Kinder Morgan Interstate Gas Transmission LLC received a FERC certificate allowing it to build a lateral that would provide distribution customers in Greeley, CO, with access to natural gas from competing pipelines. Kinder Morgan plans to construct a 41.4-mile Colorado Lateral that would begin at its existing facilities at the Rockport Compressor Station within the Cheyenne Hub and terminate in Greeley, where service would be provided to Atmos Energy Corp., a local distribution company (LDC). The project, which would deliver up to 55,000 Dth/d, has an estimated cost of $30 million. Atmos currently obtains all of its gas supplies for the Greeley area from the Public Service Company of Colorado (PSCo), an LDC that is a wholly owned subsidiary of Xcel Energy. In addition to receipts from Kinder Morgan’s Cheyenne Hub facilities, the proposed lateral would have the capability to receive natural gas from Wyoming Interstate Co., Colorado Interstate Gas Co. and Xcel Energy at sufficient pressures to meet contractual requirements, according to the FERC order. FERC rejected a request by PSCo to deny or delay approval of Kinder Morgan’s application [CP07-430].
FERC gave Saltville Gas Storage Co. permission to reduce total capacity at its high-deliverability gas storage field in southwestern Virginia by approximately 2 Bcf and to cut working gas capacity by about 1.8 Bcf. The order calls for the Virginia-based storage provider, which is owned by Spectra Energy, to reduce total capacity at its field in Saltville, VA, to 4.7 Bcf from its current level of 6.75 Bcf, and to trim its working gas capacity to 3 Bcf from 4.79 Bcf. FERC also gave the go-ahead for Saltville Gas to decrease the facility’s injection rate to 180 MMcf/d from 220 MMcf/d, and to reduce the maximum daily withdrawal rate to 275 MMcf/d from 550 MMcf/d [CP04-13]. Saltville Gas said it requested the decrease because it could remove only 3.7 million barrels of brine from Cavern No. 3, although its original estimate predicted that six million barrels could be removed. In addition, due to the lower-than-expected storage capacity, the company said it did not install all of the certificate facilities that were needed to achieve the maximum injection and withdrawal rates. Saltville Gas Storage’s facility includes three salt caverns and is connected to Virginia Gas Pipeline and East Tennessee Natural Gas. FERC issued a certificate for the project in mid-2004 (see NGI, June 21, 2004).
It’s back to the Missouri Public Service Commission hearing room for Great Plains Energy Inc. and Aquila Inc. after settlement talks with parties to the case failed to come up with an agreement on the purchase of Aquila’s Missouri operations by Great Plains and its subsidiary, Kansas City Power & Light Co.”While the sessions have been productive and useful, no comprehensive agreement has been reached to this point,” Aquila and Great Plains said in a status report. The parties are proposing that commission hearings, which had been delayed while settlement talks were ongoing, be resumed with new filings leading to hearing discussions starting April 21.Terms of the transaction call for it to be completed by May 1. It is part of a three-way deal that includes South Dakota-based Black Hills Corp. acquiring Aquila’s electric and gas operations in Colorado, Kansas, Nebraska and Iowa for $940 million. Great Plains is to pay approximately $1.7 billion in cash and stock and assume $1 billion of Aquila debt for the Missouri operations, effectively putting a period at the end of the 100-year saga of Aquila and its predecessor companies. Kansas regulators still must act on the merger (see NGI, Feb. 18).
Nicor Inc.‘s officials do not believe subsidiary Nicor Gas is earning its allowed rate of return, and the utility is likely to file for a rate increase with the Illinois Commerce Commission (ICC) by mid-year. The Naperville, IL-based gas distribution company, whose utility Nicor Gas serves more than two million customers in the state, reported that its 4Q2007 earnings slipped 4.8% — even with a 10% rise in revenues. Net income was $55.5 million ($1.22/share) compared with $58.3 million ($1.29) in 4Q2006. Revenue rose to $919.5 million from $838.2 million. Nicor as a whole “delivered solid financial results in the face of an increasingly difficult economic and cost environment” in 2007, CEO Russ Strobel told financial analysts during a conference call. However, with “continued demand weakness and operating cost pressures” at gas subsidiary Nicor Gas, “we are evaluating the need to file for rate relief.” Earnings were pinched in part because the cost of gas distributed to customers climbed 15% to $558.1 million from the same period a year earlier. The gas cost increases led to a 6.5% decline in operating profit at the Nicor Gas subsidiary to $40.4 million. Nicor’s unregulated shipping subsidiary reported flat revenues of $110.3 million in the quarter, with operating profit up 2.8% to $18.2 million. Other energy ventures reported a 30% drop in operating profit to $18.2 million. This year the company is forecasting lower earnings per share (EPS) compared with 2007. The company expects 2008 EPS to range $2.20 to $2.40, excluding rate adjustments and on normal weather conditions, a decline from the $1.35.2 million (2.99/share) reported for full-year 2007. If Nicor files for a rate hike, the ICC “normally has 11 months to complete its review,” the company said.
The Federal Energy Regulatory Commission has given Arlington Storage Co. a waiver of the agency’s certificate requirements in order to drill up to two test wells and conduct related testing activity to determine the technical and economic feasibility of developing an underground gas storage facility in the Thomas Corners Field in Steuben County, NY [CP08-60]. Arlington Storage is a subsidiary of Inergy LP.
Responding to increased natural gas demand in Utah, Nevada and California, Kern River Gas Transmission Co. is holding a supplemental open season for 84,000 Dth/d of firm year-round transportation service to those states. Expansion service is expected to be available Nov. 1, 2010. “We are pleased market interest supports another expansion of the Kern River pipeline system,” said Kern River President Micheal Dunn. “Our analysis and recently concluded open season have demonstrated this 145,000 Dth/d project is the most economical project at this time, is the best value of any project that has been announced to serve competing markets and will provide valuable transportation capacity to our customers. The current expansion project positions Kern River to expand the pipeline system in the future with projects that can meet the market demand as conditions warrant.” Service would be provided under Kern River’s existing KRF-1 rate schedule for firm incremental rate service for its 2003 expansion project on either 10- or 15-year terms. Under this structure, the rate on a 15-year term would be 47 cents/Dth, if the compliance rates Kern River filed in its pending rate case, Docket No. RP04-274, are approved. Rates are subject to the final outcome of Kern River’s pending rate case. Compressor fuel is expected to be 3.2%. Kern River owns and operates a 1,680-mile gas pipeline between southwestern Wyoming and Southern California and currently delivers more than 1.7 Bcf/d to expanding markets in Utah, Nevada and California. Kern River is a subsidiary of MidAmerican Energy Holdings Co. For information on the open season contact Kern River business development representatives Laurie Brown at (801) 937-6410, Kevin Billings at (801) 937-6167 or Greg Snow at (801) 937-6270. A precedent agreement must be completed, executed and returned by noon MST March 6.
Centrica plc‘s North American subsidiary, Direct Energy, said strong demand from business customers and accelerated growth in wholesale energy operations allowed the company to post 2007 operating profit of C$404 million, up 12% over full-year 2006. Direct Energy, the 43rd largest company in Canada, is not publicly traded, but Centrica reports the financial performance of its North American subsidiary. Centrica, which trades on the London Stock Exchange, reported full-year 2007 net earnings of C$2.21 billion. “Our continued growth reflects the diversity of our business and breadth of our offer to customers in increasingly competitive markets,” said Direct Energy CEO Deryk King. “While 2008 will be a challenging year we expect to continue to deliver both top and bottom line growth. We expect to minimize any impacts of the economic downturn by further increasing the diversity of our business portfolio, in particular by continuing to build material business upstream and in commercial and industrial downstream markets.” Direct Energy, which operates in Texas, the northeastern United States and across Canada, offers energy and energy-related services to more than five million residential and commercial customers.
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