News

Fanning the flames of the convergence-consolidation bonfire,Dominion Resources (DRI) last week announced two plannedacquisitions that would add both wellheads and burner tips, not tomention assets in between.

In an effort to smooth the way for FERC approval of its mergerwith MidAmerican, CalEnergy sold a 50% stake in power generationsubsidiary CE Generation LLC to El Paso Energy last week for $259.6million, including $236.1 million in cash and $23.5 million in debtand other payments. CE Generation is the holding company for 14U.S. power plants with capacity to produce 896 MW of electricity.

Retail unbundling in the California natural gas market is”currently being undermined” by Dynegy Marketing and Trade’swithholding of firm transportation capacity on El Paso Natural Gas,the head of the California Public Utilities Commission (CPUC) saidThursday. As a remedy, CPUC President Richard A. Bilas called onFERC to implement regulations prohibiting the “hoarding” ofpipeline capacity and to investigate allegations of anticompetitiveconduct, which he contends was prevalent in the Dynegy-El Pasocontract arrangement.

Despite three of Atlanta Gas Light’s nine gas customer poolssurpassing the Georgia Public Service Commission’s (GPSC)requirements to become fully competitive, the GPSC has decided notto move forward with the customer assignment process because ofplanned legislation that would declare Atlanta Gas Light’s (AGL)entire service territory competitive possibly as early as thisfall.

Dominion Resources Inc. (DRI) made its third move of 1999 andits second in less than a week to position itself as a major gasand power player in the Northeast and Midwest. Following on theheels of Monday’s announcement that DRI will acquire ConsolidatedNatural Gas (CNG), subsidiary Dominion Energy said Wednesday itwill make a $34 million (C$50 million) cash offer for RemingtonEnergy Ltd., a publicly traded gas E&P company headquartered inCalgary, AB.

Fidelity Oil Group of Bismarck, ND, the E&P unit of MDUResources Group Inc., production has grown at an average rate ofmore than 10%/year for the last 10 years while reserves have grownat an average rate of more than 8%/year, net of ongoing production.Gas reserves have increased most significantly, growing to morethan 110 Bcf in January after Fidelity’s acquisition of propertiesin Louisiana, Texas, Oklahoma, and Mississippi. The company targetsboth onshore and offshore properties in many of the major basins.Fidelity operations stretch from Canada through the central U.S.and into the Gulf of Mexico.

U.S. Northeast gas demand would increase by 4.4 Bcf/d ifproposed environmental regulations are implemented as planned andnuclear capacity is retired, according to a recent study by WEFAtitled Northeast Gas Markets: Opportunities and Risks. The studyevaluates the Northeast gas market under a number of scenarios. Itinvestigates the impact of environmental regulations, nuclearretirements, electricity demand growth, and pipeline capacityadditions on prices and gas demand in the U.S. Northeast.

In its weekly outlook on gas storage levels, Salomon SmithBarney (SSB) raised its forecast of expected storage levels at theend of the winter heating season by 117 Bcf from the previous week.The firm, which has grown increasingly bearish because of theclimbing storage surplus, now expects there to be 1,423 Bcf ofworking gas in storage on April 3, which would be 522 Bcf more thanthe four-year average on that date and 364 Bcf more than the sametime last year. Working gas levels in storage as of Feb. 12 were at1,887 Bcf, which is 462 Bcf more than last year on the same date,according to the American Gas Association (AGA).

Exxon worldwide additions to proved oil and gas reserves totaled1.1 billion oil-equivalent barrels in 1998, replacing 106% ofproduction. “This year’s strong performance is the fifth year in arow that we’ve exceeded 100% replacement,” said Chairman LeeRaymond. “Over the last 10 years, we’ve added nearly 11 billionoil-equivalent barrels to proved reserves, more than replacingreserves produced. Long-term reserves portfolio management anddevelopment is a key area of emphasis in our business.”