Agreements

The Federal Energy Regulatory Commission has approved a stipulation and consent agreement ordering National Fuel Gas Supply Corp. to pay refunds to its firm storage and transportation customers who subscribed to service during a period in which the company illegally operated a storage well without the prior consent of the agency.

FERC last Wednesday lifted the curtains on a notice of proposed rulemaking (NOPR) on standardized generator interconnection agreements and procedures that will be made a part of existing and future open access transmission tariffs, a move that the Commission believes will help to encourage needed investment in energy infrastructure, discourage discrimination and ease entry for competitors while ensuring efficient siting decisions.

A unit of Williams and Redbud Energy LP announced today the execution of agreements in which Williams will provide up to 51,980 Dth/d of firm natural gas transportation service to the natural gas-fueled Redbud Energy Facility near Luther, OK. In conjunction with the agreement, Williams’ Central pipeline system said it will seek permission from the Federal Energy Regulatory Commission (FERC) to construct a 30-inch diameter pipeline and measurement and flow control facilities to the plant. Williams said it proposes to have the new facilities in service by Dec. 15, 2002. Full operation of the 1,100 MW Redbud combined-cycle generation facility is scheduled for June 1, 2003. Financial terms of the agreement were not disclosed. “We are very pleased to have reached this agreement with Redbud to help them utilize clean-burning, economical natural gas for their proposed state-of-the-art power generation facility near Luther. This agreement is another example of Williams’ strong commitment to the fast-growing power generation market,” said Dean Jones, vice president of customer services and rates for Williams’ Central and Texas Gas systems.

A cross-section of U.S. energy representatives last weekpresented a laundry list of initiatives that they believe the WhiteHouse, Congress and regulators must actively pursue to build up thenation’s energy inventories, which they warn are at dangerously lowlevels.

Kinder Morgan Inc. (KMI) and Williams signed one of the largesttolling agreements to date, a deal covering 3,300 MW of combinedcycle peaking capacity Kinder Morgan is building in theMidcontinent and the Southeast regions of the U.S. Williams willprovide the fuel to the six gas-fired plants and market the entirecapacity under a 16-year agreement. Financial terms of the tollingagreement were not disclosed.

Seeking to put a positive spin on the state’s first foray intolong-term bulk electricity contracts, Gov. Gray Davis Tuesdayannounced that the state has reached agreement for the commercialterms on an unspecified number of contracts between the state waterresources department and bulk power suppliers, with volumes phasingupward from 500 to 5,000 MW over several years.

ONEOK Gas Transportation, L.L.C. (OGT), and Duke Energy NorthAmerica (DENA) reported the execution of long term agreements forOGT to supply natural gas transportation to DENA’s naturalgas-fired McClain energy facility located in Newcastle, OK. Termsof the deal were not released. OGT will provide firm transportationof gas up to 85,000 Mcf/d to the 500 MW power plant. The McClainplant is expected to become operational and begin supplyingelectricity to regional markets next summer. OGT said industrysources expect as many as 20 merchant power facilities are beingreviewed for construction in the state.

Independent oil and gas operator Central Resources entered intotwo definitive sale agreements to sell specific oil and gasproperties and related facilities located in West Texas, themid-continent and Rockies areas, the four corners area and alongthe Texas, Louisiana and Mississippi Gulf Coast. Total proceedsfrom the sale are estimated at $70 million. Denver-based CentralResources CEO Paul Zecchi said the company will use the cashproceeds on “future acquisition and development opportunities”domestically as well as internationally. The sale transactions wereeffective on June 1, and are expected to be completed inmid-to-late September.

Dynegy Inc. announced yesterday definitive agreements to sellcertain east Texas natural gas gathering, treating and processingfacilities, owned and operated by its wholly owned subsidiary,Dynegy Midstream Services LP, to an independent midstreamprocessing company. The closing of the sale is expected to occurprior to year-end. Neither the identity of the buyer nor the saleprice was disclosed.