NGI The Weekly Gas Market Report

As part of its portfolio rationalization effort, Texaco saidlast week that it has agreed to sell $161.1 million worth ofsouthwestern and Midcontinent properties to Bargo Energy. Theeffective date of the purchase was Jan. 1, 2000 and closing isexpected to occur late in the first quarter of this year.

Southern Union Co. renegotiated its franchise agreement with thecity of El Paso, TX, last week, the company said. Under the termsof the deal, Southern Union will receive a cost-of-service revenueincrease of $650,000, but it did not disclose the deal’s totalvalue. The agreement was unanimously approved by the El Paso CityCouncil on Feb. 22.

The Houston Exploration Co, and KeySpan Energy concluded theirreview of strategic alternatives for Houston Exploration and saidKeySpan will retain its 64% equity position in the productioncompany for the foreseeable future.

Sabine Pipe Line Co. last week got the go-ahead from FERC tosell a small segment of its pipeline system in Texas and Louisianaas part of its effort to restructure its business into a limitedliability company.

PanCanadian Petroleum Ltd. made a potentially sizable gasdiscovery offshore Nova Scotia about 25 miles from Sable Island. Inthe past year, the company has drilled two exploration wells intogeological zones under the Panuke oil field, about 155 milessoutheast of Halifax. During testing, each well flowed at more than50 MMcf/d, the maximum capacity of the testing equipment. Thewells, PP-3C and PI-1B, intersected net pay of more than 230 feetand 100 feet, respectively.

Even a mildly hot summer in California this year could bringall-time high power price spikes and could put a severe strain ongenerating capacity, according to energy officials in theCalifornia General Services Department (GSD). Based on state datanow available, GSD officials told a California energy conferencelast Thursday prices could be two to three cents-per-kwh above lastyear’s averages for the three traditionally hottest months,although last year was designated as a “cool” summer.

Prince Edward Island, a popular vacation spot off the northerncoasts of New Brunswick and Nova Scotia, is looking to get on boardthe natural gas express line running from Sable Island through theCanadian Maritimes provinces.

California’s $45 million state-administered group natural gaspurchasing program for major state facilities is growing andflourishing, while a newer electricity buying program, althoughestablished, is not operating because of insufficient potentialsavings, according to the prime administrator for both programs inthe California General Services Department (GSD), who spoke at anindustry meeting last week outside Los Angeles.

In its order (CP99-94) approving the downsized project last week, FERCnoted that FGT had amended its plan and cut facilities for the New SmyrnaBeach Lateral that would have served a trailblazing 514 MW merchant powerplant proposed by Duke Energy and approved by the Florida Public ServiceCommission. The PSC’s certification of the power plant was appealed bythe IOUs in a case that currently is lodged in the state Supreme Court.A Duke spokesman said the company was confident its New Smyrna Beach PowerPlant ultimately would be approved, but it has dropped back from FGT’sPhase IV expansion due to go into service in May, 2001 to its Phase V expansiondue in 2002 (see NGI, Dec. 6).