Event

Copper Eagle Gas Storage LLC., a joint event of El Paso Corp. and Pinnacle West Energy, currently is conducting a non-binding open season to assess market interest in a proposed high-deliverability natural gas storage facility to be located west of Phoenix, AZ, in Maricopa County.

Southern Co. has taken steps to shield itself in the event that financially shaky Dynegy Inc. defaults under power supply contracts it has entered into with Southern, Gale Klappa, the electric utility’s chief financial officer, told a gathering of investment professionals last Wednesday.

The recent forecast by the National Oceanic and Atmospheric Administration (NOAA) of an El Nino event forming in the equatorial Pacific Ocean has many energy market forecasters scrambling to size up the potential impact. But Weather Services International (WSI) said there is very little chance that El Nino will alter weather patterns this summer. The most likely scenario shows an impact late in the fall and in the winter.

In a move usually reserved for the late stages of acquisitions — and unheard of less than a month after an initial agreement — Dynegy Corp. is in advanced discussions with Enron Corp. to renegotiate its merger offer of Nov. 9 to acquire the Houston-based rival. According to sources, Dynegy wants to reduce the all-stock transaction price by more than 40%, which would put its share price at about $6. Enron closed at $4.11 on Tuesday, 10 cents above its Monday close.

AES Corp. disclosed in a regulatory filing made with the Securities and Exchange Commission that the Department of Justice (DOJ) last month commenced an antitrust investigation related to an agreement between AES Southland LLC and Williams Energy Services Co. The DOJ alleges that the agreement limits the expansion of electric generating capacity at or near certain plants owned by AES Southland. In connection with the investigation, the DOJ sent a civil investigative demand to AES Southland requesting the answer to certain interrogatories and the production of documents. AES Southland is cooperating with the terms of the civil investigative demand, AES noted. The Federal Energy Regulatory Commission in March of this year ordered Williams Energy Marketing & Trading and AES Southland to justify why they should not be found to have violated the Federal Power Act (FPA) by engaging in actions to drive up power prices in the California bulk market and potentially compromising the reliability of the transmission network (see Daily GPI, March 15). In California, Williams markets power produced from two generating units owned by AES. FERC said its investigation showed that Williams and AES appeared to have financial incentive to prolong outages from the two generating units to drive up prices.

Transwestern reduced total capacity on its San Juan Lateral byabout 100,000 MMBtu/d for Monday’s gas day following a 10:30 a.m.CST force majeure event at the Gallup (NM) Compressor Station. Acompressor unit was shut down while teams evaluate the situation.The force majeure will not affect plans to proceed with today’s SanJuan Lateral pigging operation, Transwestern said.

Transwestern reported a force majeure event Tuesday afternoon atStation 2 (Flagstaff, AZ) when the #2 compressor unit went down forrepairs. Downtime was estimated at 24-36 hours. West of Thoreaucapacity for today’s gas day is reduced by 70,000 MMBtu/d to about1,065 MMBtu/d.

The closest thing to a production threat that the Gulf of Mexicohas had so far this year failed to cause any ripples in cash pricesMonday. Eastern quotes ranged from barely higher to about a nickeldown, while western numbers reacted mostly to renewed heat waves inCalifornia and the desert Southwest, in ranging from flat to abouta dime higher.

In the event of a Y2K-related disruption, Transcontinental GasPipe Line said any imbalances that are incurred on advancenominations by shippers during the first seven days of the New Yearwill be exempt from cashout penalties.