Wild

Speculative energy trading is history for American Electric Power (AEP), which said Thursday that the company will instead focus on asset-based energy trading and marketing geographically — wherever it has facilities — becoming more conservative, more cost efficient, more cash-wise and less growth oriented.

What a difference a week can make. Just seven days after spiking to new 17-month highs, the natural gas futures market fell back down to match recent lows Thursday following news that a greater-than-expected 33 Bcf was injected into storage last week. The November contract closed at $4.133, down 12.7 cents for the session.

It’s been a week of wild revelations for Enron Corp. watchers — the Department of Justice on Wednesday launched a nationwide criminal task force into management practices, and President Bush announced on Thursday another task force to reform the pension fund system. Meanwhile, the Bush administration admitted for the first time that CEO Kenneth Lay, one of Bush’s leading fundraisers, called at least two Cabinet members as the company fell apart last year. And at midday Thursday, Andersen, Enron’s auditor and subject to several investigations and lawsuits, admitted destroying an “undetermined” number of documents that may have been pertinent to the impending investigations.

With so many proposed new pipelines and expansions in the works to serve the wild demand growth in California, Kinder Morgan Energy Partners LP and Calpine Corp. wasted no time last week in marketing space on their massive $1.7 billion gas pipeline project, which was announced last week (see Daily GPI, May 3). The companies launched an open season on Monday to take binding market requests for service through June 1 on their 1,030-mile Sonoran Pipeline.

With so many proposed new pipelines and expansions in the works to serve the wild demand growth in California, Kinder Morgan Energy Partners LP and Calpine Corp. wasted no time this week in marketing space on their massive $1.7 billion gas pipeline project, which was announced last week (see Daily GPI, May 3). The companies launched an open season yesterday to take binding market requests for service through June 1 on their 1,030-mile Sonoran Pipeline.

Even with stepped up state efforts for developing peakingplants, conservation and new power contracts, the key wild card forwhether California survives this summer’s expected supplyshortfalls is fickle hydroelectric power that is tied to anunpredictable, complex set of weather and environmental factors.With the end nearing for the West’s typical rainy season, stateofficials are newly optimistic about California’s hydro resourcesbeing at normal levels this summer, but in the Pacific Northwestthe prospects continued to be dour Monday as Seattle basked insunny, 60-degree weather.

They may have to start handing out seat belts at Nymex justprior to the release of American Gas Association’s weekly gasstorage report each Wednesday. In a span of only a few minutesfollowing the 2 p.m. report of a 65 Bcf injection last week intostorage, September futures spiked to $4.565, its highest levelsince June 28, but then immediately plummeted back into the low$4.40s.

Occidental Petroleum, the unpredictable mid-size producer, holdssome wild cards in California’s unfolding natural gasrestructuring, and it’s so far playing them close to the vest.Independents in the south San Joaquin Valley oil patch think Oxy is”up to something,” perhaps a merger with another Californiaproducer, while others are watching the company put increasinglymore gas supplies on the market since buying Elk Hills reservesfrom the federal government two years ago.

Wild speculation last week that Chevron was courting PhillipsPetroleum proved to be false as Phillips management told analyststhe company is not interested in merging with anybody. But theBartlesville, OK-based energy company is planning on selling GPMGas Corp., its natural-gas gathering, processing and marketingsubsidiary, and may form joint ventures with other companies onchemicals and refining and marketing so that it can concentratemainly on exploration and production.