Reduction

As polluting utilities were preparing to fight a broadEnvironmental Protection Agency emissions-reduction edict issuedlast week, they were hit with an appeals court decision upholdingan earlier EPA order on the same subject — nitrogen oxides (NOx)emissions.

As polluting utilities were preparing to fight a broadEnvironmental Protection Agency emissions-reduction edict issuedlast week, they were hit with an appeals court decision upholdingan earlier EPA order on the same subject – nitrogen oxide (NOx)emissions.

FERC last week clarified that the controversial “rate reductionmechanism” (RRM) in the capacity contract between Dynegy Marketingand Trade and El Paso Natural Gas is “not an unlawful practice orcontract” under the Natural Gas Act. Commissioner William Massey,however, issued a blistering attack not only against the RRM, butthe entire El Paso-Dynegy transaction.

FERC earlier this week clarified that the “rate reductionmechanism” (RRM) in the capacity contract between Dynegy Marketingand Trade and El Paso Natural Gas is “not an unlawful practice orcontract” under the Natural Gas Act. Commissioner William Massey,however, issued a blistering attack against the RRM and the entireEl Paso-Dynegy transaction.

A 270 MMcf/d reduction in San Juan Basin supply persisted intothe weekend-and possibly beyond-as El Paso reported it had founddamage to internal rotating components in its Blanco Plant’s “D”turbine that would require removal and inspection. The plant hadbeen scheduled to resume full operation Thursday. If the parts canbe repaired and reused, the turbine should return to service May31, El Paso said. But if the parts must be replaced, the projectedreturn date is June 5.

Citing continuing compressor repairs at Station 13, Northern BorderFriday extended a reduction of system throughput to 90% of summerdesign capacity (see Daily GPI, May 19)through Saturday and Sunday.

The drop in gas load that usually accompanies a weekendreduction of business activity failed to dampen the cash market’sbullishness Friday. Though a few points (El Paso-Permian andTrunkline-South Texas) eked out only penny upticks and CIG and Wahawere essentially flat, most markets achieved gains of 3-7 cents.Influencing factors were unchanged from earlier in the week,sources said: Western cold, Southern heat, a higher screen andelectric utilities using gas in peaking units while many nuclearand coal plants are down for refueling or other maintenance.

Mobil is yet another major producer hit by lower oil and gasprices in the third quarter. Despite cost reduction efforts,earnings were off sharply. Mobil reported third quarter 1998estimated operating earnings of $497 million, a decline of $410million, or 45%, from the record $907 million earned in the sameperiod last year. Net income declined 43% to $509 million from $892million in the third quarter of 1997. “This quarter saw virtuallyall of our businesses experience sharp declines in industryfundamentals,” said CEO Lucio A. Noto. “Despite our self-helpefforts, earnings and cash generation are down significantly thisyear.”

Citing continuing reduction of capacity by unseasonably hightemperatures, PG&E Gas Transmission-Northwest said it wouldagain be necessary to limit volumes today to 2,450 MMcf/d atKingsgate and to 1,870 MMcf/d at Station 14 (the last one upstreamof Malin) in order to return the system to optimum performance.