NGI The Weekly Gas Market Report

FERC moved with record speed to issue a certificate last week to Kern River Gas Transmission for its 135 MMcf/d mostly compression expansion to the natural gas-starved California market, but not all of the commissioners were happy with the sure-footed manner in which the project was approved.

In complying with its 1998 Pennsylvania restructuring settlement, GPU Energy has issued a request for proposals (RFP) from electricity suppliers interested in providing competitive default service (CDS) to customers in its Metropolitan Edison Co. and Pennsylvania Electric Co. service territories.

It appears the weatherman will be giving most of the U.S. a break this summer, with moderate temperatures and less of a hurricane threat than the last five years.

In a race to produce increasing amounts of natural gas to keep up with the nation’s growing demand, Anadarko Petroleum Corp. reported last Tuesday that it is continuing its work to find and produce new gas reserves from oil fields. The company announced its Fife Unit #2 well in Central Texas, which just came online, is producing natural gas at a rate of 51 MMcf/d.

Land restrictions and the availability of adequate drilling services — including qualified personnel — pose the greatest challenge to increasing North American gas production, according to Ziff Energy Group’s Third Annual Gas Industry Survey, unveiled in Houston at the North American Gas Strategies Conference. Ironically, last year’s biggest challenge was considered to be low prices.

First quarter profits for Tucson-based UniSource Energy Corp. are expected to come in well ahead of analysts’ estimates because of strong retail and wholesale sales by subsidiary Tucson Electric Power Co. TEP’s retail and wholesale sales rose 3% in January and 8% in February over a year ago. The company expects earnings to be between 50 cents and 60 cents a share for the first quarter, up from First Call/Thomson Financial estimates of 23 cents per share. In the first two months of 2000, retail sales were 1.14 million MWh and wholesale sales were 945,000 MWh. TEP revenues also increased, in particular wholesale revenues. Higher regional wholesale revenue contributed more than 50% of TEP’s operating revenues for the first two months of this year, compared with 24% of operating revenues for the same period of 2000. UniSource plans to release its earnings the week of April 23. Along with its earnings announcement, the company also plans to provide revised earnings guidance for the remainder of 2001. Previously, UniSource said earnings for 2001 would be at least $1.45 per share.

North America’s largest liquefied natural gas terminal isgetting bigger — CMS Energy officials confirmed yesterday theywill expand the Lake Charles, LA, terminal within a few months iffederal approval is received. The LNG facility, which now producesup to 700 MMcf/d could eventually increase its daily production to1.25 Bcf/d, CEO William McCormick said during a morning pressbriefing.

George Mitchell, the philanthropic-minded CEO and majority stakeholder of The Woodlands, TX-based Mitchell Energy & Development Co., is putting 4.5 million of his company shares on the block to improve the company’s liquidity and reduce his ownership to under 50%. The secondary offering would leave the 82-year-old with 22.9 million shares — about 45.5% of the independent company he founded.

Joining competition with Tennessee and Algonquin for growing markets on Long Island, Iroquois Gas Transmission System LP announced an open season yesterday for Zone 2 firm transportation capacity for delivery on its proposed Eastern Long Island Expansion.