Supply

The legislative architect of California’s 1996 precedent-settingelectric industry restructuring law Monday proposed a $2 billionreserve be carved out of the state’s next fiscal budget to fund astate effort to buy or build new generation plants. Theannouncement came at the same time the state energy commission,which approves all new power plants of 50 MW or larger, released alegislatively mandated report that concludes the state’s generationresources are adequate, and temporary peaking plants are not neededfor the upcoming summer.

SkyGen Energy LLC, a subsidiary of Calpine Corp., will use powerfrom its Broad River Energy Center expansion project to supplyCP&L Energy’s growing customer base. Northbrook, IL-basedSkyGen developed the center before its acquisition by San Jose,CA-based Calpine earlier this month.

ONEOK Gas Transportation, L.L.C. (OGT), and Duke Energy NorthAmerica (DENA) reported the execution of long term agreements forOGT to supply natural gas transportation to DENA’s naturalgas-fired McClain energy facility located in Newcastle, OK. Termsof the deal were not released. OGT will provide firm transportationof gas up to 85,000 Mcf/d to the 500 MW power plant. The McClainplant is expected to become operational and begin supplyingelectricity to regional markets next summer. OGT said industrysources expect as many as 20 merchant power facilities are beingreviewed for construction in the state.

New and improved drilling technology is turning out to be partof the answer to the emerging natural gas supply squeeze, at leastin Canada. Horizontal wells, developed initially for oil, increasethe accessibility, raise the productivity and cut the overall costsof tapping gas fields too, says a study by the National EnergyBoard, the Oil and Gas Commission of British Columbia and the B.C.Ministry of Energy.

New and improved drilling technology is turning out to be partof the answer to the emerging natural gas supply squeeze, at leastin Canada. Horizontal wells, developed initially for oil, increasethe accessibility, raise the productivity and cut the overall costsof tapping gas fields too, says a study by the National EnergyBoard, the Oil and Gas Commission of British Columbia and the B.C.Ministry of Energy.

What do you get when you mix larger-than-expected supply newswith shoulder-month demand and a bearish weather outlook? If youanswered a double-digit price decline then you would have mademoney yesterday in the gas pit at Nymex. In a bearish one-two combothat will not soon be forgotten by bull nor bear, natural gasfutures tumbled lower yesterday afternoon amid an array of negativefundamental factors. Plumbing its lowest level since Aug. 28, theNovember contract slipped 16.1 cents to close at $4.659. Meanwhile,the winter strip suffered a 16.4-cent setback to finish at $4.647.

Yukon Pacific Corp. has come up with a “slightly new twist tosupplement” its long-standing project to supply Asian markets withAlaskan liquefied natural gas (LNG), and in fact company executiveswere in Mexico yesterday to sound out officials there about it.

Coral Power LLC will supply the natural gas and collect thepower output of a 900 MW generating station to be built andoperated by Tenaska Alabama II Partners L.P., a limited partnershipcomprised of affiliates of Tenaska Inc. The two companies announcedyesterday they had executed an energy conversion agreement for thefacility to be located near Billingsley, AL. Coral plans to marketthe power throughout the Southeast. It is the second of this typeof agreement between Coral and Tenaska. The first was signed inAugust, 1999 for an 845 MW Tenaska Gateway Generating Station inRusk County, TX. The initial financing process for the project willbegin early next year with construction slated to begin in thesummer of 2001 and be completed for summer 2003.

Chairman Frank Murkowski (R-AK) said yesterday the Senate Energyand Natural Resources Committee plans to begin tackling the issueof transporting Alaska’s North Slope natural gas to the Lower 48market when Congress reconvenes in September.