Daily GPI

Mitchell Energy & Development agreed to pay $50 million foroil and gas producing properties in three separate transactions.

The gas industry might very well see another trading point inthe Garden City discharge facility of the Nautilus Pipeline. “We’vegot just about everybody connected that we initially planned to.We’re in negotiations with Columbia, and we’re finishing upnegotiations with Koch and ANR,” Nautilus President Bill Hastingstold NGI. Connections with Koch and ANR are expected this summer.Columbia also should be on line this summer, he said. A total ofseven pipeline interconnects are completed or planned right now.Currently, Louisiana Intrastate Gas, Acadian, Texas Gas, andCypress are connected. Trunkline has expressed interest, andTennessee also is in the vicinity of Garden City. “Sonat is alsovery interested, but the distance is prohibitive at the moment, andwe’re trying to work with that,” Hastings said. Ultimately, theNautilus terminus could see as many as 10 interconnects. Hastingswould not disclose Nautilus’ current throughput. “We havecommitments in the deep-water. We expect to be very close to fullin 2001. He alluded to gas processing capabilities but would notdiscuss plans.

The Kansas City Board of Trade expects to fan the flames ofinterest in its Western Natural Gas Futures Contract by offering asecond round of two-year gas trading permits for $1,000 each plusapplication fees of $300. Twenty trading permits are being offeredto non-KCBT members. Currently about 15-20 traders are active inthe gas pit so the offering potentially could double the exchange’sgas trading activity.

Touchstone Energy is planning to launch a national brandingcampaign this weekend with television, radio and print ads in 20major American markets, primarily to keep as many of its 11 millionretail customers from getting cherry-picked by power marketers. Andit is considering adding natural gas, propane, telecommunicationsand security services to its future energy mix.

Rep. Wes Watkins (R-OK) introduced legislation Wednesday thatwould provide marginal well tax relief for oil and natural gasproducers. This is a “rifle shot approach,” and is not seen as acompanion to the measure on the same issue that Sen. Kay BaileyHutchinson (R-TX) is expected to sponsor later this week.

Union Pacific Resource has reiterated its intention to examine apossible sale of its gas gathering and processing business orselected non-core assets as part of a “deleveraging” programfollowing its recent $3.5 billion purchase (including assumption ofdebt) of Norcen Energy. At the time of the Norcen deal, UPR said itintended to sell $500-$700 million in assets to cut its debt toequity ratio, which ballooned to 73% following the Norcen deal fromabout 40%. But the company has valued its midstream assets, whichare located in Texas, Louisiana, Wyoming and Colorado, at about $2billion. The assets produced about $150 million in pretax operatingincome in 1997. The company has 25 operating plants and relatedpipeline facilities. A UPR spokesman said the company is justbeginning to evaluate its options but noted the market formidstream assets has been hot. UPR’s announcement follows similarplans announced recently by Aquila Gas Pipeline and EquitableResources. “These assets have been selling at a much higher cashflow multiple than E&P assets.”

Westcoast Energy announced it has agreed to sell its Albertanatural gas distribution business, Centra Gas Alberta, based inLeduc, BC, to AltaGas Services of Calgary for $61 million. Thecompany distributes gas to 53,000 residential, rural and smallindustrial customers in 90 communities in central Alberta.

Coastal’s ANR Pipeline is seeking FERC approval to implement twonew interruptible services and expand service options availableunder its firm storage service tariff. The proposed new servicesare called interruptible parking and lending service, andinterruptible wheeling service. “We are offering these new servicesin response to requests by our customers, who have indicated a needfor more product choices and flexibility due to the dynamic natureof today’s natural gas marketplace,” said Jeffrey A. Connelly, ANRCEO. “The revisions we are proposing to our firm storage servicewill provide ANR’s shippers with an array of additional serviceflexibility in managing their supply portfolios.”

In a transaction making it the largest independent powerproducer in Texas, Calpine Corp. acquired the remaining 50% interest in Texas Cogeneration Co. (TCC), owner of two gas-firedpower plants in Texas City and Pasadena, TX, with 827 MW ofcapacity. Calpine of San Jose, CA, bought the remaining interest inTCC from Dominion Cogen Inc. for about $53 million, plus contingentpurchase payments beginning in 2000 that could approximate 2.9% ofproject revenue. As part of the deal, Calpine now owns a 7.5%interest in a 165 MW gas-fired cogeneration plant located inBayonne, NJ. Calpine Fuels Texas, a subsidiary of Calpine, buys gasfor the Texas plants from Enron Capital & Trade Resources(ECT). In a related transaction, Calpine Fuels Texas paid about$105 million to ECT to restructure its existing gas contracts.