Gathering

The driving force sought by promoters of Arctic natural gaspipelines is gathering steam as three senior Canadian productioncompanies revisit major northern discoveries they have sat on for aquarter of a century of unfavorable markets.

Coastal Gas Gathering and Processing experienced a fire Thursdayat its Dragon Trail (CO) Plant that caused one injury and limitedreceipts into Northwest, Questar, CIG and Public Service Co. ofColorado. Dragon Trail throughput was reduced temporarily to zeroFriday but was being restored by that afternoon, a spokesman said.Full output was expected to be reached by Friday night or Saturday,he said.

The public meeting held by the Gas Industry Standards Board(GISB) last week to determine whether it should develop standardsfor retail gas and power, as well as wholesale power, was short onsolutions but big on questions.

The public meeting held by the Gas Industry Standards Board(GISB) last week to determine whether it should develop standardsfor retail gas and power, as well as wholesale power, was short onsolutions but big on questions.

Columbia Gas Transmission sold its Project Penny gatheringpipeline and compressor facilities in Pennsylvania and New York toNorse Pipeline for $21.5 million. Norse is an affiliate of SchansonEnergy LLC, the energy investment arm of Schanson CapitalManagement of Los Angeles, and Nornew Inc., an integrated oil andgas exploration company focused mainly on the Appalachian Basin andthe Maritime provinces in Atlantic Canada. Norse Pipeline’sdomestic operations are based in Houston and Jamestown, NY. ProjectPenny consists of seven compressor station locations and about 341miles of gas pipeline in northwestern Pennsylvania and southwesternNew York. Constructed in the late 1970s and early 1980s, theProject Penny facilities have no direct connection to ColumbiaTransmission’s other pipeline facilities and are not necessary forthe company to provide its core services of interstate gastransportation and storage. The purchase of Project Penny makesNorse Pipeline the largest gas gatherer in the northern AppalachianBasin, with access to about 6,500 gas wells in New York andPennsylvania and the capacity to gather more than 100,000 Mcf/d.

Columbia Gas Transmission sold its Project Penny gatheringpipeline and compressor facilities in Pennsylvania and New York toNorse Pipeline for $21.5 million. Norse is an affiliate of SchansonEnergy LLC, the energy investment arm of Schanson CapitalManagement of Los Angeles, and Nornew Inc., an integrated oil andgas exploration company focused mainly on the Appalachian Basin andthe Maritime provinces in Atlantic Canada. Norse Pipeline’sdomestic operations are based in Houston and Jamestown, NY.

California regulators are scheduled to wrap up the formaldata-gathering phase of their assessment of the state’s natural gasmarkets with an oral argument March 23 in San Francisco. Using thisdata and the record from formal hearings conducted earlier thisyear, the California Public Utilities Commission will establish alist of the most promising options for injecting more competitioninto the state’s natural gas business, beginning next year. Thehalf-day hearing will divide 19 major parties into two discussionpanels: one focused on customer issues and the other oncompetitors. The three utilities will be represented on bothpanels.

Union Pacific Resource has reiterated its intention to examine apossible sale of its gas gathering and processing business orselected non-core assets as part of a “deleveraging” programfollowing its recent $3.5 billion purchase (including assumption ofdebt) of Norcen Energy. At the time of the Norcen deal, UPR said itintended to sell $500-$700 million in assets to cut its debt toequity ratio, which ballooned to 73% following the Norcen deal fromabout 40%. But the company has valued its midstream assets, whichare located in Texas, Louisiana, Wyoming and Colorado, at about $2billion. The assets produced about $150 million in pretax operatingincome in 1997. The company has 25 operating plants and relatedpipeline facilities. A UPR spokesman said the company is justbeginning to evaluate its options but noted the market formidstream assets has been hot. UPR’s announcement follows similarplans announced recently by Aquila Gas Pipeline and EquitableResources. “These assets have been selling at a much higher cashflow multiple than E&P assets.”

NGPL restored full nominations Friday at six wells on the NorthCuster gathering line in Custer County, OK. The wells had been cutto 1 MMbtu/d Tuesday after a line leak was discovered.