San Jose, CA-based independent power producer Calpine Corp. madea major investment in upstream gas supply for its current andfuture gas-fired power plants in California yesterday. The companybought 90 Bcf of proven gas reserves in the Sacramento Basin fromVintage Petroleum for $71.5 million. The transaction will makeCalpine the largest gas producer in the basin, raising itsproduction to 43 MMcf/d. The Vintage reserves currently produce14.3 MMcf/d.
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Producer investment in Western Canada Sedimentary Basin (WCSB)natural gas is expected to grow from the $8 billion spent in 1998to just under $9 billion by 2001, which should add up to about a 6%hike or 3.1 Bcf/d in production and 3.4 Bcf/d in maximum peak daydeliverability over the 1998 to 2001 period, according to a surveyby the Canadian Energy Research Institute (CERI). The report notes”the WCSB is moving into a period of tighter supply/demandbalances,” in which lower than estimated spending could result insupply shortfalls, while higher spending could create a surplus.The group’s “1999 Canadian Natural Gas Producer Survey &Deliverability Outlook” sees export capacity from the basinpossibly exceeding market demand in the short-term. “For year 2001CERI’s required production estimate equates to an 89% averageannual load factor on ex-basin capacity, notably lower than the95-100% factors experienced since the mid-1990s.”
NW Natural Allowed Net Revenue Increase
Northwest Natural Gas Co. reported that the Oregon PublicUtility Commission (OPUC), in an order issued Nov. 12, authorized anet revenue increase from NW Natural’s Oregon operations of $0.2million/year. The revenue increase will come from rate increasesaveraging about 1.3% for Oregon residential customers, partiallyoffset by rate decreases for certain commercial and largeindustrial customers.
Mexico Establishes Another Distribution Zone
Mexico’s energy regulatory commission (CRE) created thePuebla-Tlaxcala geographic zone for gas distribution. The zonecovers 51 municipalities in the two states. An investment of about$50 million is expected to develop the project, and Gaz de Francehas expressed an interest.
AGA Touts Gas Utility Stocks to Small Investors
The natural gas utility industry may be small when compared toother investment opportunities, but it’s still an extremelyattractive stock play – especially for the small- to medium-sizedinvestor, said a representative of the American Gas Association(AGA) last week.
Samson Growing Through Acquisitions
Samson Investment Co. of Tulsa, OK, completed its acquisitionfrom Nuevo Energy Co. of gas properties in East Texas. The totalpurchase price was $192 million. In addition to existingproduction, the properties contain more than 135 drillinglocations. The closing follows Samson Resources’ December closings,which included the acquisition of properties in six states fromDuer Wagner & Co. for $41 million and the acquisition ofcertain properties in the Homeglen-Rimbey and Westerose areas ofAlberta, Canada from Chevron Canada Resources for $9 million bySamson Canada Ltd.