Mountain Energy Corp., the Midwest gas marketer that has beenbesieged by lawsuits and a petition seeking to force it intobankruptcy, has notified its customers in Kansas and Missouri thatit will stop supplying them with natural gas after Oct. 31.

In a letter sent to “at least 600 customers” on Monday, MountainEnergy of Kansas City, MO, informed its mostly industrial andcommercial customer base that a petition for involuntary bankruptcyfiled against the company last week has left it unable to securegas supplies. “They have a credit problem relative to being able tocontinue to purchase gas supplies,” said Bob Rosene, president ofTulsa, OK-based Seminole Energy Services, a gatherer and marketer.

Seminole had been close to a deal with Mountain Energy this weekto purchase its customer accounts, but it fell through, Rosenenoted. “They advised us that they were not going to go forward withit. They told me they were unable to get a satisfactory releasefrom a party that had a secured interest in the contract accounts.”

That makes Mountain Energy’s customers fair game for “us[Seminole] and a lot of other marketing companies,” such as OneokGas Marketing and EnergyOne, Rosene said.

The marketer’s inability to purchase gas supplies in the market isnot surprising, given the number of lawsuits and other legal actionsthat have been brought against Mountain Energy by suppliers andcustomers in recent weeks (See Daily GPI, Oct. 25). They have accused Mountain Energyof failing to pay for delivered gas, diverting gas from storage thatwas owned by other suppliers, and failing to supply natural gas at theagreed-upon prices.

Four companies — TransCanada Energy Marketing USA Inc.,Tenaska Marketing Ventures, Farmland Industries and DuCoa LP —have petitioned the U.S. Bankruptcy Court for the Western Districtof Missouri to force Mountain Energy into bankruptcy. They claimthey have lost $24.6 million as a result of their business dealingswith the marketer. Specifically, they contend Mountain Energyconverted for its own use gas that it was supposed to be storingfor them.

In related action, Aquila Energy Marketing Corp. sought andobtained a temporary restraining order to prevent the removal ofnatural gas from an Oklahoma storage facility, where MountainEnergy had been storing gas on Aquila’s behalf. Aquila told thecourt that Mountain Energy had transferred some of its 3.4 Bcf ofstored gas to “one or more third parties” without its consent.

Anadarko Energy Services also has filed a civil lawsuit accusingMountain Energy of failing to pay for $17.8 million worth of gasthat was delivered to it in July and August, and diverting 3 Bcf ofAnadarko’s gas in storage. Columbia Energy Services Corp. brought alawsuit in Texas as well, seeking payment of $192,000 for gas itsold to the marketer.

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