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Columbia Gas of Virginia filed a motion with the Virginia StateCorporation Commission (SCC) last week to extend its pilot programthrough Oct. 1, 2000. The two-year program is set to expire inOctober of this year. The SCC said no date has been set for aruling on the filing.

Sempra Energy International said it began construction on a23-mile, $35 million pipeline running from California to Mexicolast week, adding to the already-extensive activity the company isinvolved in south of the border. The 300 MMcf/d pipeline isscheduled to begin service to the Presidente Juarez power stationat Rosarito, Baja California by December.

Ground was broken last week for a $275 million, 540 MW naturalgas-fired power plant in Arizona by San Jose, CA-based CalpineCorp., and close observers of the California electric restructuringare indicating this may be the start of more to come throughout theSouthwest.

The D.C. Circuit Court of Appeals remanded Friday a FERCdecision approving a 20-year cap on bids for Tennessee Gas Pipelinecapacity that are considered under the net-present-value approach.The Process Gas Consumers Group (PGC), which includes industrialgas users, challenged the Commission order, arguing that it failedto engage in “reasoned decision-making” by allowing the cap on theNPV bids. “…..[W]e find FERC’s reasoning on the cap to beunpersuasive and largely conclusory,” the court opined [No.98-1075]. The court said it didn’t “quarrel” with the goal behindthe Commission’s approval of the NPV capacity-allocation method forTennessee, “but [we] remind FERC of its admitted need to balancethe goal with its duty to prevent exploitation of Tennessee’smonopoly power. FERC appears to have forgotten the latter…..” PGCalso took issue with FERC’s decision allowing Tennessee to applyNPV to shippers attempting to change primary receipt and deliverypoints, and the court agreed with industrials on this point. Thecourt ordered the Commission to “better explain or modify” itsapproval of both issues.

Cumberland County awarded South Jersey Energy, the marketingaffiliate of South Jersey Industries, a one-year gas supplycontract yesterday. A company spokesman said the contract was worth$500,000. South Jersey will supply gas to all municipal facilitiesand aims to save the county government 20% off its regular gasbill. The announcement marks South Jersey’s third contract with NewJersey county governments in the past 12 months. It also has supplydeals with Atlantic and Camden Counties.

About 1 Bcf/d of NOVA capacity will be cut from May 31 to June9 as part of the system is inspected for stress corrosion crackingwhile tie-ins and other maintenance are performed. NOVA will take100 miles of 36-inch line between the Miekle River and Knightcompressor stations in northwest Alberta out of service during thattime. NOVA normally moves a total of about 11.8 Bcf/d, a spokesmansaid.

The cash market entered one of its leveling-off phases Thursdaywith flat prices prevailing at a majority of points. A little earlystrength on the futures screen helped buoy physical gas at first,but toward the end of the morning cash numbers were following thescreen lower “step for step,” a Gulf Coast producer said. Onceagain there was essentially nothing to influence trading beside thescreen, she added, dismissing the AGA storage report Wednesdayafternoon as a non-event.

After an early attempt to take out prior highs was rebuffedyesterday, natural gas futures trickled down to easily establish anew low for the week at $2.19. Bears were egged on by a number offactors, which include a rapidly deteriorating technical pictureand expected weekend physical demand fall-off, sources agreed. TheJune contract finished at $2.218, down 3.6 cents for the day.

Devon Energy Corp. and PennzEnergy Co. announced plans to mergeyesterday. While the deal was generally cheered by analysts, somecriticized PennzEnergy Chairman James L. Pate for letting thecompany go too cheaply without considering other options. Theannouncement also raised the hackles of PennzEnergy investors.