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Tennessee Beefing Up Offshore Louisiana Lines

Tennessee Gas Pipeline has filed plans to increase capacity onsix separate pipelines in the Gulf of Mexico that together wouldrepresent an increase of over 720 MMcf/d in offshore lines owned byTennessee and other parties and a net increase in deliverabilityout of the Gulf of 200 MMcf/d.

February 13, 1998

PG&E, California Producers Negotiate Gathering Sale

In a deal that could be the first of its kind in the nation,Pacific Gas and Electric is locked in serious negotiations withnorthern California natural gas producers to sell them itsextensive utility gas gathering system linked to in-state wells,most of which are in the dry gas fields of the greater SacramentoValley. The deal being sought, which is expected to take the betterpart of 1998 to gain final regulatory approvals, is an offshoot ofthe omnibus Gas Accord unbundled intrastate transmission andstorage services that start March 1. The parties will not put adollar value on the facilities involved in the negotiations, but itis conservatively estimated at tens-if not hundreds-of millions ofdollars, involving hundreds of miles of low- and medium-pressurepipelines and related gathering facilities linked to more than 100producers.

February 13, 1998

Sable Raises Production Estimates

In the official launch of the $3 billion Sable Offshore EnergyProject (SOEP) in Halifax earlier this week, project owners raisedexpectations for gas reserves and production. “Our ongoingtechnical studies and interpretation of the 3-D seismic informationgathered in 1996 and 1997 show that the potential exists for morethan the 3.1 Tcf we estimated as the basis for our development planapplication,” said Mobil Oil Canada President Jerry Anderson. “Thegood news is that we might expect to recover more than 3.5 Tcf.This larger potential resource base will enable us to increaseinitial production rates to more than 500 MMcf/d, depending on suchfactors as markets, well performance and operating efficiency.” Theowners originally expected 460 MMcf/d. The additional production,however, will be within the facilities design capacity of 554MMcf/d, they said.

February 13, 1998

Breathitt: Oil Line Rates Could Hamper Gas Conversions

The way FERC figures pass-through of costs in oil pipeline ratecases could hamper future use of converted lines, according toCommissioner Linda T. Key Breathitt, who issued dissenting opinionsin two oil pipeline cases involving Rio Grande and LonghornPartners Pipelines [OR97-1-001 and OR95-7]. In both cases theCommission ruled that the companies would not be allowed to passthrough the full purchase price of the pipelines, only thedepreciated original cost of the line. “In an area where Congresshas asked us to exercise regulatory restraint we turn around andapply textbook principles in a manner that may discourage futureconversions of oil pipelines to new uses,” Breathitt said. Theorders examine the corporate relationships between the companies toarrive at the conclusion that the companies are selling assets tothemselves. But Breathitt believes arguments about corporate tiesin these cases don’t apply. She was joined by Commissioner CurtHebert.

February 13, 1998

Nova, El Paso Finalize Chilean Pipeline Plans

El Paso Energy International announced final agreements havebeen signed by the partners of an international consortium to buildthe 325-mile Gasoducto del Pacifico pipeline from Argentina acrossthe Andes mountains into Chile, roughly 300 miles south ofSantiago. Construction on the $380 million project has alreadybegun and the pipeline is scheduled to be in service by late 1999.The initial delivery capacity of the system is estimated to be 140MMcf/d.

February 13, 1998

Weather Still Mild, But Cash Prices Are Frozen

Few areas were getting below 32 degrees (F) Thursday, but cashprices seemed to be frozen in place everywhere. The market was muchlike the landscape around Houston, one source said: flat in alldirections.

February 13, 1998
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