Thursday

Shell Oil joined the ranks Thursday of major producers who havesettled sizeable royalty disputes with the Department of Justice.The company has agreed to pay the U.S. $56 million to settle claimsthat it underpaid royalties on natural gas produced on Federalleases.

Despite the large post expiration-day futures correctiondownward last Thursday, prices rebounded some Friday and for goodreason, according to Salomon Smith Barney energy analyst RobertMorris.

Northwest notified shippers of a Declared Stage I OverrunEntitlement Period (Overrun Entitlement) that began Thursday andwill continue through the Oct. 2 gas day or until further notice.The entitlement applies to delivery points north of Kemmerer (WY)Station and subjects a Receiving Party to penalties for overtakesmore than 3% greater than its confirmed nominations. Northwestnoted it has experienced continuous drafting throughout September,resulting in low Jackson Prairie storage levels and low systemlinepack. Additionally, the large unit at Soda Springs Stationimmediately north of Kemmerer went off-line Wednesday due tomechanical problems, reducing station capacity from 470,000 Dth/dto about 430,000 Dth/d. Repairs are expected to take three to fivedays. To avoid cutting primary gas at Soda Springs, Northwest mustrely on Jackson Prairie withdrawals, necessitating the entitlement.

California regulators Thursday conditionally approved a $3.5million settlement penalizing Southern California Gas for itshandling of the proposed sale and use of eminent domain powersrelated to one of its small, discontinued Los Angeles-areaunderground storage fields in the LA suburb of Montebello, CA. Thelarge utility company admitted no wrongdoing and is avoiding what,by its own admission, could be the substantially larger costs ofprotracted litigation.

Citing forecasts of cooler temperatures in the Pacific Northwestfor the holiday weekend, Northwest began allowing both on-systemand off-system balancing Thursday after a long period of barringon-system balancing. However, storage volumes remain high in theJackson Prairie and Clay Basin facilities, limiting operationalflexibility, Northwest said.

In a non-binding letter of intent signed last Thursday, Houston-based Vastar Resources agreed to sell its 40% stake in Southern Company Energy Marketing to its partner, Atlanta-based Southern Energy, for $40 million. Southern Energy is a subsidiary of Southern Co.

In a non-binding letter of intent signed last Thursday,Houston-based Vastar Resources agreed to sell its 40% stake inSouthern Company Energy Marketing to its partner, Atlanta-basedSouthern Energy for $40 million. Southern Energy is a subsidiary ofSouthern Co.

After dropping a quick nickel in Thursday’s after-hours Accesstrading session, natural gas futures did an about-face Friday astraders learned of the first named storm in the 2000 Atlantichurricane season. The September contract was fast out of the chute,notching a gap-higher open on the daily charts and climbingthroughout the morning. However, after reaching fresh five-weekhighs at $4.39, it came under steady profit taking, which trimmedgains into the closing bell.

Sonat was unable to begin repairs Thursday as anticipated (seeDaily GPI, July 27) on a July 5 rupturein its offshore 14-inch Romere Pass Line. However, the work likelywill begin today and last 10-15 calendar days, which means the lineshould be back in service around Aug. 12 at the latest, a spokeswomansaid. An estimated 50-100 MMcf/d at five platform receipt points isbeing shut in by the outage.