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Thunder Creek Gas Services LLC, a joint venture of Devon EnergyCorp. and KN Energy, has begun construction of a 126-mile gasgathering system in the Powder River Basin of northeast Wyoming.The system is expected to be operational by fall at a total cost ofabout $100 million.

The Federal Energy Regulatory Commission is expected to go onthe record this Wednesday with thoughts, but not votes, on thecompeting Independence and Millennium pipeline projects which arevying to be the last link in the new path for western Canadian gasdelivered to the U.S. Northeast.

Electronic trading may be the antidote to anemic trading of theNew York Mercantile Exchange’s Alberta and Permian Basin gasfutures contracts, Exchange President R. Patrick Thompson said lastweek.

Maritimes &Northeast Pipeline sponsors defended their proposed pipeline certificate (Phase II) amendment last week against attack by some the project’s own shippers and others who say it is too large and too costly for the market it will serve. Project sponsors said the calls for a stay on the project and a hearing on its size are based on a misreading of its amendment filing and a misunderstanding of its agreements with its shippers (see NGI, Feb. 22 issue).

Pacific Gas and Electric applied to the California PublicUtilities Commission (CPUC) to reduce electric rates at the end ofthe electric rate freeze, but no later than March 31, 2002. Thestate law that governs the restructuring of California’selectricity market, AB 1890, gave residential and small businesscustomers a 10% rate reduction on Jan. 1, 1998 and froze rates atthat level. The state law also provided investor-owned utilities atransition period to recover stranded costs. That transition periodends March 31, 2002, or when the past investment costs have beenrecovered, whichever comes first. At that time, the rate reductionswill go into effect.

The fate of the Millennium, Independence, SupplyLink andMarketLink pipeline expansion projects, which together representabout 1.7 Bcf/d of new pipeline capacity directed at northeasternmarkets from the Midwest, have been scheduled for discussion onlyat FERC’s next regular meeting March 10. That move has sparked aconsiderable degree of speculation among FERC observers andpipeline representatives.

Burlington Resources (BR) announced that its plan for 80-acrein-fill drilling of the Mesaverde Formation in the San Juan Basinof New Mexico has been approved by the New Mexico Oil ConservationDivision. The 80-acre well spacing order could open up anadditional 7,000 drilling locations in the San Juan and be a majorfactor contributing to production growth in the basin over the nextfew years, according to basin analyst George Lippman, who hasstudied the San Juan for the last 30 years. To date, BR has drilled38 Mesaverde 80-acre in-fill wells and plans to drill 50 additionalwells in 1999.

Some traders were groaning with dismay Wednesday at the prospectof the March market being one of nearly all sideways pricemovement, much like the February one preceding it. All it takes isa look at the multitude of zeroes and ones in the change column ofDaily GPI’s price table today to understand where they might havegotten such an idea.

Adding insult to injury for gas producers suffering through awarm winter, reports from the Bonneville Power Administration (BPA)and California’s Department of Water Resources indicate the PacificNorthwest’s snow pack is thicker than normal, meaning hydropower isprimed for another productive year.