Southwest

Isn’t there a saying about the bigger they come, the harder they fall? Following a Tuesday in which quite a few Gulf Coast and Midcontinent production area points recorded their biggest numbers ever, the cash market was diving Wednesday about as fast as it had rocketed higher in the first two trading days of the week. Eastern markets, along with Waha/Permian Basin in the West, saw average declines that tended to range from about $5 to $24. Because they hadn’t soared to such stratospheric levels previously, other western points mostly saw smaller price drops of $1-3.

ANR said the critical outage along its Southwest Mainline just upstream of the New Windsor Compressor Station in Illinois remained in effect Tuesday. Investigation and analysis of Sunday night’s rupture (see Daily GPI, Feb. 4) continue. ANR does not expect the impacted facilities to become operational again until late this week. “Transportation service through this area will be evaluated and scheduled on a daily basis. Availability of secondary and interruptible transportation will depend on Firm Primary nominations,” the pipeline said.

Power customers in the Southwest can rest a little easier now that Duke Energy North America signed a power supply deal with cash strapped Nevada Power Co. and Sierra Pacific Power, two utility subsidiaries of Sierra Pacific Resources that serve much of Nevada and the Lake Tahoe portion of California. The utilities were in serious danger of entering the summer without adequate supply arrangements because of a credit crisis caused by a recent regulatory decision that disallowed recovery of millions in past power costs.

Aquila has purchased the proposed Red Lake Storage Project from Southwest Gas Corp. for an undisclosed sum. The deal includes 36,000 acres about 30 miles north of Kingman, AZ, and the rights to develop a salt cavern gas storage facility. Along with the land, Aquila purchased the water and mineral rights necessary to develop the facility.

Calgary-based Canadian Superior Energy Inc. has sold its 10% interest in its Waterton area assets in the foothills of southwest Alberta to Hunt Oil Co. of Canada for C$18 million. The assets averaged approximately 2.5 MMcf/d in the past year and include a 10% working interest in 50,000 gross acres of undeveloped land.

As a result of compression outages at Grand Chenier Station on the southwest Louisiana coast, volumes that ANR can receive there from HIOS and the West Cameron near-shore blocks was cut by about 40 MMcf/d Wednesday until further notice.

The swing market continued to move higher Tuesday in the East and the Southwest basins, but at significantly reduced momentum. Most points ranged from flat to up about a nickel with only scattered points, mostly in the Northeast, realizing gains of more than a nickel.

Except in the Rockies and Southwest, prices kept rising Tuesdaybut not nearly as spectacularly as on the day before. Californiawas still registering triple-digit increases, but otherwise, mostpoints went up between a nickel and 15 cents. The Pacific Northwestand Northeast citygates saw most of the non-California gainsgreater than 20 cents.

Elwood Energy LLC, located about 60 miles southwest of Chicago,has signed a multi-year power plant sales agreement with AquilaEnergy for the output of Elwood’s phase II expansion of itsgas-fired peaking facility. When the Elwood, IL facility becomesoperational next summer, it will double the capacity of itsexisting 600 MW merchant facility, bringing the total capacity to1,350 MW.