Redistributed

The pace of announced mergers and acquisitions (M&ampA) haspicked up steam in the last few weeks because electric utilitiesare realizing that the pool of potential natural gas targets isquickly dwindling, according to a Merrill Lynch &amp Co. report.

A Senate report’s conclusion that the natural gas and oilindustries aren’t likely to be ready for the computer-relatedsystem challenges of the Year 2000 is based on “out-of-date”information that “misses [the] significant progress the industrieshave made” during the past six months, said major industry tradegroups.

Fresh after receiving a boost from a hefty storage withdrawalWednesday afternoon, natural gas futures continued higher yesterdayin yet another tumultuous trading session. And for the second dayin a row locals were seen as the catalyst, using buy stops toorchestrate a gap higher opening. But overhead resistance at $1.77held and the market was left to ebb and flow within the 4-centtrading range, which was set in the first hour of trading. TheApril contract finished up 3.9 cents to $1.762.

The fate of the Millennium, Independence, SupplyLink andMarketLink pipeline expansion projects, which together representabout 1.7 Bcf/d of new pipeline capacity directed at northeasternmarkets from the Midwest, have been scheduled for discussion onlyat FERC’s next regular meeting March 10. That move has sparked aconsiderable degree of speculation among FERC observers andpipeline representatives.

Burlington Resources (BR) announced that its plan for 80-acrein-fill drilling of the Mesaverde Formation in the San Juan Basinof New Mexico has been approved by the New Mexico Oil ConservationDivision. The 80-acre well spacing order could open up anadditional 7,000 drilling locations in the San Juan and be a majorfactor contributing to production growth in the basin over the nextfew years, according to basin analyst George Lippman, who hasstudied the San Juan for the last 30 years. To date, BR has drilled38 Mesaverde 80-acre in-fill wells and plans to drill 50 additionalwells in 1999.

Completing an asset sell-off started last month, ConsolidatedEdison Co. announced Baltimore, MD-based Orion Power Holdings asthe winning bidder in the auction for three New York citygenerating facilities. Orion’s winning bid was $550 million. MorganStanley Dean Witter advised Con Edison on the sale. Orion officialssaid the deal will close by mid-1999.

Nicor Gas has filed a performance-based rate proposal with theIllinois Commerce Commission that would allow the company and itscustomers to save money if Nicor’s commodity, transportation andstorage costs are lower than a fluctuating benchmark. The benchmarkwill be based on a bushel of published gas price indexes, plusaverage transportation costs over the prior year and actual storagecosts. The PBR is expected to be in place starting next January.

Independent producers plan to present a resolution later thismonth to congressional lawmakers and others in the federalgovernment, asking them to support measures to lift the oil and gasindustry from its currently depressed state.

Adding insult to injury for gas producers suffering through awarm winter, reports from the Bonneville Power Administration (BPA)and California’s Department of Water Resources indicate the PacificNorthwest’s snow pack is thicker than normal, meaning hydropower isprimed for another productive year.