Focus

State-backed financial bailout options for California’s twocash-strapped utilities were being looked at Friday by the statelegislature and treasurer, including public takeover of the stategrid, as Gov. Gray Davis prepared to divulge his plan today priorto making another trip to Washington, D.C., in search of a federalcap on western wholesale electricity prices later this week.

With various energy players attempting to seize the moment ofintense political and regulatory focus during the first two weeksof December, California electricity proposals are flowing freerthan movie scripts and dot.com start-up business plans are allanticipating the impending state plan from Gov. Gray Davis onFriday and the subsequent final decision by the Federal EnergyRegulatory Commission Dec. 13 for stabilizing California’s powermarkets.

With focus shifting to natural gas prices and supplyavailability this fall and winter, a proposed conversion of the old16-inch-diameter Four Corners oil pipeline to natural gas has runinto a stalemate over a Southern California Gas Co. tariff thatallegedly inhibits the new pipeline from signing up industrialloads in the southern half of the state.

With focus shifting to natural gas prices and supplyavailability this fall and winter, a proposed conversion of the old16-inch-diameter Four Corners oil pipeline to natural gas has runinto a stalemate over a Southern California Gas Co. tariff thatallegedly inhibits the new pipeline from signing up industrialloads in the southern half of the state.

Although the focus of last week’s “summit” in Ohio was spiraling winter gas prices, Enron Chairman and CEO Kenneth L. Lay used the opportunity to take a few shots at deregulation in the electric industry in general, and the California market specifically.

Moving ahead with its strategy to focus on southwestern andwestern markets, Aquila Energy announced yesterday it has purchasedU.S. Gas Transportation (USGT) for an undisclosed price. Bothcompanies expect the deal to close by the end of the month.

In outlining his company’s strategy for this year, Union PacificResource’s CEO George Lindahl III said it will continue to focus ononshore North America plays. The company, he said, has budgeted$750 million for capital spending in 2000, including $100 millionfor property purchases. This budget should enable UPR to stabilizeproduction volumes by the middle of the year and increase volumesin the second half, while replacing over 100 percent of producedreserves. UPR also intends to continue the trend of increaseddrilling activity. Twenty-five rigs are now running in the U.S.,compared to 11 at this time last year and 17 at the end of 1999.Drilling in Canada has also picked up, with 11 rigs running today,compared to 13 in March of 1999 and four at year-end. Lindahlfocused on three specific areas that will be vital for thecompany’s growth: the Frontier play in southeast Wyoming’s GreenRiver Basin, South Louisiana’s Etouffee discovery and the Kluawells in British Columbia. “Our exploration activity in Wyoming,south Louisiana and British Columbia shows that we are making goodon our strategy, which is to find and produce natural gasopportunities onshore North America,” Lindahl said. “Our rig countshould continue to increase during the year. Development drillingis one of our strengths and we are hard at it onshore NorthAmerica, in the Gulf of Mexico and in Latin America..We believethat we are off to a good start to delivering value in 2000.”

Northwest Natural Gas announced the sale of its Canadian oil andgas exploration subsidiary, Canor Energy Ltd, for C$87.5 million incash to Celsius Energy Resources Ltd, a Canadian exploration andproduction company owned by Questar Corp.

Northwest Natural Gas announced the sale of its Canadian oil andgas exploration subsidiary, Canor Energy Ltd, for C$87.5 million incash to Celsius Energy Resources Ltd, a Canadian exploration andproduction company owned by Questar Corp.