FERC staff issued favorable environmental impact statements onproposed pipeline expansions by Trans Union Interstate and WilliamsGas Pipeline Central. Both projects primarily will serve new powergeneration in the Midcontinent and Gulf Coast regions. In itsEnvironmental Assessments, Staff said the projects would have noadverse environmental impact if certain mitigating measures wereundertaken. Trans Union Interstate is proposing a 430,000 MMBtu/dpipeline extension to a 2,700 MW combined-cycle, gas-fired powerplant proposed by Union Power Partners near El Dorado, AR. Thepower plant is expected to be operation in spring of 2002. Anapplication for the 42-mile 30-inch diameter pipeline was filedlast December. The Williams project, called the Pleasant HillPipeline, would involve construction of two miles of 24-inchdiameter pipe and 2,890 hp of compression in Franklin County, KS,and Cass and Johnson County, MI. The project would provide 44,200Dth/d of gas in the winter and 88,200 Dth/d of gas in the summer toUtiliCorp United’s proposed Pleasant Hill Power plant in CassCounty, MI, to UtiliCorp’s distribution system in Missouri and toU.S. Energy Services in Pettis County, MI. UtiliCorp also willconstruct its own eight mile pipeline to the Williams facilities.

R&B Falcon Corp. is betting on the natural gas market forfull employment. The company anncounced yesterday it is preparingto activate six of its shallow water jackups and three of its drillbarges to fulfill contracts for natural gas drilling in the Gulf ofMexico. And that is just the beginning.

“Current price and storage levels for natural gas for this timeof year are almost unprecedented and are clearly signalingincreased demand for our services. We believe these latestreactivations are in response to a trend that will ultimatelyresult in full utilization of our entire shallow water fleet,” saidPaul B. Loyd, R&B Falcon chairman. “With a fleet of 31 jackupsand 34 drilling barges in the Gulf of Mexico, R&B Falcon willbenefit substantially as the natural gas drilling market continuesto improve. The most recent Baker Hughes rotary rig count stood at866, or 311 more active rigs than a year ago.

Kentucky-based LG&E Energy Corp. got a thumbs up this week fromLondon’s PowerGen shareholders, who have approved the proposedacquisition by the United Kingdom utility giant. PowerGen firstannounced its intention to acquire the equity of LG&E in Februaryfor US$4.2 billion (see Daily GPI, February29). LG&E shareholders now must approve the deal – scheduledfor today – and approvals still must come from FERC, the Securitiesand Exchange Commission and the Virginia State CorporationCommission. The Kentucky Public Service Commission approved theacquisition in May. If the acquisition is approved, LG&E wouldbecome a wholly-owned subsidiary of PowerGen, and its headquarterswould remain in Louisville.

Denver’s Tom Brown Inc. has paid $16.2 million for an estimated22 Bcf of gas equivalent, with current net daily production ofapproximately 8 MMcf of equivalent gas in the Rocky Mountain gasbasin’s Pavillion field from an undisclosed seller. The transactionby the independent energy company increases its working interest inthe Pavillion to 90%, up from a previous 50% interest.

Planalytics Inc. announced that it has inked an agreementallowing Dow Hydrocarbons and Resources access to Weathernomics GasBuyer on a trial basis. Weathernomics Gas Buyer is anInternet-based program that combines long-range weatherintelligence, American Gas Association Storage inventory changeforecasts, real-time futures contract pricing, and Weathernomicstechnology into an engine that chooses one of six buy-sellpossibilities.These choices are made approximately 12 timesevery day for twelve months.

This system recommends specific buying and hedging actions fornatural gas buyers which reduces the risks and highlightsopportunities presented by weather-driven changes in gas prices.”Weather fluctuations are usually behind volatility in natural gasprices, and we are interested in evaluating any tool that may helpmanage that volatility,” said Myk R. Fenstermacher, Treasurer, DowHydrocarbons and Resources. He went on to say that DowHydrocarbons had tried some “pure weather” forecasting systems inthe past, but that this was the first system that used the weatheras well as incorporating such market factors as futures contractprices and forecasted inventory.

Frederic Fox, President of Planalytics explained “We do notattempt to forecast gas prices in a traditional sense. Rather, wepredict the turning points and direction of future gas pricechanges, and use that knowledge to determine the mostcost-effective method to purchase natural gas on any given day.”

Williams and the University of Tulsa announced plans for theestablishment of an Energy Risk Management Center to be located inthe College of Business Administrations on campus. The WilliamsRisk Management Center will provide graduate students withclassroom training and hands-on experience essential for a careerin energy risk management, a field which is immersed in the age ofelectronic finance, deregulation, globalization, and technologicalinnovation. Williams has also set up a corporate-sponsoredinternship program to give the students a real-world experience.”The demand for students with premier skills in quantitativeanalysis, financial engineering, structure valuation and riskmanagement will continue to grow at a record pace,” said KeithBailey, Williams Chairman. The graduate students will have to testsophisticated risk management models, trading strategies, andanalytics used by traders to control risk. They will takespecialized courses on the fundamentals of risk management, tradingfinancial assets and commodities, and pricing and managing, as wellas going through simulations experiences. Williams has made a $1million commitment to establish and support the center for thefirst three years. The first risk management classes will beoffered in the Fall of 2001.

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