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Two gas-rich western independents, Black Hills Corp. and Mallon Resources Corp., last week announced a merger estimated at $52 million. Under the definitive agreement entered into by Rapid City, SD-based Black Hills, it also will acquire Denver-based Mallon’s debt to Aquila Energy Capital Corp., as well as $30.5 million of its outstanding hedges.

House negotiators conferring on broad energy legislation (H.R. 4) offered last week to more than double the size of the Arctic National Wildlife Refuge (ANWR) in exchange for their Senate counterparts agreeing to allow oil and natural gas drilling on a 2,000-acre “footprint” in the Alaska wilderness region.

After half a century as the mainstay of natural gas transportation across Canada, TransCanada PipeLines Ltd. is charting a new course — out to sea, where it aims to launch an armada to serve offshore production projects.

Shell Exploration & Production Co. (SEPCo) has announced another deep water discovery in its Mars Basin. The company said last Thursday it has encountered oil and gas at its Deimos prospect located in approximately 3,000 feet of water in Mississippi Canyon Block 806. SEPCo, as operator, has a 72% interest in the prospect; BP has a 28% interest.

PPL Corp. will replace a start-up transformer at the 1,100 MW Unit 2 of the utility’s Susquehanna nuclear power plant in Luzerne County, PA, after a fire hit the transformer last Thursday morning. Company officials said the unit, which was automatically shut down last week when a problem occurred on the non-nuclear side of the plant, will not restart until the damaged transformer is replaced.

Citing the downgrade of El Paso Energy Corp. as part of the reason for its action, Moody’s Investors Service downgraded the senior secured debt of a MidAmerican Energy Holdings Co. subsidiary that owns and operates a 537 MW natural gas-fired combined cycle generation plant located in the Midwest.

The weather forecasters say Lilli, a category 4 when it went through the Gulf of Mexico production area, could rival Andrew, a category 5 hurricane in 1992 that devastated a wide swath of Florida before cutting across the Gulf, toppling 34 oil and gas platforms, leaving 28 leaning, and causing over a billion dollars in damage, not counting the loss of production revenue (see NGI’s storm chronicle — located under special reports on intelligencepress.com).

Depending on the severity of the coming winter, Raymond James energy analysts are warning that the U.S. natural gas supply may be “rapidly careening” toward a gas shortage, anywhere from 3-10 Bcf/d short of demand. Analysts revised their gas price estimates upward through 2003, and expect prices to reach at least $4.50/Mcf by the first quarter of next year.

Unconventional gas sources, particularly liquefied natural gas (LNG), will play a critical role in supplying a projected 33-34 Tcf gas market over the next two decades, according to a new study by an Alexandria, VA-based energy consulting firm. But even with added supply from non-traditional sources, Energy Ventures Analysis Inc. (EVA) believes the industry will be challenged to meet future demand requirements.