NGI The Weekly Gas Market Report

In response to an unfavorable royalty decision by the ArkansasSupreme Court two weeks ago week, Southwestern Energy announcedplans sell its entire utility business to pay for the $109 millionjudgment against the company. As a direct result of the ruling,Southwestern also has suspended its quarterly dividend.

With between $50 million and $100 million in spending money inits first year of operation, Pacific Venture Capital LLC, a companylaunched last week by PG&E Corp., plans to build and manage aportfolio of capital investments in growing energy andtelecommunications companies.

Calpine Corp., the San Jose, CA-based merchant power plantdeveloper/operator, continued its aggressive growth strategy lastweek, announcing separate acquisition and strategic alliances inthe central midsection of the U.S., along with startup anddevelopment of new projects in Texas and California, respectively.This latest growth spurt eventually could make Calpine by 2005 thenation’s largest merchant power plant operator with the youngest,most natural gas-intensive electricity generating network.

Tucked inside a “supplemental notice” addressing FERC’s interimreliability measures, the Commission last week said it “has begunand will continue an extensive review and audit” of electrictransmission owners’ Open Access Same-time Information System(OASIS) sites to ensure compliance.

Tulsa’s Williams Cos., buoyed by soaring natural gas prices andbetter news than expected on its rate-refund liabilities andperformance by its communications group, said last week that itexpects second-quarter profits to exceed the first quarterperformance of 27 cents a share. It had been expected to earn 16cents, according to analysts polled by First Call/ThomsonFinancial.

The soaring gas market continues to claim casualties amongindustrial end-users. The ammonia, urea and methanol industries,just to name a few that require significant amounts of natural gasfor production, are on the verge of being crippled because of highfeedstock costs and continuing poor sales prices in the domesticand international markets.

Atlanta’s natural gas utility holding company, AGL ResourcesInc., whose stock prices have fallen nearly 14% in the past year,said last week that cost cutting and more customers will pushthird-quarter profits ahead of analysts’ estimates. AGL wasexpected to earn 21 cents a share in the three months ending lastFriday (June 30), the average estimate of several analysts polledby First Call/Thomson Financial.

The D.C. appellate court has issued a final ruling upholding theEnvironmental Protection Agency’s (EPA) 1998 clean-air rulerequiring several states east of the Mississippi River to enforcestrict nitrogen-oxide (NOx) emission standards.

The Boards of Directors of the North Texas Oil and GasAssociation (NTOGA) and the West Central Texas Oil and GasAssociation (WeCTOGA) have approved a plan to merge the twoorganizations, which when completed, would become the largestmembership association of any state oil and gas group in thecountry. Both were organized in the early 1930s to representindependent oil and gas companies that primarily explore for andproduce crude oil and natural gas.