Separately

A FERC administrative law judge (ALJ) last week recommended that the full Commission approve settlement agreements separately reached between FERC trial staff and San Diego Gas & Electric Co. (SDG&E) and American Electric Power (AEP) resolving allegations that the two utilities tried to manipulate California’s power markets in 2000-2001.

Phillips Petroleum Co. and Conoco Inc. reported Tuesday that shareholders of both companies have separately voted to approve the proposed merger of equals. The companies said that the merger is expected to be completed in the second half of 2002, pending expiration of the waiting period under the U.S. Hart-Scott-Rodino Act and other customary closing conditions.

Phillips Petroleum Co. and Conoco Inc. reported Tuesday that shareholders of both companies have separately voted to approve the proposed merger of equals. The companies said that the merger is expected to be completed in the second half of 2002, pending expiration of the waiting period under the U.S. Hart-Scott-Rodino Act and other customary closing conditions. Preliminary results from the votes indicate that more than 96% of the Conoco shares voted were cast in favor of the merger, while approximately 97% of the Phillips shares voted were also favorable. Once complete, the merged company will be headquartered in Houston and will be called ConocoPhillips. The combined company is expected to achieve annual recurring cost savings of at least $750 million within the first full year after the completion of the merger. “Today’s vote is an important step in combining Phillips and Conoco, and we appreciate the support from our shareholders,” said Jim Mulva, Phillips CEO. “We believe the combination of these two companies will create significant value for all stakeholders and provide excellent financial and operational growth opportunities.” Mulva will serve as president and CEO of ConocoPhillips, while Archie W. Dunham, currently chairman and CEO of Conoco, will serve as chairman. “The combination creates an extraordinary set of complementary capabilities, drawing on the talented management and core competencies of both Conoco and Phillips,” Dunham said. He added that the new company will have strong and stable earnings and cash flow as a result of its portfolio diversification and a larger relative presence in more politically stable regions of the world. First announced in November 2001, the merger valued at $53.5 billion would create the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production (see NGI, Nov. 26, 2001).

Looking to help meet North America’s ever-increasing appetite for natural gas, companies such as El Paso Corp. and Shell have been looking outside the box to find new sources of natural gas, and new methods to deliver it to the continent. El Paso announced that it has finalized LNG agreements with a Norwegian consortium, while Shell has proposed its floating liquefied natural gas technology (FLNG) for Timor Sea production. Shell also announced last week that it will invest in the first LNG export project in Venezuela, which intends to tap 10 Tcf of gas reserves and send them to the U.S. East Coast (see related story).

The Independent Petroleum Association of America (IPAA) and the American Petroleum Institute (API) separately petitioned an appeals court in Washington, DC, last week to review its earlier decision upholding the federal government’s right to include downstream marketing costs when computing natural gas royalties owed by individual producers.

With natural gas wholesale prices at a 2 1/2 year low, Pacific Gas and Electric Co. and Southern California Gas Co. separately are telling their more than nine million customers this week that they can expect much lower monthly utility bills this winter. For the immediate winter, supply and prices should be fairly stable, according to both national and state reports.

The Maine Public Utilities Commission and United IlluminatingCo. separately have called on FERC to order the New EnglandIndependent System Operator to disregard the extremely high bidprice for power that was purchased from a New York supplier andpermitted to set the market clearing price for energy in NewEngland during a heat wave last May.