2002

Buyers and sellers of natural gas during the California energy crisis are opposed to a FERC staff proposal that would establish a new formula for calculating spot gas prices to be used in assessing the refund obligation of electricity generators. They asked the full Commission to reject staff’s proposed method, arguing that it had failed to show delivered gas prices to the state during the 2000-2001 period — which were based on published price indices — had been artificially inflated as a result of manipulation.

Kinder Morgan Inc. (KMI) subsidiary Natural Gas Pipeline Company of America (NGPL) has extended a long-term agreement to provide MidAmerican Energy with up to 115,000 MMBtu/d of firm-transportation service starting in December. The new agreement, which will continue through Nov. 30, 2004, represents an increase over the current level of 100,000 MMBtu/d. The companies also entered into an agreement to extend a firm-storage contract totaling 10 Bcf for an additional two years through Nov. 30, 2005.

El Paso Natural Gas and affiliate El Paso Merchant Energy LP have called on FERC to issue a final decision by the end of the year on a Commission judge’s rulings that the pipeline withheld transportation capacity from customers during the California energy crisis and abused the agency’s market-affiliate rules.

With three hour-plus conference calls over four business days, TXU Corp.’s management team offered assurances that the corporation was liquid and strong. The losses, they kept reminding analysts and investors, were only within its European affiliates. By the end of the week, the Dallas-based corporation appeared to have calmed jittery investors, as management made clear that TXU Europe Ltd. and its entities will always be secondary to the success of the U.S. business.

Gulf of Mexico gas production was rapidly returning to normal Monday, with only about 2.6 Bcf/d remaining curtailed at 11 a.m. compared to 9.9 Bcf/d of shut-ins on Friday, the Minerals Management Service (MMS) reported. Most pipelines reported near normal throughput conditions, and spot prices in the Gulf Coast region were mixed with some points rising and others falling a few cents. However, at most other locations outside of the Gulf Coast region, spot prices were at least a nickle higher and as much as 30 cents higher in California.

Two drilling rigs capsized, another was blown 45 miles from its mooring and one platform was damaged, according to early reports, as Hurricane Lili went through the Gulf of Mexico production area early Thursday as a Category 4, before dropping in intensity and hitting the Louisiana coast as a Category 2 with winds of less than 110 mph.

A major interstate gas pipeline group said Friday it was “deeply concerned by the policy implications” of a FERC judge’s ruling last month that El Paso Natural Gas withheld pipeline capacity from customers during the California energy crisis by not operating its system at the maximum allowable pressure (MAOP). The decision in the high-profile complaint case could potentially affect all interstate pipelines, subjecting their operational decisions to the “second-guessing” of regulators, the Interstate Natural Gas Association of America (INGAA) warned.

Producers, pipelines and other industry companies with facilities in Lili’s path grew increasingly alarmed on Tuesday as the hurricane continued to grow in strength and appeared poised to wreak havoc on infrastructure in Louisiana. By the end of the day Tuesday, it was clear Lili would pack far more punch than the much weaker Isidore did only a few days earlier.

In a much-anticipated initial decision last Monday, FERC Chief Administrative Law Judge Curtis Wagner found that El Paso Natural Gas withheld “extremely large amounts of capacity” from shippers on its system to drive up prices for natural gas delivered to the southern California border during the critical November 2000-March 2001 period. He called this “a clear exercise of market power.”