Growing

Kerr-McGee Corp. last week joined a growing number of productioncompanies, including ARCO, Occidental Petroleum and Unocal, thatare restructuring or reducing work forces because of the depressedoil market. Kerr-McGee said it plans to layoff about 70 workers,reducing its Oklahoma City metropolitan area work force by 7% andits exploration and production company staff by a similar amount.

Kerr-McGee Corp. yesterday joined a growing number of companies,including ARCO, Unocal and Occidental Petroleum, that plan torestructure or reduce workforces because of the depressed oilmarket. Kerr-McGee said it plans to layoff about 70 workers,reducing its Oklahoma City metropolitan area workforce by 7% andits exploration and production company staff by a similar amount.The company, which has $3.7 billion in assets and had already shedits coal businesses this year, said the restructuring is designedto save 20% of annual overhead cost, or about $18 million.

Noticing continued futures strength and a growing threat of newstorm shut-ins in the Gulf of Mexico, cash prices built onTuesday’s gains with even bigger ones Wednesday. Increases oneither side of 20 cents were common at nearly all points. TheCalifornia market, far removed from Gulf storm influence, sawsmaller gains of about a dime, although a Malin rise of 13 centsnearly fulfilled one source’s prediction of up 20 cents there (seeDaily GPI, Sept. 16) based on Tuesday’s intra-Alberta pricestrength.

The nation’s largest municipal electric utility is rapidlyincreasing its participation in robust wholesale energycompetition, although as a government-run entity it is not directlya part of California’s ongoing restructuring of electricity andnatural gas. In the fiscal year just ended, the Los AngelesDepartment of Water and Power did about $110 million in wholesaleenergy deals, according to department sources, including one of itsbiggest natural gas contracts ever for more than 6 Bcf of suppliescovering the next six months.

The American Gas Association released a study yesterday thatforecasts gas consumption growth of 40% by 2015, fueled by strongindustrial demand growth, the dominance of gas-fired generation innew power plant construction and the popularity of gas in new homeand commercial construction. AGA projects gas will expand its shareof the U.S. energy market to 28% in 2015. Consumption is expectedto rise to 31.9 quadrillion Btus (roughly 31 Tcf) from about 22.9quads in 1997.

Encouraged by another skyrocketing screen, growing airconditioning load and a major supply outage in the Rockies, cashprices were on the rise Friday almost across the board by anywherefrom 2 to 18 cents. Most upticks were in the neighborhood of anickel, but all Rockies pipes were seeing double-digit increases.”I think a lot of people are starting to put their bull horns backon,” commented a Texas source.

Cinergy Corp. took a huge step in growing its commoditymarketing operation yesterday with the purchase of Producers EnergyMarketing, LLC, (ProEnergy) from owners Oryx Energy and ApacheCorp. for $42.5 million and with the signing of a 10-year marketingalliance that covers both producers’ entire marketable gas supply,or about 1.1 Bcf/d.

Some in the natural gas industry are growing increasingly uneasythat the re-appointment of William Massey to a second term at theFederal Energy Regulatory Commission appears to be stalled at theWhite House.

Millennium Pipeline yesterday joined a growing crowd of pipelineexpansions and projects that are being delayed until 2000. Thecompany informed the Federal Energy Regulatory Commission of therevised project schedule, which calls for some portions of the442-mile pipeline to be constructed in 1999, the balance beingbuilt the following year and service by November 2000. IndependencePipeline, a Millennium competitor, announced a similar delayearlier this year, and Alliance Pipeline said it too was forced toput off transportation services until winter 2000.