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Chevron U.S.A. Production and its joint-venture partners – ShellDeepwater Development, EEX Corp. and Enterprise Oil Gulf of Mexico- set a new water-depth world record of 7,718 feet as they begandrilling their initial exploratory test well in the Gulf ofMexico’s Atwater Valley Block 118, about 175 miles southeast of NewOrleans. The Chevron-led team anticipates the well, designatedAtwater Valley 118 #1, will reach target depth of 15,471 feet belowthe seabed in the fourth quarter of this year. The companies areusing the fabled Glomar Explorer drill ship – initially built forU.S. intelligence work – owned by Global Marine to drill the well.Chevron and Texaco plan to alternate into the operator position asthey go forward with plans to drill 20 deepwater wells in the Gulfof Mexico.

Barrett Resources Corp., a Denver-based independent producer,reported that a major well blowout that erupted early Thursday mayhave been caused by “downhole casing failure due to extendedexposure to high pressure.”

Tesoro E&P Company L.P., a wholly-owned affiliate of TesoroPetroleum Corp., announced earlier this week it purchased a 50%working interest from Sheridan Energy in the Stiles Ranch Fieldnorth of Amarillo, TX.

Nation Fuel Gas Supply Corp. is holding an open season for19,100 Dth/d of long-term firm transportation capacity that hasbeen turned backed to its system. The open season will terminate onSept. 11.

LG&E Energy Corp. said it is discontinuing power marketingoperations and will take a $231.8 million after-tax loss in thesecond quarter mainly because it was forced to cover fixed-pricedpower marketing agreements when Midwest power prices went throughthe roof last month, reaching $7,000/MW compared to $30/MW justdays prior. The company was among the top 10 largest powermarketers (by volume sold) in the country last year.

New Mexico is the latest state to be labeled unfit forresidential energy marketing by Enron Corp., North America’slargest wholesale energy marketing firm. As in other states, suchas California, where Enron came to a similar conclusion, thecompany plans to continue participating in commercial andindustrial energy marketing. But the regulatory structure will makeit difficult, if not impossible, to compete profitably against theincumbent gas supplier, Public Service Company of New Mexico (PNM),Enron said.

Questar Corp. subsidiary Universal Resources will increase itsdaily gas and oil production 20% and reserves 31% with a $157.5million acquisition of HSRTW Inc., a Midcontinent regionexploration and production subsidiary of HS Resources of SanFrancisco. In the cash transaction, Universal will receive 150 Bcfeof proved oil and gas reserves (80% gas) primarily in Oklahoma, aswell as Texas, Arkansas and Louisiana. It also receives another 50Bcfe of reserves considered probable and possible. The propertiesinclude 1,000 wells in the Anadarko and Arkoma basins.

Independent power producer Calpine Corp. acquired Dow Chemical’s70 MW gas-fired power plant at Dow’s Pittsburg, CA, chemicalfacility for about $13 million. The deal includes Dow’s gaspipeline system that provides the plant with low-cost fuel fromSacramento basin gas fields. Key to the transaction is Calpine’splan to build a 500 to 700 MW gas-fired power plant adjacent toDow’s Pittsburg chemical plant. The new power plant will requirecapital of $250 million to $350 million and will generate enoughelectricity to power half a million households. The existing plantuses 16,000 MMBtu/d, and the new plant will use 80,000 to 90,000MMBtu/d.

Coastal Corp. was able to buck the trend of poor second quarterearnings by improving refining margins, increasing its gasproduction 22% to 526 MMcf/d and raising its crude oil andcondensate production by 50% to18,063 b/d. The company reportedsecond quarter earnings of $94.6 million, or 43 cents per share, up23% (on a per share basis) from 2Q97 earnings of $79.3 million, 35cents/share.