Program

Several electricity providers that participated in the Texas pilot deregulation program last summer admitted Wednesday to the Texas Public Utility Commission (PUC) that they had overscheduled power in the first few weeks of the pilot, costing the state $29 million. Reliant Energy Services, TXU Electric, American Electric Power Service, Mirant Americas Energy Marketing, Constellation Power Source and another unnamed company are being investigated by PUC to see whether they should be fined for hedging — even though it apparently was allowed at the time.

As part of a massive overhaul of El Paso Corp., conceived by the management team after the stock fell amid rumors of dubious debt transactions (a la Enron Corp.), the company made two major announcements last week: it simplified its balance sheet to remove any off-balance sheet debt, and it announced it will divest itself of $2.25 billion in assets by the second quarter in the Gulf of Mexico, Midcontinent and the Rocky Mountains to enhance its liquidity.

As part of an announced program to reduce debt, Devon Energy Corp. has agreed to sell properties in the United States and Canada for $953 million to undisclosed buyers. The assets had aggregate estimated proved reserves of 126.7 MMboe at the end of 2001. Devon’s sales include previously disclosed dispositions involving 43.0 MMboe of proved reserves for $366 million. After an acquisition binge, Devon announced in late December it would sell up to $1.5 billion in properties in North America and overseas to reduce its debt by mid-2002 (see NGI, Jan. 7).

Continuing in its effort to find a way to develop stranded natural gas economically, Conoco has taken a major step toward commercializing its proprietary technology for converting natural gas to liquids with the delivery and installation of the first production modules at the company’s gas-to-liquids (GTL) demonstration plant under construction in Ponca City, OK.

The Department of Energy (DOE) is adding two new projects to its program to develop new technologies that can increase natural gas production from low-permeability, or “tight,” reservoirs. The new projects, to be carried out by Advanced Resources International of Arlington, VA, and Cementing Solutions of Houston, were selected for federal cost-sharing when Congress increased DOE’s budget for natural gas research in fiscal year 2002. They will join two projects selected last August. All four had been proposed in an industry-wide competition earlier this year.

The Department of Energy is adding two new projects to its program to develop new technologies that can increase natural gas production from low-permeability, or “tight,” reservoirs. The new projects, to be carried out by Advanced Resources International of Arlington, VA, and Cementing Solutions of Houston, were selected for federal cost-sharing when Congress increased DOE’s budget for natural gas research in fiscal year 2002. They will join two projects selected last August. All four had been proposed in an industry-wide competition earlier this year.

After analysis of anomalies discovered during its routine inspection program, NGPL has shut in its #1 line between Compressor Stations 301 and 302 in Segment 22. The #2 line is still flowing at a reduced pressure while repairs commence on the #1 line. Effective today until further notice, gas sourced out of the South Texas Zone for deliveries north or east into the Gulf Coast System will be restricted. AOR, IT and Secondary volumes will not be scheduled, while Primary services will be available at a reduced level.

The Electric Reliability Council of Texas (ERCOT), on track to begin its pilot deregulation program in 5% of the state June 1, issued a progress report to the Texas Public Utility Commission this week, reporting that it now is finalizing megawatt registrations for generators that will serve the state. Conversion remains on schedule for the pilot, with transition to a fully deregulated market by January 2002.

The Georgia House and Senate passed bills this week that changethe the states deregulation program for the first time since itsinception in 1998. The changes, however, are a far shot from there-regulation that some legislators including Georgia Sen. ReginaThomas (D-Savannah) had sought (see Daily GPI, March 5).