Cost

Acknowledging that the state’s cost for spot wholesale power supplies has increased significantly since the PG&E utility bankruptcy filing, the newest member of the California Public Utilities Commission lashed out at merchant generators and power suppliers last week for “manipulating” the western wholesale electricity market and extracting billions of dollars out of the states’ economies. If the situation does not ease soon, Gov. Gray Davis is likely to seize some of the private sector power plants, according to Geoffery Brown, a former San Francisco public defender named to the CPUC by Davis earlier this year.

Acknowledging that the state’s cost for spot wholesale power supplies has increased significantly since the PG&E utility bankruptcy filing, the newest member of the California Public Utilities Commission Wednesday lashed out at merchant generators and power suppliers for “manipulating” the western wholesale electricity market and extracting billions of dollars out of the states’ economies. If the situation does not ease soon, Gov. Gray Davis is likely to seize some of the private sector power plants, according to Geoffery Brown, a former San Francisco public defender named to the CPUC by Davis earlier this year.

The current high cost of energy, particularly natural gas, andthe continuing energy crisis in California prompted President BushMonday to retract an earlier promise to press for restrictions incarbon dioxide (CO2) emissions from power generation. Curbing CO2emissions would boost demand for natural gas at the expense ofother dirtier fuels, particularly coal and oil.

DTE Energy knocked off more than $400 million from the cost ofacquiring MCN Energy Group last week, according to a revised mergeragreement approved by the boards of both companies.

DTE Energy knocked off more than $400 million from the cost ofacquiring MCN Energy Group yesterday, according to a revised mergeragreement approved by the boards of both companies.

Once considered a problem in their oil exploration efforts, thehigh cost of natural gas is getting another look-see from EmpireEnergy. The Overland Park, KS-based producer said it would beginselling its natural gas reserves — which it used to squeeze off— from the Upper Cumberland Plateau region of north-centralTennessee once a natural gas pipeline is completed there. CoastalHydrocarbons LLC has begun laying a 4-inch line into the area andis expected to begin accepting gas in two to three months, Empiresaid. Pryor Oil Co., which holds a 40% interest in an explorationproject with 60% partner Empire, is now evaluating and high-gradingprogram leases to determine what wells to put into the natural gassales line. “Gas has been a hindrance in our exploration andproduction in that region due to the complexities it presentsduring drilling,” said Bryan S. Ferguson, Empire COO. “Previously,we didn’t have a market in which to sell the gas so while wedrilled oil wells, we either squeezed the gas off or held it information. With gas prices up and the market demand present, wefeel fortunate to now be able to put these assets to work for us.”Because of the fractured nature of the geology in the region,Empire said it was difficult to estimate the total gas reservespresent. However, every well drilled so far has had an “abundant”amount of natural gas.

Once considered a problem in their oil exploration efforts, thehigh cost of natural gas is getting another look-see from EmpireEnergy. The Overland Park, KS-based producer said it would beginselling its natural gas reserves — which it used to squeeze off— from the Upper Cumberland Plateau region of north-centralTennessee once a natural gas pipeline is completed there.

Kerr-McGee Corp. said it replaced 255% of its 2000 worldwideproduction of 108 million boe at an average finding and developmentcost of $4.81/boe. Worldwide net additions of proved oil andnatural gas reserves totaled 275 million boe in 2000, resulting inyear-end 2000 reserves of nearly 1.1 billion boe. Additions in 2000include reserves associated with the greater Boomvang and Nansenareas in the deepwater Gulf of Mexico and the greater Leadon areain the U.K. sector of the North Sea, each of which are currentlyunder development. The additions do not include the company’sdiscoveries in Bohai Bay, China, or at the Gunnison field in thedeepwater gulf. “The results of our exploration program in 2000were outstanding and build on our achievements in 1999,” saidKerr-McGee chairman Luke R. Corbett. “Our expertise andtechnological advancements continue to drive our success inworldwide exploration efforts. This year, we will grow ourdeepwater exploration program, focusing on core areas in proven,high-potential trends throughout the world.” In 2001, Kerr-McGeehas budgeted $205 million for exploration expense to drillapproximately 25 to 30 exploratory wells, including 10 to 15deepwater wells.

FERC approved Northern Border Pipeline Co.’s rate settlement,which converts the pipeline’s rate design to straight-fixedvariable from cost of service and which imposes a moratorium onrate changes until Nov. 1, 2005.