Basin

Putting the finishing touches on a controversial asset sell-offplan, MCN Energy Group Inc. announced last week the sale of itsAppalachian natural gas exploration and production (E&P) andrelated pipeline properties for a total of $180 million.

Statoil Energy’s sale of 1.1 Tcf of gas reserves and 6,500 wellsin the Appalachian Basin to Equitable Resources earlier this monthfor $630 million was the first of three possible transactions, aspokeswoman said last week. The latter two, which would include thecompany’s top-30 trading operations, and growing power developmentarm, are expected to involve an eastern-U.S. electric utility buyerand take place before March, according to one inside source.

The company began moving its Houston operations to its Alexandria headquarterslast week in preparation for closing down the Houston office. The Houstonmarketing and trading group is expected to be operating at least throughthe end of the month and plans to come up with a transition plan to ensureservice will not be disrupted.

HS Resources will buy Houston-based Kinder Morgan’s gatheringsystem in the Wattenberg field area of the Denver-Julesberg Basin,along with its interests in the Amoco-BP Wattenberg Gas ProcessingPlant and KN Wattenberg LLC, which owns the Wattenbergtransmission system, in a phased transaction.

Costilla Energy Inc., a Texas-based producer with assets inSouth Texas and the Permian Basin, reported last week it has filedfor Chapter 11 with the U.S. Bankruptcy Court in Midland, TX. Thecompany said despite this setback, its oil and gas operations willcontinue without interruption. The company did not return phonecalls by press time.

The proposed Southern Trails Pipeline from the Paradox Basin ofNew Mexico to Long Beach, CA, could be delayed three to six monthsbecause of additional environmental assessment work underway aspart the federal and state regulatory processes, according to aSalt Lake City-based spokesperson for Questar Corp., which boughtthe pipeline for $40 million last year from ARCO. Nevertheless, theconverted 700-mile pipeline should be bringing 120 to 130 MMcf/d ofgas into California by the end of next year at the latest.

The proposed Southern Trails Pipeline from the Paradox Basin ofNew Mexico to Long Beach, CA, could be delayed three to six monthsbecause of additional environmental assessment work underway aspart the federal and state regulatory processes, according to aSalt Lake City-based spokesperson for Questar Corp., which boughtthe pipeline for $40 million last year from ARCO. Nevertheless, theconverted 700-mile pipeline should be bringing 120 to 130 MMcf/d ofgas into California by the end of next year at the latest.

The controversy surrounding an idle Southern California Gas Co.underground storage field in the Los Angeles Basin continues tosimmer as the ongoing state investigation into SoCal’s potentialmisuse of the power of eminent domain goes forward with hearingsscheduled for October. All the facts may never surface publicly,and even if they do, it will take months of complicated regulatoryproceedings.

Range Resources Corp. and FirstEnergy Corp. announced Thursdaythe formation of a $1 billion joint venture in the AppalachianBasin. Each company will own 50% of the yet-to-be-named venture.The deal is expected to close within 60 days.