August

After making in August 2002 what were expected to be the last remaining organizational changes since it bought Columbia Energy Group in 2000 (see Daily GPI, Aug. 30, 2002), NiSource announced another major corporate restructuring this week that includes the internal promotion of six new leaders for its major utility companies. The moves are part of what has become an industry trend of selling off high-risk and costly unregulated operations and focusing on a back-to-basics strategy of optimizing regulated utility and pipeline businesses.

Calgary independent CanScot Resources Ltd., which agreed in early August to a takeover by crosstown independent APF Energy Inc., reported record third quarter earnings and income on Friday, boosted by its coalbed methane (CBM) production in North America.

Tennessee Gas Pipeline Co. has begun a non-binding open season through August 11 to assess market interest in additional firm capacity, which would be created by its proposed Freedom Trail expansion project. The project is scheduled to begin service in 2006. The proposed project is designed to increase mainline capacity on Tennessee’s Line 200 located in New York and Massachusetts by 50,000 to 150,000 Dth/d, with up to an additional 40,000 horsepower of compression and up to 40 miles of new pipeline looped along existing right of way. Freedom Trail would enable customers in the Northeast to access various supply points along Tennessee’s system including market and supply area storage, the Gulf of Mexico (Zones 0 and 1), and the Niagara Interconnect with TransCanada Pipeline. The incremental capacity would provide service to New England as well as New York City and/or Long Island via deliveries to existing and proposed downstream pipelines directly serving these markets. To obtain open season request forms and guidelines, contact Jim Scabareti at (617) 217-2115 or at jim.scabareti@elpaso.com.

Tennessee Gas Pipeline Co. has begun a non-binding open season through August 11 to assess market interest in additional firm capacity, which would be created by its proposed Freedom Trail expansion project. The project is scheduled to begin service in 2006.

Despite a third straight triple-digit weekly storage injection (114 Bcf), natural gas futures surged Thursday in three distinct waves of short-covering and speculative buying. When the dust had settled and the orders counted at Nymex, the numbers were impressive: July natural gas futures rose 36 cents to close at $5.941, just off its new one-week high of $5.95. In contrast to the first three trading days of this week, volume at Nymex was heavy Thursday, with an estimated 92,607 contracts changing hands.

Kinder Morgan Inc. (KMI) on Tuesday completed a plan begun in early August with affiliate Kinder Morgan Energy Partners LP (KMP) to issue a total of $1.84 million of debt and equity financing. KMI completed $750 million in 10-year, 6.3% notes, while KMP issued $343 million of new equity capital, $500 million of 31-year 7.3% debt and $250 million of five-year 5.35% debt. The debt and equity offering proceeds will be used to pay down both of the companies’ commercial paper.

The August aftermarket started out Wednesday flat to moderately up from end-of-July numbers in most cases, although the Rockies, California and some Northeast citygates dropped by varying amounts up to nearly a quarter. Comparisons to apparent first-of-month indexes were mixed, with swing prices tending to be above index by 10-30 cents in the East, but many western points falling short of index levels.

Several initiatives to increase domestic natural gas and oil production are included in the Minerals Management Service (MMS) Final Notice of Sale for Western Gulf of Mexico Sale 184, scheduled for Aug. 21 in New Orleans. The Final Notice was published in Thursday’s Federal Register. Along with the incentives, MMS has included the new required provisions to protect certain endangered and threatened species. The sale will be the first one scheduled under MMS’s current five-year leasing program, which will run through 2007 (see NGI, April 19).

Several initiatives to increase domestic natural gas and oil production are included in the Minerals Management Service (MMS) Final Notice of Sale for Western Gulf of Mexico Sale 184, scheduled for Aug. 21 in New Orleans. The Final Notice was published in Thursday’s Federal Register. Along with the incentives, MMS has included the new required provisions to protect certain endangered and threatened species. The sale will be the first one scheduled under MMS’s current five-year leasing program, which will run through 2007 (see Daily GPI, April 18).