NGI The Weekly Gas Market Report

U.S. energy trader Dynegy saw its second quarter income rise 60% as electricity and natural gas prices surged in North America, but as important, CEO Chuck Watson said last week he expects to see the Houston-based company continue to profit, despite sagging energy prices. Watson told analysts during a conference call that Dynegy’s capital investments are “setting up our success for the future,” reiterating that the “strategy has always been about being prepared.”

Questar Corp. subsidiary Questar Market Resources is buying Uintah Basin producer Shenandoah Energy (SEI) for $406 million in cash and debt. The deal boosts Questar’s proved gas reserves by 59% (415 Bcfe) to 1.1 Tcfe.

Columbia, SC-based SCANA Corp. has formed subsidiary SCG Pipeline Inc., which will concentrate on transporting natural gas in Georgia and South Carolina, transporting gas from interconnections with Southern Natural Gas and Southern LNG’s Elba Island liquefied natural gas (LNG) import terminal near Savannah, GA. SCG Pipeline also is now evaluating potential pipeline routes for an end point in Jasper County, SC, which is expected to begin commercial operations in November 2003.

Calgary-based TransAlta Corp. and Des Moines, IA-based MidAmerican Energy Holdings Co. reported that they have entered into an alliance to develop, build and operate natural gas, coal and hydro-powered electricity generating assets in markets throughout Canada, the United States and Mexico. The agreement also includes the possibility of jointly acquiring existing power facilities. The companies currently have a combined portfolio of 18,000 MW globally.

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FERC issued an order authorizing additional compression on Algonquin Gas Transmission that is designed to help affiliate Texas Eastern Transmission (Tetco) increase its delivery capabilities on a constrained part of its system in New York and New Jersey.

While legislation remains alive that could cripple future expansions of the Gulfstream Natural Gas pipeline and might even bring the project to a standstill, sponsors Duke Energy and Williams said they are moving forward with construction. A Williams spokesman said the company remains confident that the legislation against the pipeline will be removed from the energy appropriations bill during conference on the measure in September.

Houston-based El Paso Corp. increased its earnings per share (EPS) in the second quarter by 36% with earnings up from all of its business segments, topping analysts’ predictions despite the downturn in commodity markets of late. EPS were $0.79 compared with an adjusted $0.58 in the second quarter of 2000. Second quarter adjusted net income also jumped 40% to $413 million, compared with an adjusted $294 million for the same period a year ago.

Severe heat and humidity in the Northeast last week led to record power demand and high prices in the region before a cold front swept through on Friday. The Pennsylvania New Jersey Maryland Interconnection (PJM), the New England Independent System Operator and the New York Independent System Operator all issued various alerts and requests for additional supply and conservation.