Forecast

Kinder Morgan Inc. (KMI) on Tuesday completed a plan begun in early August with affiliate Kinder Morgan Energy Partners LP (KMP) to issue a total of $1.84 million of debt and equity financing. KMI completed $750 million in 10-year, 6.3% notes, while KMP issued $343 million of new equity capital, $500 million of 31-year 7.3% debt and $250 million of five-year 5.35% debt. The debt and equity offering proceeds will be used to pay down both of the companies’ commercial paper.

After remaining for more than two months in a range of 350-400 Bcf, the natural gas surplus finally has begun to show signs of yielding to a combination of “relentless” summer heat, a continuing production decline and a positive demand response and “steady trend” toward a higher oil-to-gas price ratio, said an energy analyst Monday. However, the return to “tight gas markets” may not occur until “some point in 2003.”

Salomon Smith Barney meteorologist Jon Davis released his 2002 hurricane forecast last week calling for normal to below normal hurricane activity this year based mainly on the growing likelihood of an El Nino weather pattern in the equatorial Pacific. It is well known that in El Nino years Atlantic hurricane activity is hindered by a strong southern jet stream, Davis said. Pacific sea surface temperatures currently are warmer than normal but not quite enough yet to call an El Nino.

EnCana Corp. has completed a major land acquisition program along the Devonian Jean Marie reef margin in the Greater Sierra region in northeast British Columbia. With the acquisition, the company now holds more than 2 million net acres of land on the Greater Sierra play, which is one of the fastest growing gas producing regions in North America. In total, the company estimated that it has spent C$100 million (US$65-70 million) on the acquisitions.

Speaking at an analyst conference last week in Houston, Exxon Mobil Corp. Chairman Lee R. Raymond remained pessimistic about the development of a natural gas pipeline through Alaska. Backing the results of a preliminary study by Exxon Mobil, Phillips Petroleum Co. and BP Plc, the three largest lease holders along the North Slope, he said the future of an Alaskan pipeline still remains a long shot, due to the nature of natural gas volatility along with the overall cost of the enormous project.

Speaking at an analyst conference Tuesday in Houston, Exxon Mobil Corp. Chairman Lee R. Raymond remained pessimistic about the development of a natural gas pipeline through Alaska. Backing the results of a preliminary study by Exxon Mobil, Phillips Petroleum Co. and BP Plc, the three largest lease holders along the North Slope, he said the future of an Alaskan pipeline still remains a long shot, due to the nature of natural gas volatility along with the overall cost of the enormous project.

Citing the “extremely cold weather” forecast for its market area, CIG declared a Strained Operating Condition that took effect Friday until further notice. The pipeline anticipated “very limited ability to handle imbalances caused by variations between scheduled receipts and deliveries and actual gas flow,” especially during the weather conditions that had been predicted for Friday and Saturday. As of Friday CIG did not anticipate any need to issue an OFO as long as receipt shortage or delivery overage imbalances did not occur.

Based on the weather forecast and projected system demand, Sonat advised shippers that the OFO Type 3 implemented Wednesday for eight market-area groups, along with capacity allocations for four other groups, are being canceled today.

Mirant’s stock price has plunged 60% since the beginning of December forcing the company to take drastic actions to restore investor confidence. Enron’s bankruptcy, Mirant’s credit rating downgrade by Moody’s Investor Services and questions about its accounting practices all have played a role in the collapse of its stock.