NGI The Weekly Gas Market Report

Gulfstream Natural Gas System, LLC broke ground last Thursday on its $1.6 billion, 753-mile pipeline under the Gulf of Mexico from Mississippi and Alabama to Florida. The target for completion is June, 2002.

Gas volumes among the top 20 North American marketers continued to show significant growth in the first quarter of the year with nearly a 40 Bcf/d rise in volumes compared to 1Q2000 and a 14.9 Bcf/d increase compared to 4Q2000 (see Table). The big volume gainers for the quarter (1Q2001 versus 1Q2000) were El Paso, Enron, BP, Mirant, Sempra and Reliant, while the only volume decreases in the top 20 were posted by Coral, Aquila and Williams.

Florida Gas Transmission Co. (FGT) reported that it has entered into a long-term firm transportation agreement with the Orlando Utilities Commission (OUC) to deliver gas to the Curtis H. Stanton Energy Center located in Orange County near Orlando, FL from its latest 2003 mainline expansion project (tentatively referred to as Phase VI), to be revealed during the third quarter 2001.

NiSource Inc., headquartered in Merrillville, IN, is expanding its Washington, D.C. presence to enhance the company’s advocacy efforts on federal government issues, and beginning June 4, Rebecca T. Sczudlo will be the company’s vice president of federal government affairs. Sczudlo has 20 years experience in government affairs and communications, including seven years as a staff member of the U.S. Senate Energy and Natural Resources Committee. She also has worked for Shell Oil Co. as a government affairs representative. She will report to NiSource CEO Gary Neale on policy matters and to Ramon Arredondo, assistant to Neale, administratively.

Pacific Gas and Electric Co. formally announced its expansion plans last week a few days after testifying at FERC about growth on its system and the need for additional transportation and storage capacity (see Daily GPI, May 29). The utility company is holding an open season in June and July for capacity on its in-state California transmission system. Complete open season packages will be available June 12 at www.pge.com/pipeline.

The majors are focusing more of their spending attention on the domestic natural gas market, gobbling up gas-rich acquisitions, which has lowered their finding and development costs. Meanwhile, the independents’ spending is limited only by the lack of “drill ready” projects and experienced geoscience personnel, according to the latest exploration and production study by Salomon Smith Barney’s analysts Robert Morris and Michael Schmitz.

Richmond, VA-based Dominion Exploration & Production Inc. reported that it has entered into a landmark agreement with Northern Ute Partners LLC to jointly explore for and develop oil and natural gas on 83,000 acres of previously restricted lands within the boundaries of the Uintah and Ouray Reservation of the Ute Indian Tribe in Utah.

DTE Energy Services and Entergy Wholesale Operations announced that construction of a jointly-owned 320 MW natural gas-fired electric power generating plant began in May in Will County, IL. The plant, located about 30 miles south of Chicago in the Village of Crete, is expected to be in commercial operation in June 2002. The facility will be operated by Entergy Operating Systems Inc., in cooperation with DTE Energy Services. “The electric output from this facility will be available in time to supply additional electricity to the region during high-demand periods next summer,” said Barry G. Markowitz, president of DTE Energy Services. The companies said gas for the project will be provided through the recently completed Vector Interstate Pipeline. The Vector pipeline is partially owned by MCN Energy, which will become part of DTE Energy as a result of a merger between the companies, expected to close today. EntergyShaw LLC, an affiliate of the Shaw Group, will provide the engineering, procurement and construction services for the project.

An already bullish California oil/gas developer with both deep-drilling and shallow gas exploration in separate parts of Kern County received another shot of optimism earlier this month on reports that EOG Resources plans to expand its oil drilling program in the general area within 10 or 15 miles of the town of Delano, CA. EOG officials in Denver denied having any such plans.