Believes

Transocean Sedco Forex Inc. revealed yesterday that Marathon Oil has decided to back out of an 18-month drilling deal because it believes Transocean hasn’t lived up to its end of the bargain. The contract is for Transocean’s recently constructed, ultra-deepwater semisubmersible Cajun Express drill ship. Marathon gave notice it wants out of the deal apparently in response to incidents of downtime relating to equipment failures. Transocean said it strongly disputes that Marathon has the right to terminate the contract and intends to “vigorously pursue all available remedies.”

Northern Border Partners L.P. is moving quickly to scoop upMidwestern Gas Transmission from El Paso Corp. because it believesthe pipeline is destined to become strategically more important asan outlet for western Canadian gas and eventually Alaskan gas, aswell as a key supplier for generation plants in the Midwest.

Williams Energy Marketing & Trading is buying an undisclosedminority stake in Houston Street Exchange, a Web-based powertrading exchange that Williams believes will be actively taken upby the energy trading community.

Williams Energy Marketing & Trading is buying an undisclosedminority stake in Houston Street Exchange, a Web-based powertrading exchange that Williams believes will be actively taken upby the energy trading community.

Oklahoma Corporation Commission Chairman Bob Anthony stillbelieves his state’s ratepayers are getting the short end of thestick in a 10-year supply contract that Oklahoma Natural Gas (ONG)originally made with now-bankrupt Dynamic Energy Resources. That1993 contract was divided and transferred to two other suppliersnow serving the utility under the original terms.

While the natural gas industry generally believes the multiplepipeline projects planned for the Midwest and New England areoverkill, Roger Gale of the Washington International Energy Groupwould disagree.

NGC Corp. clearly believes renewable energy is the product ofthe future and has signed an agreement to supply power generatedfrom renewable sources to Green Mountain Energy Resources forretail power customers in California. NGC will supply wholesalepower for two of the three products Green Mountain is selling: itsWater Power blend and its 75% Renewable Power blend, according toTom Boucher, vice president of energy supply and businessdevelopment at Green Mountain. The wholesale power will come fromdifferent types of generating facilities in California and thewestern region, including small-scale hydro, geothermal, andbiomass facilities. A contractual chain will ensure that GreenMountain’s retail customers are purchasing power from a renewableor hydro source, said Doug Boccignone, director of marketing forNGC’s Electric Clearinghouse.

Despite current crude oil and natural gas price weakness,PaineWebber believes its 1998 wellhead gas price forecast of$2.15/MMBtu is “conservative.” And PaineWebber raised its 1999 spotwellhead price forecast to $2.35 from $2.20. Although the firmacknowledges first quarter producer earnings probably will suffer asetback, over the long term “we’re very very bullish” for eightreasons, said analyst Ronald J. Barone. First of all, despite ElNino’s impact of a 10% warmer than normal winter, spot gas priceshave averaged a solid $2.04/MMBtu so far this year. If temperatureshad been normal, prices would have averaged $2.50, PaineWebbersaid. Secondly, nine of the last 11 summers that followed an ElNino winter have been warmer than normal. Normal to warmer thannormal temperatures next summer would contrast sharply with the 7%cooler than normal temperatures last summer. And warmertemperatures would have an even greater impact on prices if coupledwith near normal hydroelectric power supply – which PaineWebberalso is expecting – rather than the 150% above normal hydro supplyseen in 1997.