Basin

Southern California Gas’ attempt to sell its smallest LosAngeles Basin underground natural gas storage facility has beenabruptly halted by state regulators while an investigation isconducted into how the nation’s largest gas utility has dealt withregulators and surrounding landowners in the Eastern LA suburb ofMontebello, CA, bordering the storage facility. It is now in thehands of the California Public Utilities Commission, which couldassess some large fines if SoCalGas is found to have violated staterules.

A 270 MMcf/d reduction in San Juan Basin supply persisted intothe weekend-and possibly beyond-as El Paso reported it had founddamage to internal rotating components in its Blanco Plant’s “D”turbine that would require removal and inspection. The plant hadbeen scheduled to resume full operation Thursday. If the parts canbe repaired and reused, the turbine should return to service May31, El Paso said. But if the parts must be replaced, the projectedreturn date is June 5.

Southern California Gas’ attempt to sell its smallest LosAngeles Basin underground natural gas storage facility has beenabruptly halted by state regulators while an investigation isconducted into how the nation’s largest gas utility has dealt withregulators and surrounding landowners in the Eastern LA suburb ofMontebello, CA, bordering the storage facility. It is now in thehands of the California Public Utilities Commission, which couldassess some large fines if SoCalGas is found to have violated staterules.

Electronic trading may be the antidote to anemic trading of theNew York Mercantile Exchange’s Alberta and Permian Basin gasfutures contracts, Exchange President R. Patrick Thompson said lastweek.

Similar to a deal the two companies made last May involvingthree power plants in the Los Angeles Basin, Williams and AESforged an agreement last week in which Williams will supply thefuel and market the power produced from an AES-built and -operatedpower facility in Pennsylvania. The AES Ironwood plant will belocated in South Lebanon Township and will have a capacity toproduce 700 MW. Financial terms of the transaction were notdisclosed.

El Paso Natural Gas has given up on its first attempt tode-bottleneck the constrained Bondad System in the San Juan Basin(see Daily GPI, Oct. 19), but is approaching FERC again in hopesthat a second try will be more fruitful in adding capacity to apoint that some gas traders sarcastically call “Bondage.”

EEX Corp. agreed to trade substantially all of its Permian Basinproperties in West Texas and Eastern New Mexico for the shallowwater properties located off the coast of Texas and Louisiana ofEnergen Resources Corp., the oil and gas subsidiary of EnergenCorp. In addition to the shelf properties, EEX will receive $9million in cash. “This trade is another step in our strategy toexit the onshore business and focus on offshore Gulf of Mexico.These new properties will improve near-term production of naturalgas and will contribute to improving our cost structure by loweringper unit production costs while eliminating overhead costs relatedto onshore properties,” said Tom Hamilton, EEX CEO.

Williston Basin Interstate Pipeline (WBI), through its”surrogate” affiliate Frontier Gas Storage, has displayed a patternof preferential treatment by selling all of Frontier’s gas to itsmarketing affiliate, Prairielands Energy Marketing Inc., in anattempt to give the latter a competitive edge over non-affiliatedshippers, the pipeline’s customers charge.

Union Pacific Resources Group sold its interests in theWattenberg area of Colorado’s Denver-Julesberg Basin toDenver-based United States Exploration Inc. for $41 million. Theproperties, which are in Adams, Arapahoe, Elbert and Weld counties,consist of 336 producing wells, which produced about 5.5 MMcf/d ofgas and 640 barrels of liquids/d in 1997. UPR retained its royaltyinterest in the properties. The transaction closed May 15 and waseffective Jan.1.