NGI The Weekly Gas Market Report

After both projects received preliminary approval from FERC over a month ago, the ongoing race to Florida accross the Gulf of Mexico between Coastal Corp.’s Gulfstream Natural Gas System and Williams and Duke Energy’s Buccaneer pipeline is heating up again (see NGI, May 1). Gulfstream yesterday announced it signed a multi-million dollar deal with the Manatee County Port Authority for a permanent right-of-way easement to cross through Port Manatee

Denver-based Forest Oil Corp. has agreed to purchase another independent producer, Forcenergy Inc., for $615 million in stock, a move that is expected to significantly boost the new company’s operations in the Gulf of Mexico, Alaska and Canada.

In the wake of California’s latest round of electricity priceand supply shock concentrated in San Diego, some of the state’smajor energy industry participants have raised the level ofinterest in forward markets and hedging. San Diego Gas and ElectricCo., in particular, has been second guessed about why it did notuse available hedging instruments through the state’s nonprofitpower exchange to help ease the impact of recent wholesale pricespikes on its retail customers.

The NiSource-Columbia merger has gotten past two more hurdles on its way toward completion. The Pennsylvania Public Utility Commission (PUC) unanimously approved the merger, leaving Virginia as the only state left out of the nine yet to approve it (see NGI, July. 10).

Mitchell Energy & Development’s gas production in NorthTexas is soaring. The company announced that its developmentprogram in the Newark East Barnett shale field is exceedingexpectations. In a little more than a year’s time, the company’sgross natural gas production in the Barnett field has doubled to172 MMcf/d. At this rate, Mitchell Energy will meet, and exceed itstarget growth of 15% this year.

FERC last week issued a final rulemaking that reinstates itsauthority to make well determinations so that qualifying producerscan obtain Section 29 tax credits for high-cost, hard-to-find gasproduced from certain wells and formations.

Ultra Petroleum commenced in-fill drilling last week in theJonah Field, located in the Green River Basin of Wyoming. It gotthe go-ahead to start drilling on June 8 when the Bureau of LandManagement released an order for 22 new well locations, whichshould keep Ultra busy through 2001.

After a lengthy absence, resistance is redeveloping in Canada tolong-term commitments of significant Canadian gas supplies tomarkets in the United States.

OGE Energy’s subsidiary Enogex, has completed the sale of several non-core assets in Utah and in Oklahoma. The assets were considered non-core by the company after it completed its acquisition of Transok LLC for $701 million in July 1999 (see NGI, May 24, 1999).