Briefs

Williams has completed the sale of three straddle plants in southern Alberta to Inter Pipeline Fund of Calgary for C$715 million (US$536 million). The sale includes Williams’ 100% ownership interest in the Cochrane and Empress II plants, and Williams’ 50% ownership interest in the Empress V facility. The sale does not include Williams’ olefins business that extracts natural gas liquids and olefins from oil sands refining near Fort McMurray, AB. The liquids are then fractionated into various products at a Williams facility near Redwater, AB. In addition to the proceeds from the sale, the transaction will release approximately $30 million in U.S. funds of letters of credit and prepayments back to Williams by the end of the year. Williams expects to record an estimated pre-tax gain of $190 million in U.S. funds on the sale, which will be reported in discontinued operations in its third quarter financial results.

ANR Pipeline received a FERC certificate Wednesday to reconfigure its gas storage operations in Michigan by converting 4.1 Bcf of base gas to working gas in three storage fields and abandoning by sale the Capac Field, an inefficient off-system storage field, to Mid Michigan Gas Storage Co. ANR also will construct new injection/withdrawal wells and separation equipment at one field and add other facilities at two other fields to enhance late season deliverability. FERC said approval of the $9.8 million project will serve the public interest by allowing ANR to improve the overall efficiency of its entire storage system. The project will result in a net decrease of ANR’s maximum storage quantity of 9.5 Bcf and a net decrease of late season deliverability of 38 MMcf/d. However, ANR will still have 24.5 Bcf of unsubscribed capacity and 355 MMcf/d of unsubscribed deliverability available.

Mexico’s state-owned oil and gas monopoly Petroleos Mexicanos (Pemex) opened its second round of tender offers for companies interested in exploring for natural gas in the Burgos Basin. Pemex will take bids on four new blocks in the region located south of Texas. Through its multiple-service contracts, which allow international companies to take part in exploration, Pemex last year awarded tenders for five blocks in the basin. The contracts are part of Mexico’s plan to halve the country’s gas imports by 2007. Last year, Mexico’s gas output totaled 4.4 Bcf/d. Pemex will take bids for the Pandura-Anahuac and Ricos blocks through Oct. 26. Tenders for the Pirineo and Monoclonal blocks will begin Aug. 17 and will be taken through Nov. 23. In total, Pemex said the contracts are worth $2.7 billion.

ANR Pipeline received a FERC certificate Wednesday to reconfigure its gas storage operations in Michigan by converting 4.1 Bcf of base gas to working gas in three storage fields and abandoning by sale the Capac Field, an inefficient off-system storage field, to Mid Michigan Gas Storage Co. ANR also will construct new injection/withdrawal wells and separation equipment at one field and add other facilities an two other fields to enhance late season deliverability. FERC said approval of the $9.8 million project will serve the public interest by allowing ANR to improve the overall efficiency of its entire storage system. The project will result in a net decrease of ANR’s maximum storage quantity of 9.5 Bcf and a net decrease of late season deliverability of 38 MMcf/d. However, ANR will still have 24.5 Bcf of unsubscribed capacity and 355 MMcf/d of unsubscribed deliverability available.

GulfTerra Energy Partners said its Phoenix Gas Pipeline has received initial gas flows from the Red Hawk Field in the Garden Banks area of the deepwater Gulf of Mexico. Phoenix is a 78- mile, 18-inch diameter pipeline originating in 5,300 feet of water at the Red Hawk cell spar in Garden Banks Block 876. The pipeline interconnects with the ANR Pipeline system at Vermilion Block 397 and is capable of transporting up to 450 MMcf/d of gas. Red Hawk is operated by Kerr-McGee Oil and Gas Corp. and owned by Kerr-McGee and Devon Energy. The Red Hawk cell spar has an initial capacity of 120 MMcf/d and can be expanded to a production capacity of 300 MMcf/d (see Daily GPI, July 20).

Deepwater field sizes have increased steadily but deepwater operating costs per unit are facing upward pressure as well, according to Ziff Energy’s fifth annual study on deepwater statistics. Ziff found that deepwater average unit operating costs did fall from 1997 to 1999. However since then average unit operating costs have remained nearly flat with a small increase between 2000 and 2003. For the 13 deepwater fields tracked in the latest study for 2003, all but three of the fields had increased unit costs even among fields with increased production volumes, Ziff said. For information about the study, contact Ziff at (888) 736-5780.

Capgemini Energy LP, a joint venture formed by Capgemini America Inc. and TXU Corp., began operation on Thursday with a complete leadership structure drawn from both parent companies. TXU signed a $3.5 billion, 10-year agreement in May with Capgemini to form the new company. Under the agreement, about 2,700 employees will be transferred from TXU to Capgemini. TXU will own less than 3% of the company and will have the right to sell all of its interest when the contract ends. The company will provide information technology, call center, billing, human resources, supply chain and accounts payable, and finance and accounting services to TXU and other energy companies. Capgemini selected Bob Pryor, its former president of outsourcing services, as its CEO. Elizabeth Lavalley, who most recently served as TXU’s senior vice president of information technology, will be the company’s COO.

Junior independent Lexington Resources Inc., which is focused on natural gas exploration in the Arkoma Basin, said Wednesday it more than doubled its drillable land holdings in Oklahoma with the acquisition of 4,600 acres of coalbed methane-targeted natural gas leases. Lexington paid $125,000 toward the farm-out lease purchase of $600,000. Acreage included in the acquisition extends over an area of mutual interest of approximately 24,320 acres. The new leases encompass rights to all possible producing zones to the base of the Hartshorne Coal Formation at estimated depths of approximately 3,000 feet and include a 79.25% net revenue interest and a 100% working interest. With the latest purchase, the Las Vegas-based producer’s land position now totals drillable acreage of almost 9,000 acres.

Members of the North American Energy Standards Board (NAESB) have ratified standards to implement FERC Order 2004 which significantly broadened the scope of energy affiliates that will be subject to the agency’s standards of conduct governing the relationships between regulated natural gas pipeline/electric transmission providers and their affiliates (see Daily GPI, Nov. 26, 2003 and April 15, 2004). The rule, set to go into effect Sept. 1, significantly expanded the current Order 497 regulations governing regulated pipeline and power transmission providers and preferential treatment, information disclosure and employee sharing with their marketing and wholesale merchant affiliates. The expanded rules apply to traders, producers, gatherers, processors, intrastate and Hinshaw pipelines, and any affiliate making a sale for resale of natural gas or electric energy in interstate commerce. The new standards set out by NAESB include a package of modifications of existing definitions and standards, the deletion of several principles and definitions, the creation of a new principle and the modification of one interpretation. NAESB members approved the standards in balloting that closed June 25.