2000

The New York Mercantile Exchange took two giant steps forward last week, announcing plans to become a for-profit organization and to launch a global electronic exchange for over-the-counter forward trading and clearing of a wide range of standardized physical commodity contracts.

Arguments opened last week in a $7.5 billion lawsuit brought byTransAmerican Natural Gas Corp. and its founder, Jack Stanley,accusing Coastal Corp. and its founder Oscar Wyatt Jr., El PasoNatural Gas, and William Wise, CEO of parent El Paso Energy, ofvarious illegal acts aimed at financially underminingTransAmerican.

The head of a Gas Industry Standards Board (GISB) task forcethat’s exploring the feasibility of the organization gettinginvolved in creating standards for retail electric and natural gas,as well as for wholesale power, personally believes a newstandards-setting group should be formed to undertake the task.

In a gesture of conciliation, the Edison Electric Institute(EEI) yesterday said it will meet with board members of the GasIndustry Standards Board (GISB) within the next few weeks in aneffort to bring more electric utilities and electric-relatedcompanies into the debate over whether retail standards should beestablished for electricity and, if so, by whom.

Coral Energy won a two-year contract last week to manage thesupply and upstream natural gas assets of KeySpan Energy, theparent company of the nation’s fourth largest gas utility BrooklynUnion, which serves 1.6 million customers in New York City and LongIsland. The deal also covers the fuel supply for KeySpan’s 6,000 MWof electric power generation on Long Island. Financial terms of thedeal, which became effective April 1, were not disclosed. Thecontract was awarded following an 11-month review of competitivebids from multiple marketing and trading companies.

The Independent Petroleum Association of America is suing theU.S. Department of the Interior to challenge its new oil royaltyvaluation regulation. The regulation creates new methods of valuingroyalties on oil from federal leases and takes effect June 1.

Transco’s Sundance expansion project received two major boostslast week as Carolina Power and Light (CP&L) and Southern Co.each said they have purchased major capacity deals on the yet-to-beconstructed line. The contracts will go into effect when Sundancebecomes operational in the Spring of 2002, barring rejection fromFERC.

The Department of Justice has intervened in three civil lawsuitsaccusing affiliates of ExxonMobil Corp., Shell Oil Co. andBurlington Resources Inc. of “knowingly undervaluing” royalties onnatural gas produced from leases on federal and Indian lands over a10-year period. This could be just the tip of the iceberg, as thedepartment has indicated it is reviewing several other gas-royaltycases.

Absent a showing of market support, the Federal EnergyRegulatory Commission staff last week threatened to dismiss PetalGas Storage L.L.C.’s amended proposal in which it seeks to expandthe deliverability of its storage facilities in Mississippi.