Daily GPI

Independent Power Producer Cogentrix Energy has signed anagreement with Bechtel Enterprises Inc. to acquire Bechtel’sownership interests in 12 electric generating facilities, plus afractional share of Iroquois Pipeline. Most of the properties wereon the market as the result of PG&E Corp.’s acquisition lastfall of Bechtel’s interest in U.S. Generating Co. Regulatoryconstraints barred PG&E from acquiring certain of the USGenassets.

Despite current crude oil and natural gas price weakness,PaineWebber believes its 1998 wellhead gas price forecast of$2.15/MMBtu is “conservative.” And PaineWebber raised its 1999 spotwellhead price forecast to $2.35 from $2.20. Although the firmacknowledges first quarter producer earnings probably will suffer asetback, over the long term “we’re very very bullish” for eightreasons, said analyst Ronald J. Barone. First of all, despite ElNino’s impact of a 10% warmer than normal winter, spot gas priceshave averaged a solid $2.04/MMBtu so far this year. If temperatureshad been normal, prices would have averaged $2.50, PaineWebbersaid. Secondly, nine of the last 11 summers that followed an ElNino winter have been warmer than normal. Normal to warmer thannormal temperatures next summer would contrast sharply with the 7%cooler than normal temperatures last summer. And warmertemperatures would have an even greater impact on prices if coupledwith near normal hydroelectric power supply – which PaineWebberalso is expecting – rather than the 150% above normal hydro supplyseen in 1997.

Despite a three-month delay because of technical interfaceproblems, the California Independent System Operator and theCalifornia Power Exchange Corp. (PX) announced they have completeda week’s worth of testing and have notified FERC they’re ready toopen the statewide electricity market on March 31. They intend tocommence operations by accepting bids in the Day Ahead market onMarch 31 with the first full day of operations being the day after.

Overall movement of cash prices was lower Monday, but there wereconsiderable differences among markets as to the degree ofdownturn. The Gulf Coast, Appalachia and Rockies barely budged withvery few points falling more than a penny or two. TheMidcontinent/Midwest tended to occupy the middle ground-fieldprices were only off 2-3 cents, but declines at marketarea-oriented points such as Northern Natural-demarc, NGPL AmarilloMainline and Chicago citygates were more like a nickel or greater.The biggest losses of around a dime occurred at Northeastcitygates.

The April NYMEX contract gained a meager 1.8 cents to $2.155 onMonday, as traders continue to hold the spot month to a tighttechnical trading range. The bottom of that range was confirmedwhen April bounced off major support at $2.105. Despite the narrowtrading band, estimated volume still managed to reach 33,502 totalcontracts.

Texaco and Chevron are proceeding on a fast track with a $185million subsea production system for their Gemini prospect, asubsalt project in the deep-water Gulf of Mexico expected to yieldup to 300 Bcf of gas and four million barrels of condensate.

The congressional debate over electricity restructuring so farhas focused on whether its should be done as comprehensivelegislation or as piecemeal reform of the Public Utility HoldingCompany Act (PUHCA), but a third option may be tossed into the fraysoon.

The Energy Council has unanimously adopted a policy statementvoicing strident opposition to congressional restructuring measuresthat would mandate states to use a specific fuel mix in thegeneration of electric power. It also said it was against federallymandated targets for states to supply power from renewable energysources.

Columbia Natural Resources (CNR) has expanded operations toeastern Canada with the purchase of an interest in gas and oilwells and undeveloped property in Ontario. The US$3.6 millionacquisition from Paragon Petroleum of Calgary includes a 50%interest in 24 wells and 100% of 5,000 acres of undevelopedproperty. The owner of the other 50% of the wells is CanEnercoLtd., which will market gas production. “Our move into Canada isthe second expansion of CNR’s base of operation in less than ayear,” said W. Henry Harmon, CEO. CNR’s $101 million purchase ofAlamco Inc. last August increased reserves by 25% and expandedcompany operations into southern Kentucky and northern Tennessee.