Development

KeySpan Energy Development has agreed to acquire a 50% interestin Gulf Canada Resources’ massive midstream gas business in westernCanada for US$189 million and form a new partnership governing GulfMidstream Services (GMS). The partnership will hold interests in 14gas processing plants that handle 1.4 Bcf/d, of which thepartnership’s share is about 750 MMcf/d. It also will hold all ofGulf’s western Canadian pipelines, storage, products facilities andgas and liquids marketing.

Same story, different company. That summarizes third quarterresults reported recently by Anadarko Petroleum. Like everyoneelse, Anadarko suffered from lower gas and oil prices last quarter,and the hurt shows plainly in its financials.

Bulls have not had much to smile about in the last five monthsat the New York Mercantile Exchange, so it was to their surpriseand delight when a trio of factors — storage, technicals, andanother possible tropical storm — combined to lift the marketThursday. The three remaining months in 1998 all received an almostequal boost with October edging out the others slightly byadvancing 6 cents to settle at $1.712 in moderate trading activity.

Mitchell Energy & Development agreed to settle the lastremaining 25 North Texas groundwater lawsuits brought against acompany subsidiary. Plaintiffs alleged in the suits that Mitchell’soil and gas operations in Wise County, TX, affected theirgroundwater.

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.

Mitchell Energy & Development has grown its gas reserves toan all-time high and increased combined oil and gas reserves bynearly 10% over the last six months by acquiring producingproperties in Limestone and Colorado counties in Texas.

Weak gas processing margins prompted Mitchell Energy &Development to cut its natural gas liquids (NGL) production by morethan 20% – roughly 10,000 barrels/d. “With the collapse in thecrude oil market, gas processing margins are pretty ugly rightnow,” said George P. Mitchell, CEO. “NGLs have tracked the slide incrude prices due to weak demand and higher imports. Strong gasprices are adding to the squeeze in processing margins since makingup the volume shrinkage that occurs when we extract the liquids isa cost. With NGL inventories in the U.S. running at 10-year highs,we decided to cut back where it makes economic sense.

In a dramatic step toward the development of a whole new way ofgenerating electricity, Plug Power demonstrated last week the firstresidential fuel cell to successfully power a home.

Frustrated by the pace of electric competition’s development inCalifornia, Enron has stepped out of the battle for residentialcustomers, at least for the time being. Enron blamed severalfactors for its decision. Consumer response has been disappointing,and state regulations put a crimp on the profitability of thebusiness.