NGI The Weekly Gas Market Report

Goldman Sachs Group Inc. has agreed to pay $456 million in cash for El Paso Corp.’s interests in East Coast Power LLC, which owns the natural gas-fired 940 MW Linden cogeneration facility in New Jersey.

The Federal Energy Regulatory Commission last week pushed back by four months the effective deadline for El Paso Natural Gas to carry out a systemwide conversion of full requirements (FR) service to contract demand (CD) service, marking the second time the planned contract conversion has been postponed on the pipeline.

The utility sector was the top performer in the first quarter of this year and for many companies, the worst may be over, according to a report by CreditSights analysts. Although there are “a lot” of risky names, the analysts believe the sector as a whole is becoming more stable — but there still is substantial work ahead for some.

Although steep production declines from mature domestic gas fields have taken much of the blame for current skyrocketing gas prices, there’s actually a larger natural gas resource in the United States now than there was two years ago, according to a new assessment by the Potential Gas Committee, which is made up of 140 members from the gas industry, government agencies and academic institutions.

As it continues its efforts to exit the wholesale marketing arena, sell assets and restructure, Aquila Inc.’s CEO last week warned that the losses will continue through this year and into 2004 as the rebuilding utility repairs its damaged balance sheet.

Most of the world’s attention has been directed toward the security and availability of crude oil supplies, but a global energy consultant told a Senate committee this month that domestic pressure on natural gas supplies and prices “poses a greater threat to energy security and to the U.S. economy.”

Kinder Morgan Inc. (KMI) and Kinder Morgan Energy Partners (KMP), in which KMI owns a general partnership share, reported record growth from internal pipeline and terminal operations for the first quarter and expect substantial increases for the year, according to CEO Richard Kinder, who raised KMI’s earnings guidance for the year by 5-10 cents/share.

Natural gas consumers in the future could be forced to pay more in winter heating bills if the trend toward overreliance on gas as their fuel of choice continues, according to a study released Wednesday by Americans for Balanced Energy Choices (ABEC). The non-profit group, based in Alexandria, VA, is primarily funded by the U.S. coal-based electricity industry.

Responding to FERC’s threat to revoke the energy marketing privileges of wrongdoers, Reliant Energy Services last week acknowledged the actions of one of its power traders were “plainly wrong,” but it asked the agency for leniency in light of the trading reforms enacted at the company. BP Energy Co. apologized for the misconduct of one of its traders and asked for mercy as well. A group of Enron Corp. power and gas marketers, however, challenged the Commission’s action, claiming it was based on faulty and “ambiguous” charges.