estimates were released, Pittsburgh-based ATI CEO Robert B. Bozzone said he expects to see “substantial cost savings. He said the company’s natural gas and electricity expenses total nearly $120 million annually. “These costs have become volatile and can vary widely from one region of the country to another.” Last August, DukeSolutions began using online auctions to buy energy for its clients to reduce costs (see NGI, Sept. 4, 2000). The company uses auctions when client facilities are grouped to create optimal savings based on the number and quality of suppliers, local rules and regulations, pipelines, electric transmission line constraints, distribution and transmission tariffs, facility loads and market prices.
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