Industry

Although like the rest of the industry, Houston-based PogoProducing Co. has been wrangling with super soft commodity prices,the company is wading deeper into the Gulf of Mexico with a focuson future growth.

The White House has given the green-light to the renomination ofCommissioner Curt Hebert Jr. for a full five-year term at theFederal Energy Regulatory Commission. “It’s my understanding thatthey’ve signed off on my nomination,” Hebert told NGI.SenateMajority Leader Trent Lott (R-MS) sent a letter to the White Housein January seeking his renomination. The Senate EnergyCommitteeis expected to schedule a hearing after Congress returns fromrecess in mid-April, at which time it will begin to schedule ahearing.

TransCanada PipeLines subsidiary NOVA Gas Transmission (NGTL)filed its new pricing structure proposal with the Alberta Energyand Utilities Board (AEUB) yesterday. The gas transportation tollson TransCanada’s Alberta system are consistent with the memorandumof understanding (MOU) reached recently with the CanadianAssociation of Petroleum Producers. Announced March 24, the MOUdetails a new distance- and quantity-based pricing structure toreplace the current postage-stamp pricing regime for tolls on theAlberta system. The application also reflects input gathered duringan extensive stakeholder consultation process that began in late1996. The filing replaces an application NGTL put forth to the AEUBin April 1998.

In step with the rest of the industry as it deals with supersoft commodity prices, Houston-based Pogo Producing Co. also hascut back spending. In recent years the company’s annual explorationbudgets have been between $230 million and $250 million. Lastyear’s allocation was $230 million and was set to grow to between$260 and $270 million, said CEO Paul Van Wagenen. Instead, thecompany cut back considerably. This year Pogo is planning to spendabout $170 million.

Semco Energy bought Iowa Pipelines Associates (IPA) for anundisclosed amount Monday, in the company’s initial move tostrengthen its gas construction services after exiting the gasmarketing business. IPA will continue to operate with its own name under the Semco Energy Ventures section of the company. Semco saidthe deal should close sometime this week. “By acquiring IowaPipeline Associates, we have expanded our capacity to providequality engineering and construction services for an ever-wideningcustomer base,” said William Johnson, Semco Energy’s CEO. Semcorevealed its strategy last month, when it sold its gas marketingassets to CoEnergy, an MCN affiliate, for an undisclosed amount.Johnson, said the sale allowed the company to concentrate onbecoming “one of the largest providers of underground engineeringand construction services in North America.” IPA builds undergroundnatural gas pipelines and local gas distribution networks forcustomers in Iowa, Kansas, Missouri, and Nebraska.

The Maryland General Assembly Friday passed legislation to openthe state’s retail electric industry to competition. Gov. ParrisGlendening is expected to sign the bill into law next week. Thelegislation will phase in residential customer choice over athree-year period beginning with one-third of residential customersJuly 1, 2000. Residential customers choosing to keep their utilityas supplier would get rate cuts of 3% to 7.5% to be determined bythe Public Service Commission. The rate cuts would last four yearsand then rates would be deregulated.

Consolidated Edison and Orange and Rockland Utilities passed amilestone on their way to merging with approval of the transactionFriday by the New York Public Service Commission (NYPSC). Themerger also has been approved by the New Jersey and Pennsylvaniaregulators and FERC. Con Ed plans to acquire all O&R’s commonstock for $58.50 per share, or about $790 million. O&R willbecome a wholly-owned subsidiary of Consolidated Edison and willcontinue to operate as a separate company. The utilities areawaiting the approval of the Securities and Exchange Commission andcompletion of the Hart-Scott-Rodino Act review by the U.S.Department of Justice and expect to close the transaction by nextmonth.

Pennaco Energy and TransMontaigne Inc. subsidiary Bear PawEnergy signed a gathering agreement in which Bear Paw will buildand operate a new gathering line in the Powder River Basin ofnortheastern Wyoming and provide services to about 10% of Pennaco’scoal-bed methane program in the basin. The agreement covers thePennaco “South Gillette,” WY contract area, including over 8,600gross leasehold acres and 200 potential well locations. Pennaco hasdrilled and is in the process of testing and completing its first100 wells in the area. The Bear Paw gathering systems will connectPennaco’s gas wells to several major pipelines, including theWestern Gas Resources MIGC Pipeline, currently transporting up to130 MMcf/d of coal-bed gas, the recently announced Fort Union GasPipeline projected to be in service by September of this year, andthe proposed Thunder Creek Pipeline. The remaining 90% of Pennaco’s312,000 net acres in the Powder River will be devoted to FortUnion.

Conoco Inc. filed a registration statement with the Securitiesand Exchange Commission (SEC) outlining a split-off plan fromDuPont that will establish Conoco as a fully independent company.The proposed split-off would be achieved through an exchange offerin which DuPont stockholders would be given an opportunity toexchange DuPont common stock for shares of Conoco Class B commonstock currently held by DuPont. The split-off is expected to becompleted in the third quarter. Last autumn, DuPont sold 30% ofConoco last October in the largest initial public offering in U.S.history. The IPO raised $4.4 billion and left DuPont with a 70%controlling interest in Houston-based producer.