Variety

While some of the usual suspects who are attempting to re-open or summarily close down energy markets have re-submitted bills, a wide variety of proposed new energy laws were dumped in the California Legislature’s hopper as the deadline for submitting bills passed at midnight last Tuesday. What has emerged, even has one energy industry veteran in the state capital scratching his head trying to determine what might gain some traction this legislative session.

Duke Energy Trading and Marketing has agreed to pay $550,000 to settle charges of energy market manipulation, including participating in a variety of trading and power transportation schemes during the California’s 2000-2001 electricity crisis. The agreement was approved last Monday by an administration law judge with the Federal Energy Regulatory Commission.

Houston-based Cheniere Energy Inc. said its Exploration Group generated, captured and sold 16 prospects on 7,000 acres to a variety of industry partners last year. Cheniere received up-front payments along with retained overrides and carried working interests with no obligation for drilling and development costs. Seven of these prospects were drilled during 2002 resulting in five discoveries. One development well was also drilled successfully in 2002. At year-end, Cheniere’s net reserves from these successful prospects were 2.5 Bcfe, of which 1.3 Bcfe was classified as proved and 1.2 Bcfe as probable. Value of the proved reserves was $5.1 million, and for the combined proved and probable reserves it was $9.4 million. Since the beginning of 2003, Cheniere’s partners have drilled three development wells, adding 0.5 Bcfe of net proved reserves, bringing Cheniere’s total proved and probable reserves to 3.0 Bcfe to date. Cheniere’s partners are planning to drill an additional development well and eight exploratory wells on Cheniere prospects during the year. Cheniere affiliate Gryphon Exploration Co., in which Cheniere owns a 9.3% interest and Warburg Pincus the balance, drilled nine wells in 2002 and had five discoveries. At year-end, Gryphon had proved reserves of 29.7 Bcfe and probable reserves of 9.2 Bcfe. Value of the proved reserves was $106.9 million, and for the combined proved and probable reserves it was $138.8 million. Gryphon expects to drill 14 exploratory wells and three to four development wells in 2003. Its daily production at year-end was 20 MMcfe/day and is expected to rise to 35 MMcfe by the end of the first quarter.

With a wide variety of storage estimates and medium-range weather forecasts, natural gas traders turned to technical factors Wednesday morning as they bid prices off recent lows and tested overhead resistance. The January contract managed a 19-cent rebound to $4.365 in just 90 minutes, but resistance in the mid-$4.30s held and prices then retraced lower. January finished at $4.298, up 7.2 cents for the day, but 6.7 cents off its $4.365 high for the session.

Following the wide variety of temperatures seen across the nation during the Thanksgiving weekend, Salomon Smith Barney Meteorologist Jon Davis said the temperature pattern during the rest of November and the first few days of December is expected to be “normal,” which he allowed is something that much of the U.S. has not experienced this month.

In an effort to build a larger customer base, cut costs and offer a wider variety of commodities and services, Indiana Energy, parent of Indiana Gas, announced plans to merge with Sigcorp, the holding company for Southern Indiana Gas and Electric (Sigeco). The merger of equals will create a new $1.9 billion holding company called Vectren Corp.