NGI The Weekly Gas Market Report

FERC last week conditionally approved Ameren Corp.’s $1.4 billion purchase of CILCORP Inc., parent company of Peoria, IL-based Central Illinois Light Co. (CILCO), from AES Corp. Key to the approval was the utilities’ commitment to participate in the Midwest Independent Transmission System Operator (MISO).

Reliant Energy Services (RES), the marketing arm of financially troubled Reliant Resources, said Florida Gas Transmission (FGT) is demanding that it pay $36.7 million upfront before the pipeline will provide service under its latest expansion project, a move that Reliant Energy claims is a clear violation of the credit provisions in FGT’s existing transportation tariff.

Enron Power Marketing Inc. (EPMI) and Portland General Electric Inc. (PGE) jointly developed an arrangement that allowed EPMI to implement a scheme to create false congestion and to receive payment for relieving that congestion on California’s transmission lines, FERC staff said in a recent report filed with a Commission administrative law judge (ALJ).

Transwestern Pipeline is disputing California regulators’ claims that an index-based rate contract negotiated with Dynegy Marketing and Trade violates a FERC order barring the Enron-affiliated pipeline from doing such deals for a one-year period.

Investment banker UBS Warburg last week lowered its estimates for Marathon Oil Corp.’s 12-month price target and earnings-per-share (EPS) in 2003 and 2004 following the producer’s announcement last week that it expects lower production levels in the next two years.

Standard & Poor’s issued a warning Thursday that more credit rating declines and possible defaults “loom on the horizon” even though the industry already has experienced its sharpest credit slide in decades.

The Federal Energy Regulatory Commission gave the green light last week for Tuscarora Gas Transmission to put into operation the first phase of its system expansion in Nevada and California.

As he had done against five merchant generators last year, California’s lieutenant governor Cruz Bustamante Wednesday filed a criminal lawsuit in a Los Angeles state Superior Court on behalf of the state’s taxpayers against energy traders and two McGraw-Hill industry publications that publish natural gas price indices relied on by state officials and the market to establish energy prices.

Marathon Oil Co. and TotalFinaElf have set new world water-depth records for producing wells and laying pipelines, respectively, both at 7,209 feet below the surface, according to Interior Department’s Minerals Management Service (MMS). This exceeds the previous deepwater production record by about 100 feet, which was set by the French energy concern, TotalFinaElf, two months ago in the Aconcagua field in the Gulf of Mexico.