Report

Chevron announced late Friday it adjusted its 1998 earnings toaccommodate $637 million in “potential losses” due to an OklahomaSupreme Court decision last week affirming a lower court’s rulingagainst the integrated oil and gas company. Chevron said it stillplans to seek aggressive review of the case.

The Oklahoma Corporation Commission (OCC) is deciding whether toorder interim rates, which could lead to a reduction for customersof Oklahoma Natural Gas (ONG), which would create what the LDCcalls “a rate case within a rate case.”

Small gas producers might not see much if any benefit from aseverance tax relief bill passed by the Texas legislature lastweek. Oil producers, however, will get a break. Relief specified inthe bill is triggered by low commodity prices, and the trigger foroil producers already has been pulled. However, the statecomptroller’s office does not expect gas prices to dive low enough,long enough to enact relief.

The formal, bi-weekly negotiations on major gas restructuringinitiatives, which had been under way for more than two months,were “suspended” when various industry segments decided that a”unified proposal” wasn’t likely, sources said. This action was nottotally unexpected (See NGI, March 1 issue).

As construction begins on Alliance Pipeline, Canadiannatural-gas producers are mounting aggressive northern drillingcampaigns to fill up the added export capacity when it goes intoservice in October of 2000. Northeastern British Columbia, thestarting point for Alliance’s 2,320-mile route to Chicago, hasemerged as an E&ampP hot spot.

Wild Goose Storage, California’s first merchant natural gasstorage facility, is set to begin operations April 1, at the sametime the state’s second merchant storage project gets a publicairing of its 18 Bcf proposal.

A very divided FERC last week broke with a decade-old procedureby leapfrogging the preliminary determination (PD) step in fourcontroversial pipeline projects intended to carry Canadian gas fromthe U.S. Midwest to the Northeast gas market. Instead, it deferredaction on the fate of the projects until all of the environmentalreviews are completed – “hopefully” by early next fall. Projectsponsors had mixed reactions: they were disappointed by the breakwith PD procedure, but they also were encouraged by FERC’sassurance of a final vote by fall. And all said – at least publicly- they still planned to move forward with their separate projects,but sources said privately sponsors were re-evaluating whether itwas “worthwhile to go ahead.”

Houston-based Kimball Trading and Kimball Trading Canada ofCalgary, two of the Kimball Companies, last week filed for Chapter11 bankruptcy protection in Houston. The move caused marketrepercussions last Thursday, the day after the filing, as Kimballhalted gas flows to customers. The bankruptcy filings do notinvolve the related Kimball Resources or the other KimballCompanies.

Coho Energy was notified by its lenders last week that it wasin default on an $89.6 million over-balance. The company failed tomake the first of five scheduled payments on the balance, whichresulted from an overall $239.6 million debt. The lenders reservedall rights, remedies and privileges as a result of the paymentdefault, but Coho said it expects to continue to discuss afinancing alternative with the bank group.