Western

El Paso Natural Gas “is willing to expand its system” to the California border if “sufficient support” for such a project can be demonstrated through long-term capacity contracts, the pipeline told FERC last week.

Once again several western points defied the overall downwardtrend of the cash market Tuesday. Most eastern quotes ranged 2-3cents to either side of down a nickel, but Rockies/San Juan andNorthern California increases went as high as a dime-plus.

Apache Corp.’s $600 million acquisition this week of FletcherChallenge Energy Ltd.’s assets in the western sedimentary basin ofCanada increased its holdings there by 75%, adding explorationopportunities near existing operations and pumping up its provenreserve base in a mega buy that sent analysts’ forecasts skywardfor the Houston-based company.

Flat to moderately higher prices predominated in a quiet Mondaymarket in which some were out on holiday. The larger advances ofabout a dime or more were concentrated in the Rockies and Southwestbasins.

Except for a few western points, the September aftermarket gotoff to a generally strong beginning. In swing deals done Thursdayfor the first (and in some cases for flow through Tuesday), mostmarkets registered double-digit increases over last-of-Augustlevels and also were well above September indexes.

McMoRan Exploration has agreed to sell its 35% interest in theBrazos Block A-19 field and its 50% interest in the unexploredBrazos block A26, both located in the western Gulf of Mexico. ShellOffshore has signed an agreement to purchase both interests for $70million. Shell plans on drilling a new well on Brazos A-19 in thenear future. McMoRan’s CEO Richard C. Adkerson said, “We are verypleased with the sale of the Brazos properties. This transactionprovides us significant near term financial resources for use inour expanded oil and gas exploration program in the Gulf ofMexico.” Both fields are approximately 75 miles southwest ofGalveston, TX.

In the wake of generation shortages and price spikes that haveriddled the western power markets this summer, California’s newestregulators last week indicated the state’s experiment with furtherelectricity unbundling should be halted completely or at a minimumplaced on temporary hold. At least that was the message deliveredwhen the two regulators roundly criticized a new California PublicUtilities Commission staff report that advocated continuedunbundling of the state’s electric distribution market.

Prices continued to soften Friday but except for some steepdrops in the West, the weekend declines were considerably smallerthan many traders had been expecting.

Honeoye Storage Corp. has received FERC approval to expand itswestern New York sandstone storage facility to provide anadditional 1.8 Bcf of firm service capacity under market-basedrates. Honeoye plans an open season to start before the end of Juneand run through July.