Questionable

Citing commercial, environmental and technological uncertainties, the environmental group Western Resource Advocates (WRA) released a report casting doubts on oil shale, and emphasizing its distinct differences with shale gas and shale oil.

The Pittsburgh City Council was scheduled to vote Tuesday on an ordinance with questionable legal premises that would prohibit natural gas drilling in the city which is surrounded by the Marcellus Shale.

An exhaustive, six-month investigation by a law firm retained by a special committee to Westar Energy’s board of directors did not turn up any evidence of accounting fraud at the Kansas-based power company, according to a 376-page report that was prepared for the company’s board and publicly released by Westar last Thursday.

Cleco Corp. last Thursday said that it has identified so-called “round trip” trades, as well as transactions that may have violated affiliate regulations established by FERC and the Louisiana Public Service Commission (PSC), after a review initiated by its board of directors of certain energy trading activities over the past three years.

Reliant Resources Inc. (RRI), wobbling as a stand-alone retail and wholesale services company, last week said it had identified a series of four more related natural gas financial swap transactions that should not have been recorded. The transactions decreased RRI net income by $13 million in 2000 and increased net income by the same amount in 2001. After meeting with its independent auditors and the Securities and Exchange Commission, RRI determined that a restatement would not be required, but it will file an additional footnote disclosure as an amendment to its 2001 Form 10-K/A.

Reliant Resources Inc. (RRI), wobbling as a stand-alone retail and wholesale services company, revealed Tuesday that a review of its energy trading activities has identified a series of four related natural gas financial swap transactions that should not have been recorded.

Fueled by a rash of disclosures about questionable energy trading practices, Sen. Dianne Feinstein (D-CA) last week offered modified stand-alone legislation that seeks to bring over-the-counter (OTC) energy and metals derivatives traded over private electronic exchanges under the oversight umbrella of the Commodity Futures Exchange Commission (CFTC).

Extreme weather and questionable interstate natural gas pipeline capacity for the peak demand could compromise California energy reliability this summer, according to an outlook report from the Energy Security Analysis, Inc. (ESAI) in its latest assessment of North American natural gas capabilities. California’s chief gas forecaster, however, isn’t worried about this summer because demand for gas from generators will be down compared to last summer.

Aquila Gas Pipeline might be taken off the auction block inlight of depressed gas liquids prices and the fear a sale pricewon’t do justice to the company’s value. Indeed, the company’ssecond quarter results were something less than stellar. Net incomewas $1.4 million, down from $7 million in the second quarter of1997. This despite the fact gas throughput and marketed volumesaveraged a record 1.4 Bcf/d, compared to 1.2 Bcf/d in the secondquarter of last year. However, total system throughput was 446MMcf/d, compared to 534 MMcf/d in the second quarter of 1997. Anincrease in gas volumes marketed off system to 954 MMcf/d from 642MMcf/d in the second quarter of 1997 reflects the continuedincreased emphasis on marketing activities. Liquids productiondecreased to 25,000 barrels/d from 38,000 barrels/d 2Q 1997. Lowliquids prices were the reason for the decline.