Egan Hub Storage LLC, a subsidiary of Duke Energy Gas Transmission, has informed FERC that it has placed in service 5.5 Bcf of additional capacity at its natural gas storage facility in Acadia Parish, LA. The new capacity is about half of the total capacity that was authorized for a third cavern in an April 2003 order [CP03-12). That order granted Egan Hub certificate authority to boost the capacity of a third salt dome storage cavern to 10.5 Bcf, raising the maximum aggregate operating capacity of its storage field to 31.5 Bcf, of which 24 Bcf would be working gas. The April 2003 decision, which was amended in July, extends the deadline to allow Egan to have the remaining storage capacity of the third cavern (5 Bcf) in service by Oct. 1, 2009. Duke Energy subsidiary Market Hub Partners (MHP) owns Egan Hub, which has 16 Bcf of existing storage capacity. MHP also owns and operates the Moss Bluff, TX salt dome, which has 16 Bcf of working gas capacity as well.

The estate of Enron Corp. founder Kenneth Lay has agreed to a $12 million settlement with the U.S. Department of Labor over the alleged mismanagement of Enron’s pension plans. The final settlement may fall below the full amount and will depend upon the total amount of assets in the estate, government officials said. The Labor Department sued Enron and 21 former company officials, including Lay and former CEO Jeffrey Skilling, in June 2003, seeking to require the defendants to restore all of the losses with interest to two of Enron’s pension plans. The plans had been governed by the federal Employee Retirement Income Security Act (ERISA). More than 20,000 participants in Enron’s savings and employee stock ownership plans “experienced a substantial erosion of their retirement assets” when the company declared bankruptcy in December 2001, the Labor Department noted. With the agreement with Lay’s estate, Skilling is the only defendant who has not settled, the government said. Skilling is scheduled to be sentenced to federal prison in October following his criminal convictions related to his misdeeds at Enron.

Spokane, WA-based Avista Utilities filed separate requests with the regulators in Washington and Oregon last month to adjust its natural gas and electric utility rates in those states. The utility said the changes are driven by increasing costs associated with meeting what it called “growing electric and natural gas demands of customers.” In addition, in Washington, Avista is seeking an electric rate decrease tied to the “residential exchange program” with the Bonneville Power Administration (BPA). Overall, Avista asked the Washington Utilities and Transportation Commission (WUTC) to increase its annual electric revenues $28.9 million, or an average of 8.8%, as one of three filings to the Washington panel. It is seeking the increase to be effective Feb. 1, 2007. Separately, Avista requested a 1.7%, or $1.02/month, decrease in residential electric rates, effective Nov. 1, reflecting the decrease from the BPA credit. For natural gas customers, Avista made separate annual purchased gas adjustments (PGA) filings with WUTC and the Oregon Public Utility Commission (PUC), asking for a $16.7 million, or 8.1%, increase in Washington, and $11 million, or 8.8%, in Oregon, with an effective date of Nov. 1 in each state. On average, gas utility customers face monthly increases of $6.90 and $6.64 in Washington and Oregon, respectively. The utility said its PGAs reflect higher wholesale natural gas prices “caused by a tight balance between growing demand for and available supply of natural gas across North America.” Avista said they also reflect what it called “substantial increases” in rates by the two interstate pipeline companies supplying its gas distribution system.

On its concluding day (Aug. 31) of this year’s legislative session, a committee in the California lower house Assembly killed a proposal to require the California Energy Commission (CEC) to review and rank four existing proposals for a liquefied natural gas (LNG) receiving terminal along the state’s coast. Proponents wanted the legislation to counteract the federal permitting preemption established in last year’s federal Energy Policy Act (EPAct). The bill (SB 426) was resurrected from last year because two proposed offshore projects in Southern California have been stalled in the federal permitting process, but the Assembly Utilities and Commerce Committee rejected the measure on a 6-2 vote. Among the representatives testifying against SB 426 was BHP Billiton, the Australian resources giant that has the proposed the floating Cabrillo Port, and Crystal Energy LLC, which is planning the Clearwater Port LNG terminal slated for development on a converted oil platform off the coast from Oxnard, CA, which is about 60 miles west of Los Angeles. Clearwater Port’s project manager contended its proposed terminal is already going through what he characterized as “the most rigorous environmental and safety reviews in the world.” Environmental groups supported the legislation.

Houston-based independent Swift Energy Co., whose core operations are focused onshore Louisiana and Texas, said it will purchase the interests in five oil and gas properties in South Louisiana from BP America Production Co. for $175 million. Production is about 75% natural gas, with proved reserves estimated at 58.2 Bcfe and probable reserves estimated at 28.1 Bcfe. Swift will buy interests in BP’s Bayou Sale, Horseshoe Bayou and Jeanerette fields, all located in St. Mary Parish, as well as the High Island field in Cameron Parish and the Bayou Penchant field in Terrebonne Parish. About 67% of the proved reserves are classified proved developed, and future development costs of both the proved and probable reserves are estimated to be $45.0 million for an all-in acquisition cost of $2.55/Mcfe of proved and probable reserves, Swift noted. Production averaged 12 MMcfe/d net to the purchased working interests in the first six months of this year. Once the BP purchase is completed, Swift estimates the five fields will increase its 4Q2006 production by 0.6-1.0 Bcfe if no preferential rights are exercised. Swift expects its 2007 budget will include $20-25 million of capital expenditures in these five fields.

During a month that saw high volatility, Atlanta-based IntercontinentalExchange (ICE) reported record activity on its online marketplace during the month of August. Average daily volume (ADV) for ICE futures, its London-based regulated futures subsidiary, totaled 406,037 contracts for an eighth consecutive monthly record, an increase of 115.1% over August 2005’s 188,757 contracts. In addition, average daily commissions in ICE’s over-the-counter (OTC) business segment in August rose 84.7% to $799,017 over August 2005’s $432,648. The exchange reported that record monthly volume in ICE futures’ light sweet crude contracts, Brent crude futures and ICE WTI crude futures, as well as ICE gas oil futures contracts, helped to produce the exchange-wide monthly volume record. Total monthly futures volume rose 124.9% to a record 9.34 million contracts, compared to total monthly volume of 4.15 million contracts in August 2005. The previous monthly record was set in July 2006 at 8.1 million contracts. ICE Futures established a new exchange-wide daily volume record on Aug. 7 of 567,361, exceeding a half-million in contract volume for the first time in its history. More important, ICE continues to gain exchange-traded market share. For the third consecutive month, ICE reported that ICE Futures averaged greater than 50% market share in global crude futures as measured by volume of light sweet crude oil.

Houston-based independent Cabot Oil & Gas Corp. is selling its Gulf Coast offshore portfolio and South Louisiana properties to recently launched Phoenix Exploration Co. LP for $340 million. With the sale, Cabot will be 96% weighted to natural gas, with all of its operations concentrated onshore in North America. Phoenix was formed earlier this year by former executives of Gryphon Exploration Co., receiving its initial funding of $250 million from private equity heavyweights Carlyle/Riverstone Global Energy and Power Funds (see NGI, April 24). At year-end 2005, the assets Phoenix is buying held an estimated 73 Bcfe in proved reserves. However, between the end of 2005 and Aug. 1, Cabot identified 30 Bcfe of new proved undeveloped reserves (PUD), recorded 6 Bcfe of positive reserve revisions, and produced 11 Bcfe on the properties to be sold, so reserves at the effective date total 98 Bcfe. However, because Cabot reconciles PUDs only at year-end, the reserves to be sold would total 68 Bcfe on Cabot’s books at the end of 2006, CEO Dan O. Dinges said. The sale is expected to close by Sept. 29.

Australian-based producer Woodside Exploration Ltd. has formally launched an unsolicited bid for Energy Partners Ltd. (EPL), offering $880 million for the New Orleans-based producer. Woodside offered $23 for each outstanding share of EPL, contingent on EPL not completing its pending $1.4 billion merger with Stone Energy Corp. (see Daily GPI, Aug. 29). EPL said it is reviewing the offer, which is effective until Sept. 28. In the offer, Woodside said that if either of two termination fees involved in the EPL-Stone transaction are invalidated as a result of a lawsuit, its offer will rise to $23.50 per share. If both of the transaction fees are ruled invalid, Woodside said its offer would rise to $24. On Thursday, EPL was trading at around $24.77. Stone said it intends to proceed with the merger agreement. Woodside also has filed a lawsuit challenging an EPL bylaw that requires 85% of the company’s shareholders approve the removal and appointment of board members. Woodside noted it believes only a majority of shareholders would have to approve board members, and through its Covington, LA-based subsidiary ATS Inc., Woodside said it will replace the EPL board with its own nominees.

Agrium Inc., which has been searching for more than a year for ways to secure natural gas supplies for its Nikiski nitrogen plant in Kenai, AK, has begun a detailed feasibility review on the proposed Kenai Blue Sky Coal Gasification Project. If the project is completed, it could be operational by 2011. The plant had been scheduled to shut down in October after its gas supply contract with Cook Inlet producers ended (see NGI, Nov. 22, 2005). The Blue Sky Project would use low-sulfur coal mined in Alaska and delivered by barge to produce the feedstock needed for the production plant. To run at full capacity, the Kenai plant needs about 53 Bcf a year. The fuel produced through coal gasification would be more than enough for the facility, and excess capacity could be sold into the Alaska power grid, generating 100 MW of power for converting coal to gas and as much as 250 MW for sale to the Railbelt power grid. The completed facility would be Alaska’s second largest power plant, second only to Chugach Electric Association’s Beluga plant.

El Paso Corp. has became the first natural gas company to join the California Climate Action Registry, a group of organizations that publicly track and report their greenhouse gas (GHG) emissions. The registry, created by the California legislature in 2000, helps companies and organizations throughout the United States track, publicly report and reduce their GHG emissions. The reports are certified by independent third parties to ensure compliance with registry protocols and standardization across participants and sectors. As a member, El Paso will work with the registry to certify its GHG emissions beginning in 2008. “El Paso believes in advancing constructive debate and greater understanding of global warming issues and, specifically, greenhouse gas emissions,” said CEO Doug Foshee. “We are committed to being an active participant in that debate and to developing sound, technology-based solutions that benefit the nation, consumers, and industry.”

The Missouri Energy Task Force, a blue-ribbon panel appointed last December by Gov. Matt Blunt, has recommended the state adopt a “common-sense approach” to meeting the increasing energy demands within the state. Among other things, the panel recommended diversifying energy sources to include wind-and ethanol-based fuels, as well as increasing conservation efforts to keep energy costs affordable. Missouri Public Service Commission Chairman Jeff Davis, who headed the task force, said that using alternative energy sources would help meet new demands and reduce the state’s over-dependence on fossil fuels. To read the task force report, visit www.psc.mo.gov/energytaskforce.asp.

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