Department

Calling it the first comprehensive grouped-utility privatizationcontract awarded by the Department of Defense (DOD), the U.S. ArmyMilitary District of Washington and Enron Federal Solutions Inc.announced a 10-year $24.8 million deal yesterday. The Enronsubsidiary will manage all of New York-based Fort Hamilton’sutility needs. The announcement was made yesterday at Fort McNairin Washington D.C.

The U.S. Department of Interior (DOI) is being sued byCalifornia Gov. Gray Davis, the California Coastal Commission andthe state attorney general’s office for granting extensions on 36offshore oil and gas leases. The extentions were granted two weeksago by DOI Secretary Bruce Babbitt.

The Department of the Interior’s Minerals Management Service(MMS) is beginning its third royalty-in-kind (RIK) pilot, puttingit in the business of selling Gulf of Mexico (GOM) gas productionit accepts in place of cash royalties. The pilot is intended totest a different approach to RIK, using a competitive auction tomove up to 260 MMBtu/d initially.

Department of Energy (DOE) Secretary Bill Richardson made aspirited request to a host of gas industry executives last week,asking for their help to pass a federal electric restructuring billbefore the end of this year. Richardson, addressing attendees ofthe Natural Gas Roundtable in Washington D.C., said the gasindustry stands to gain handsomely if electric restructuring getspassed as soon as possible.

Department of Energy (DOE) Secretary Bill Richardson made aspirited request to a host of gas industry executives yesterday,asking for their help to pass a federal electric restructuring billbefore the end of this year. Richardson, addressing attendees ofthe Natural Gas Roundtable in Washington D.C., said the gasindustry stands to gain handsomely if electric restructuring getspassed as soon as possible.

The Interior Department’s Minerals Management Service (MMS) hasissued a final rule for determining royalties for natural gasproduced on Indian lands. Under the new rule, which was publishedin the Aug. 10 Federal Register, Indian leases would have theoption to either compute royalties on wellhead gas using apublished price index, continue using the existing gross-proceedsmethod for arms-length contracts, or use the current MMS benchmarksystem for non-arms-length sales. If gas is processed, Indiantribes then would adopt a “dual accounting” method under whichroyalties would be based on whichever has the greater value for gas- before processing or after processing. In most cases, it’s thelatter.

Sempra Energy Trading entered into a one-year, $30-$35 milliongas management contract with California’s Department of GeneralServices (DGS) yesterday. Under the terms of the contract, SempraEnergy Trading will provide natural gas management for a total of117 state government buildings including San FranciscoInternational Airport.

The Interior Department’s Minerals Management Service (MMS) hasissued a final rule for determining royalties for natural gasproduced on Indian lands. Under the new rule, which was publishedin Tuesday’s Federal Register, Indian leases would have the optionto either direct producers to compute royalties on wellhead gasusing a published price index, continue using the existinggross-proceeds method for arms-length contracts, or use the currentMMS benchmark system for non-arms-length sales. If gas isprocessed, Indian tribes then could adopt a “dual accounting”method under which royalties would be based on whichever stage hasthe greater value for gas – before processing or after processing.In most cases, it’s the latter.

Although the Department of the Interior’s Minerals Management Service (MMS) is about to embark on another gas royalty in kind (RIK) pilot in the Gulf of Mexico, that doesn’t mean producers there will be completely relieved of gas sales price reporting requirements.