After six months of construction, the Thunder Creek Pipelinebecame operational earlier this month, Thunder Creek Gas Servicessaid. The 126-mile 450 MMcf/d trunkline system, which carries gasproduced from the Powder River Basin in Northeast Wyoming, begandelivering gas into the KN Interstate system on Sept.1.Construction of the line was completed last month. Thunder Creekalso has interconnects with the CIG system, Wyoming InterstateCo.’s proposed Medicine Bow Lateral and KN’s proposed Pathfinderline. The estimated cost of the Thunder Creek gathering trunkline,related compression and the processing plant is $100 million.Thunder Creek Gas Services is a joint venture between KN Energy andDevon Energy. Two other projects designed to transport gas from thebasin, the Fort Union Gathering project and the Northern Header GasGathering project, are still in construction. Fort Union GasGathering project, a 106-mile system, currently is being built by aconsortium of five companies. The Northern Header Gas Gatheringproject is a 256-mile system that would move up to 500 MMcf/d fromthe northeast end of the basin for CMS Oil & Gas and Pennaco.
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Transportation Notes
A Matagorda Offshore Pipeline System 24-inch line leak at theMustang Island 758 delivery point was confirmed Wednesday morning,causing the shut-in of 17 of the 24 producing blocks connected toMOPS. Shippers and operators were being notified around noonWednesday that the outage, affecting a total of 129,743 MMbtu/d,will last about seven days.
Canada’s East Coast Poised For Supply Growth
Oil and gas production from offshore Atlantic Canada could reachabout 500,000 Boe/d if, as key operators in the region predict, anew development project begins every two or three years throughoutthe next two decades, according to “Harnessing the Potential -Atlantic Canada’s Oil and Gas Industry.”
Industry Briefs
Pioneer Natural Resources USA Inc. filed a preliminary proxystatement with the SEC regarding a proposed merger with the limitedpartners of 25 publicly-held Parker & Parsley limitedpartnerships. According to the plan, each partnership that approvesthe proposals will merge with Pioneer and their partnershipinterests will be converted into the right to receive cash. At thesame time, Pioneer also is offering to acquire 21 non-publiclimited partnerships and 13 privately-held employee partnershipsthrough mergers for cash. Pioneer is the sole or managing generalpartner of all of the partnerships. As a result of the mergers,Pioneer will acquire additional working interests in wellspredominantly located in the Spraberry field in the Permian Basinof West Texas. If approved, the mergers are expected to add twomillion barrels of oil equivalent production next year. The amountof cash Pioneer USA will pay for the partnership interests will bebased on the partnerships’ reserve value plus net working capital(less expenses and fees of the mergers) as of Sept. 30. Undercurrent Nymex futures strip prices, Pioneer estimates that its cashoffer would be $60 million. However, it also said it will consideroffers from third parties to purchase any partnership or itsassets. Persons interested in making an offer should contactTimothy L. Dove or Mark L. Withrow at (972) 444-9001 before Nov. 1.
Transportation Notes
Koch Gateway has planned maintenance for today and Friday forits Index 129 segment (West 30-inch mainline in East Texas). Exceptfor gas received and delivered south of Mile Post 98.33 (Koch’sColorado River crossing near the Wharton/Fort Bend County line),all other receipts south of 98.33 will be scheduled to zero.However, at shippers’ request, up to a total of 233,000 MMBtu/d ofdeliveries (the pipeline’s total firm obligation from the area)will be kept whole.
‘Buy Early, Sell Late’ is a Winning Strategy as Prices Rise
Few traders would dispute that Wednesday was a classic day forwanting to buy early and sell late. Sources reported prices risingsteadily during trading at virtually every point, with the highends of ranges occurring late in the morning. Increases of a dimeor more dominated the market, and Northeast citygates were seeingthe high side of $3 again in some deals.
Futures Ebb and Flow Amid Shorts, Storage and Storms
After failing to completely fill a chart gap left from lastweek’s precipitous decline, the futures market slipped loweryesterday as bears were victorious ahead of weekly storage data.The October contract was hardest hit, suffering a 6.5-cent declineto finish at $2.612 amid average trading volume.
SoCalGas Modifies Restructuring Proposal
With two more months of breathing room to work out a deal,Southern California Gas Co. has substantially modified its originalrestructuring proposal for the resumption of settlementnegotiations this week in Los Angeles. With SoCalGas leading theway, representatives of 75 interested parties are attempting tohammer out a consensus on how further unbundling is shaped forCalifornia’s natural gas industry.
Eight Power Utilities Y2K Challenged, DOE Says
All eyes were on the electric utility industry yesterday as itreadied for the first industry-wide test of the preparedness of itscomputer systems for the transition to the year 2000. At the sametime, Energy Secretary Bill Richardson announced that eight majorelectric utilities still were either not Y2K ready or Y2K readywith limited exceptions. Also 16 municipal utilities and ruralcooperatives have yet to report on their Y2K progress to theAmerican Public Power Association and the National Rural ElectricCooperative Association.
BG&E Waiver Threatens Shipper Title Rule, Exxon Says
Unlike those given to Atlanta Gas Light (AGL) and National FuelGas Distribution, the exemption to the shipper-must-have-titlepolicy awarded to Baltimore Gas and Electric (BG&E) was”unnecessary” and represented an “unacknowledged policy shift” byFERC, said Exxon Corp. It warned the Commission’s decision inBG&E could open up the floodgates to similar requests from themultitude of LDCs that are looking to unbundle their systems.
