Struggling

One of the energy sector’s currently financially healthy conglomerates, San Diego-based Sempra Energy purchased the natural gas trading book of financially struggling Michigan-based CMS Energy’s trading unit for $17 million, subject to final due-diligence reviews.

One of the energy sector’s currently financially healthy conglomerates, San Diego-based Sempra Energy purchased the natural gas trading book of financially struggling Michigan-based CMS Energy’s trading unit for $17 million, subject to final due-diligence reviews.

In a reprise of action two months ago, PG&E Corp.’s financially struggling National Energy Group (NEG) announced late last Thursday that it agreed with lenders to provide funding for two of the merchant energy developer’s new electric generating plants — the 840 MW natural gas/fuel oil-fired Lake Road plant in Connecticut and 1,121 MW gas-fired, combined cycle La Paloma unit in California.

PG&E Corp.’s struggling National Energy Group (NEG) won an eleventh-hour, very short-term reprieve with a lenders’ syndicate Monday that will allow for the continued construction of new merchant electric generating plants in Arizona, Michigan and New York, all of which have had a pall cast over them for the past three months as NEG and its parent struggle to reorder the unit’s balance sheet through still undecided asset sales, reorganization and refinancings. The agreement is good through Nov. 14, after which lenders need to come up with a longer term solution.

Struggling with a well of problems in the past few months, the once venerable Duke Energy’s quarterly earnings plunged 71% from a year ago. Huge merchant energy losses, problems in California, the deferral of several large generation projects and mounting severance costs all played a part in the losses. But Duke disclosed more bad news last week, revealing that the Securities and Exchange Commission (SEC) launched a formal investigation in mid-October of its round-trip energy trades. The SEC’s stepped up scrutiny joins two inquiries already under way by the Commodity Futures Trading Commission (CFTC) and a Houston grand jury, which subpoenaed Duke last summer (see NGI, July 15).

While many energy companies are struggling to make ends meet in the current difficult financial environment, the service/fee-based liquids and gas transportation and terminals businesses of Kinder Morgan Inc. (KMI) and its master limited partnership, Kinder Morgan Energy Partners LP (KMP), showed tremendous growth in the third quarter, and CEO Richard Kinder said the companies see nothing standing in the way of continued double-digit growth despite the crisis in parts of the industry.

While many other producing regions are struggling just to maintain production levels, the Rocky Mountain region continues to see incremental growth, prompting gathering and processing expansions last week by Williams and Duke. Williams completed a $45 million gathering and processing system upgrade in Wamsutter, WY, that will boost processing capacity by 140 MMcf/d and add 70 MMcf/d of gathering. Meanwhile, Duke Energy Field Services completed its third expansion in the Denver-Julesburg (D-J) Basin, adding a new 33 MMcf/d processing plant northeast of Denver.

In a shareholder letter sent on Friday to Enron Corp.’s board of directors, the AFL-CIO and the Amalgamated Bank called on the struggling company to expand the mission of its newly created special committee, urging the board to adopt a package of reforms to restore investor confidence. The union trade group and the bank said they sent the letter because “America’s working families are significant shareholders of Enron stock through their pension, health and welfare benefit funds.”

Like everyone else in the United States, we at Intelligence Press are struggling to make sense of this gigantic catastrophe, which has struck at the very foundation of this nation. Our sympathy and condolences go out to those who have suffered and lost loved ones in New York, Washington and Southwest Pennsylvania. As are many others, we are making a financial contribution to the recovery process. We also offer, in our first editorial in 21 years of publishing, a way that every American can show help to show the world our confidence in and support of this country and the American way of life.