Brief

Aspen Group Resources Corp. has signed a binding Letter of Intent (LOI) with Oklahoma-based Crusader Energy Corp. to sell its U.S. oil and natural gas assets for $22 million cash, pending closing adjustments. The LOI proposes the sale of all of Aspen’s U.S. oil and gas production and reserves, which equates to approximately 3,600 Mcfe/d of production and approximately 26.4 Bcfe of proven reserves. The reserves are approximately 88% natural gas. Aspen’s wholly owned subsidiary United Cementing and Acidizing Co. is not included in the sale. Crusader is a new entity funded by an equity investment made by Kayne Anderson Capital Advisors LP and David D. LeNorman. The transaction’s effective date is June 1, 2004, and closing is expected to occur by Oct. 1, 2004.

FERC on Thursday gave Cheyenne Plains Gas Pipeline Co. LLC the green light to begin construction on the 380-mile pipeline, which will offer a new direct route to Midcontinent and Midwest natural gas markets for rapidly growing Powder River Basin coalbed methane production and traditional gas supply from the Jonah Field in the Green River Basin in western Wyoming. The $425 million project, which will extend from the Cheyenne Hub in northeastern Colorado to Greensburg, KS, will be a major new addition to the entire Rockies region. The pipeline is targeted for service in January 2005, with an expansion the following year. Initial deliveries are expected to total 560 MMcf/d with another 170 MMcf/d in Phase II and the possibility of an additional 1 Bcf/d expansion.

El Paso Corp. said Friday that it eliminated about $815 million of non-recource debt on its balance sheet by closing the sale of Utility Contract Funding (UCF) to Bear Stearns’ Houston Energy Group for $21 million. UCF assets include a power contract that was restructured as part of the company’s previous power restructuring activities. El Paso said it will take a pre-tax charge of $100 million on the sale based on the company’s investment in the equity of this entity.

Following Wednesday’s brief market lull in which gains were small and softening had set in in some cases, all points were back on the same rising page again Thursday. A multi-day bullish streak in natural gas futures got the chief credit for the new advances, as gradually rising power generation load in the South was approximately offset by falling load caused by cooler temperatures in the Midwest, Plains and eastern Rockies.

EnCana Corp. has notified the Federal Energy Regulatory Commission that all of its U.S. subsidiaries that are engaged in natural gas purchase and sale transactions are reporting transaction information to index publishers. The company previously had told FERC that its marketing division was reporting, but its storage unit was not. EnCana said that as of May 28 it had implemented a uniform, automated process for reporting transaction information across all its U.S. subsidiaries.

Drawing lots of lender interest, Bellevue, WA-based Puget Energy announced Wednesday that it obtained two new lines of credit totaling $500 million, involving 17 foreign and domestic banks and including a three-year $350 million unsecured credit line for its major utility subsidiary, Puget Sound Energy (PSE). Its nonutility construction arm, InfrastruX Group, will have a three-year, $150-million line for its operations nationally. Puget said the new credit facility will be used for general corporate purposes, and specifically for the utility, it will be used “primarily to back up the insurance of commercial paper, one of the company’s least expensive sources of borrowed funds.”

Reporting its production statistics for April 2004, Pittsburgh, PA-based Consol Energy said its natural gas production was up 12% over April 2003 due to additional producing wells drilled, while electricity production in the 2004 month fell significantly due to lower peak demand and higher natural gas prices. Consol produced a net 4 Bcf for April 2004, compared to 3.6 Bcf for April 2003. As one of the largest U.S. producers of coalbed methane, Consol produces approximately 146.2 MMcf/d from wells in Pennsylvania, Virginia and West Virginia. The company also has joint ventures that produce natural gas in Virginia and Tennessee, while producing electricity from coalbed methane at a joint-venture generating facility in Virginia. The company’s electricity production went from 425 MWh in the 2003 month to 124 MWh in April 2004. Coal production increased from 5.4 million tons in April 2003 to 6.2 million tons in the 2004 month.

Canada’s National Energy Board concluded in a new report that the gas market in British Columbia is working well and both consumers and producers are making appropriate adjustments to higher gas prices. The Energy Market Assessment (EMA) found that natural gas prices in the province are now integrated with the North American gas market. In response to recent price increases, provincial consumers have reduced demand. Industries such as the forest products industry improved energy efficiency and increased their use of other fuels. Residential consumers reduced household consumption by improving energy conservation. In northeast British Columbia, producers have responded to higher prices by increasing exploration activity. However, the small size of the British Columbia natural gas market and the lack of a major storage facility near the Lower Mainland limit market flexibility in comparison with other major market centers, such as Alberta. Looking ahead, the potential exists to increase gas supply from northeast British Columbia and there is potential to find natural gas in other provincial supply basins, the NEB said. The EMA is available on the NEB’s website at www.neb-one.gc.ca.

KeySpan Energy Canada said it has started building a 52-mile gas pipeline in the Pembina area of Alberta to deliver gas to its Brazeau River gas plant. Current production in the area is severely restricted due to the lack of sour gas processing capacity. The pipeline, known as the Brazeau Northeast Gas Gathering System, is expected to be operational in August. The pipeline routing has been chosen to follow the development of the highly prospective Pembina Nisku edge bank play. It will be a combination of 6- and 8-inch diameter pipe with a maximum capacity of 28 MMcf/d and has been designed to transport sour gas containing up to 25% hydrogen sulphide. Gross capital expenditures will be $18.4 million. The KeySpan Brazeau River gas plant currently has sufficient capacity to process the full capacity of the pipeline.