Giving

Giving gas unbundling efforts in California a shot in the arm,FERC last week approved a major agreement to restructure thelong-term transportation and gas sales arrangements that haveenabled Southern California Gas (SoCalGas) over the years toreceive imports of Canadian gas through its paper pipelineaffiliate, Pacific Interstate Transmission Co. (PITCO).

Coral Energy became the principal gas supplier to LDCMountaineer Gas Co. through an agreement giving Coral management ofvirtually all of Mountaineer’s total firm transportation andstorage entitlements. Effective Nov. 1, Coral will begin supplyingMountaineer, West Virginia’s largest LDC, about 25 Bcf/year forthree years. Gas will be supplied at a fixed price. Local gassupplies are not part of the deal and will continue to be managedby Mountaineer.

Oneok bought an additional 55% of the Sycamore gathering systemin Carter County, OK, from Continental Natural Gas of Tulsa, OK,giving it 97% of the system. Oneok is operator of the system and amajor producer in the area. “This is a continuation of our strategyof concentrating ownership in areas where we have a growing reservebase to maximize value for our shareholders,” said David Kyle,Oneok COO.

Giving pipelines the presumption in favor of rolled-in rates mayhave been a good idea a couple of years ago, but CommissionerWilliam Massey says he’s now beginning to have second thoughtsabout that decision.

The controversy over the terms and conditions of the contractsgiving Natural Gas Clearinghouse a large bite of the westboundtransportation capacity on El Paso Natural Gas – capacity that wasdestined to be turned back to the pipeline at the end of last year- is expected to take center stage at FERC next week. Marketers andproducers say they plan to make a case that the contracts areanticompetitive and contain illegal negotiated terms andconditions, and are responsible for the run-up in transportationrates on El Paso’s system to the California border.