Service

With at least 800 MMcf/d and potentially more than 1 Bcf/d of gas supply to sell, the Minerals Management Service (MMS) will be a major force in the gas market come October when its Gulf of Mexico Royalty In-Kind (RIK) pilot program begins. MMS’ total royalty share of Gulf production is about 2.5 Bcf/d, and by next spring it expects at least a third of that will be taken in kind in lieu of cash payments.

Public Service Co. of Colorado and Cheyenne (WY) Light Fuel& Power will implement Operational Balancing Procedures in allareas effective Saturday and Sunday. The effect is to requireshippers to cut nominations to a level that does not exceedestimated daily consumption taken from a previous “Model Day” (inthis case July 4, 1999). Imbalance paybacks will not be allowedduring the OBP period.

With at least 800 MMcf/d and potentially more than 1 Bcf/d ofgas supply to sell, the Minerals Management Service (MMS) will be amajor force in the gas market come October when its Gulf of MexicoRoyalty In-Kind (RIK) pilot program begins. MMS’ total royaltyshare of Gulf production is 2.5 Bcf/d and it expects at least athird of that will be taken in kind by next spring.

The Interior Department’s Minerals Management Service hasscheduled a meeting in Houston to discuss implementation of itsGulf of Mexico Royalty In-Kind pilot program, which is slated tobegin in October. The three-year program will involve thecollection and sale of as much as 800 MMcf/d of royalty gas fromfederal leases in the Gulf. It is the MMS’s third RIK pilot, all ofwhich are being conducted to determine the feasibility andeconomics of accepting royalties in kind rather that as a cashpayment from lessees. The meeting on the Gulf RIK will begin at 10a.m. on July 20 at the MMS Houston Compliance Division Office RM104, 4141 Sam Houston Parkway East. It is open to the publicwithout reservation. Lessees, operators, payers and potentialpurchasers are encouraged to attend.

The Building Owners and Managers Association (BOMA) of GreaterTucson, AZ, chose New Energy Ventures as the energy serviceprovider for its members with the goal of lowering members’electricity costs.

The New York State Public Service Commission has approved thesale of all electricity generating facilities owned by Orange andRockland Utilities, including a facility owned jointly withConsolidated Edison of New York, to affiliates of Southern Energy,Inc. for $476.3 million. All net proceeds from the sale will beused for the benefit of O&R and Con Edison ratepayers.

The U.S. Senate has approved a bill including $500 million inloan guarantees for independent oil and gas producers and thepetroleum service industry. The loan guarantee program is part ofH.R. 1664, which is now on its way to a House/Senate conferencecommittee. The product of that committee will then be sent back toboth houses for ratification. The bill drew praise from theIndependent Petroleum Assoc. which called it a “tool that America’soil and gas producers will be able to use to help them recover fromthe recent devastating period of low oil prices.” The groupcredited Sen. Pete Dominici, R-NM for leading the initiative. Underthe program 85% of the loans of up to $10 million will be coveredby a government-backed repayment guarantee. The bill alsoestablishes a $1 billion loan program for the steel industry.

The U.S. Senate has approved a bill including $500 million inloan guarantees for independent oil and gas producers and thepetroleum service industry. The loan guarantee program is part ofH.R. 1664, which is now on its way to a House/Senate conferencecommittee. The product of that committee will then be sent back toboth houses for ratification. The bill drew praise from theIndependent Petroleum Assoc. which called it a “tool that America’soil and gas producers will be able to use to help them recover fromthe recent devastating period of low oil prices.” The groupcredited Sen. Pete Dominici, R-NM for leading the initiative. Underthe program 85% of the loans of up to $10 million will be coveredby a government-backed repayment guarantee. The bill alsoestablishes a $1 billion loan program for the steel industry.

Something good did come out of the power market malfunctions oflast summer, according to Moody’s Investors Service. In a reportreleased yesterday, Moody’s said the experience has triggered a newcommitment to counterparty risk management by energy trading firmsthat will enhance credit quality in the energy sector and inspiregreater confidence in the market.