Supply

The cash market finally caved in Friday under the weight of verylittle heating demand and abundant available supplies, sendingprices lower for the first time in the fledgling March aftermarket.

Through a new tolling deal Southern Company Energy Marketingwill have the exclusive right to supply fuel to and receive powerfrom United American Energy Corp.’s 82 MW gas-fired power plant inLowell, MA.

If regulators wanted further proof of need for additionalpipeline capacity to the Northeast, Independence Pipeline andTranscontinental Gas Pipe Line said they got it last month whendelivered prices in some markets shot up to nearly $20Dth. Citingthe January deliverability shortage, the two pipelines separatelyasked FERC to deny the requests for a stay of the interim orderconditionally approving their Northeast projects.

Conectiv Energy Supply, Inc. has purchased the assets of thePennsylvania office of Black Hills Energy Resources, a gasmarketing operation that was a subsidiary of Black Hills Corp. Thepurchase brings Conectiv an office located in Allentown, PA, thatserves more than 300 gas customers in the tri-state area. Thecustomers primarily are industrial and commercial consumers in theUGI, PECO, Penn Fuel, and Columbia of Pennsylvania service areas.

Through a new tolling deal Southern Company Energy Marketingwill have the exclusive right to supply fuel to and receive powerfrom United American Energy Corp.’s 82 MW gas-fired power plant inLowell, MA. Southern will market and trade electricity from theplant in the New England Power Pool. Terms of the deal were notreleased.

One of the nation’s largest and fastest growing municipalutilities, the Sacramento Municipal Utility District (SMUD) Tuesdaysigned a multi-million-dollar five-year deal for 150 MW ofpurchased power from Calpine Corp. Terms of the agreement werebeing kept confidential. The deal starts in the summer of 2001when Calpine’s first new natural gas-fired merchant generationplants in Sutter County begins operations about 50 miles north ofSacramento in northern California. Now under construction, theSutter plant is the first of a series that Calpine and othermerchant generators are planning to build in California over thenext five to ten years.

The role of liquefied natural gas (LNG) in the U.S. gas supplymix continues to grow as 1999’s third quarter saw a significantpercentage jump in LNG imports. According to the U.S. Department ofEnergy’s Office of Natural Gas & Petroleum Import and ExportActivities, total gas imports grew by 15% over the third quarter of1998 while LNG imports were up a strong 221% over the same period.A 10% rise in Canadian imports and a 154% rise in Mexican importswere also noted. At the same time, U.S. exports of gas to Mexicogrew by 41%.

San Jose, CA-based independent power producer Calpine Corp. madea major investment in upstream gas supply for its current andfuture gas-fired power plants in California. The company bought 90Bcf of proven gas reserves in the Sacramento Basin from VintagePetroleum for $71.5 million. The transaction will make Calpine thelargest gas producer in the basin, raising its production to 43MMcf/d. The Vintage reserves currently produce 14.3 MMcf/d.

San Jose, CA-based independent power producer Calpine Corp. madea major investment in upstream gas supply for its current andfuture gas-fired power plants in California yesterday. The companybought 90 Bcf of proven gas reserves in the Sacramento Basin fromVintage Petroleum for $71.5 million. The transaction will makeCalpine the largest gas producer in the basin, raising itsproduction to 43 MMcf/d. The Vintage reserves currently produce14.3 MMcf/d.