Daily GPI

The head of California’s beleaguered utility regulatorycommission (CPUC) Thursday encouraged the state’s major electricutilities to more fully use existing authority to do short-termforward market hedging deals for power, noting that she wanted toclarify continuing perceptions that the state regulatory body isblocking more utility hedging.

As it ended its annual conference in San Antonio this week, theInterstate Oil and Gas Compact Commission emerged with an agendacalling for new tax and public policy incentives to increasenatural gas production in the United States. The 30-stateorganization re-issued its call for a national energy policy andurged Congress to give tax breaks to exploration and developmentcompanies.

Guardian Pipeline said it bought five engine compressor packagestotaling 22,225 hp to provide natural gas compression on its141-mile, 660 MMcf/d pipeline in Illinois and Wisconsin. Itpurchased the compressors from Compressor Systems, Inc. of Midland,TX. Combined, the compressors will be capable of delivering up to750 MMcf/d of gas on Guardian. “Guardian Pipeline is continuing tomake steady progress. This purchase agreement for a major equipmentcomponent keeps Guardian on track to meet its scheduled in-servicedate of November 2002,” said George Hass, Guardian project manager.A final Federal Energy Regulatory Commission (FERC) decision on theGuardian Pipeline is expected by early 2001. In June, FERC issued aPreliminary Determination that the pipeline is in the publicinterest, subject to the outcome of its environmental review, andin July, FERC staff issued a favorable Draft Environmental ImpactStatement on the project. In addition, the Public ServiceCommission of Wisconsin made a preliminary determination on theproject in October, accepting the economics of a Wisconsin Gaslateral pipeline, which will connect Guardian with Wisconsin Gas’distribution system. Guardian will transport gas frominterconnections with Alliance, Northern Border, Midwestern, andNGPL at the Chicago hub near Joliet, IL, to northern Illinois andsouthern Wisconsin markets starting in November 2002. Its sponsorsinclude CMS, WICOR and Viking Gas.

El Paso Energy Corp. clarified Wednesday that what used to be knownas Channel Industries Gas, which exploded Monday evening (see DailyGPI, Dec. 6), is now managed by a unitcalled El Paso Energy Intrastate Co. and has not actually changed tothat name. The instrastate unit refers to it as the A-S Line becauseit runs from Agua Dulce to the Sabine River at the Texas-Louisianaborder. The rupture occurred downstream of the Houston Ship Channelwhere most its major customers are located, a spokeswomansaid. Because of supply re-routing or fuel switching, there are stillno service interruptions occurring or expected, she added. Averagerecent throughput was 400 MMcf/d, the spokeswoman said, but the volumeof gas lost to the atmosphere was unavailable.

Spot gas prices into California broke Daily GPI’s nationwideall-time record high of $39 at the Chicago citygate, set in Feb.2, 1996 trading. A western trader for one marketing firm reported adeal for $41 at the Southern California border Wednesday, saying,”And I’ve got my confirmation from EOL [EnronOnline] to prove it.”California was just part of a hyperpowerful cash market that hadmost points exploring price territory they had never seen before.

Forget the old nine-to-five, all the action now takes placeafter hours. While that sounds like a seedy radio ad for a happyhour hot spot or club, it is also an apt description of the naturalgas futures market as of late. Wednesday was a perfect example ofthis as prices climbed higher overnight Tuesday and notched a newhigh at $8.80 on the opening of the regular trading sessionWednesday, only to tumble lower for much of the remaining regulartrading session. However, bulls were on the offensive again lastnight as they bid up prices in overnight Access trading once again.As of press time at 7:30 PM (ET), the January contract was at$9.07, 58.5 cents higher than Wednesday’s $8.485 settlement price.

El Paso Natural Gas has decided to postpone what it called”routine” maintenance projects on its system in order to maintainthe flow of natural gas into the California market to meet thesurge in demand there. The higher demand has been created by ashortfall in energy imports from the Northwest region, which hasbeen gripped by cold weather.

The California Independent System Operator (Cal-ISO) Wednesdaybegan some joint inspections of off-line power plants as it facedthe possibility of declaring a Stage Three alert. Officials had notdeclared the alert as of press time.

Since its reintroduction to the north country in 1995, ApacheCorp. continues on its steadfast course of absorbing Canadian realestate at a fever pitch. Almost a month after Phillips Petroleumput its Canadian assets in the Zama area of northwest Alberta onthe market, the company reported that it has entered into adefinitive agreement in which Apache will acquire the oil and gasassets for $490 million. The properties included have provedreserves of 71.6 million boe, of which 59% is natural gas (seeDaily GPI, Nov. 21).