NGI The Weekly Gas Market Report

California’s regulatory process for adding merchant power plantsand repowering existing merchant sites is likely to get morecomplicated and time-consuming, based on discussions at a Jan. 25one-day energy roundtable on market and infrastructure issuessponsored by the California Public Utilities Commission in SanDiego.

While recognizing that congested areas in part of California’senergy grid need a combination of potential mitigation measures,including distributed generation, the serious discussion at astatewide energy roundtable last week remained ambivalent about howfast, and whether, the decentralized approach can make a meaningfulcontribution.

The Coastal Corp.’s Colorado Interstate Gas Co. (CIG) istargeting a new power plant and local demand growth with a lateralto deliver gas along Colorado’s Front Range. The line would serve aplanned 478 MW power plant south of Colorado Springs.

Higher oil and gas prices spurred industry leaders ExxonMobiland Chevron to large leaps in fourth quarter 1999 earnings over thedepressed 4Q 1998. The two companies reported fourth quarterrealized U.S. natural gas prices up about 50 cents/Mcf over 4Q 1998and the full year average up about 15 cents over 1998. Unocal,Texaco and Conoco also enjoyed significant price appreciationfourth quarter over fourth quarter, although not as much gainyear-to-year.

The Federal Energy Regulatory Commission last week proposedreinstating its authority to make well determinations so thatqualified producers can obtain Section 29 tax credits for high-costgas wells that were drilled prior to 1993.

Merger turmoil and tight margins are putting the screws to quitea few energy marketers, but Frost & Sullivan still sees plentyof room for the industry to grow. Several of the top-20 marketersof 1998 have exited the market, while other companies have beenspurred to acquire assets and start online trading, according to arecent study by the group.

Two asset management deals were announced last week, one with aCanadian producer group and another with a northeastern LDC.

Tengasco Inc. subsidiary Tengasco Pipeline Corp. signed afranchise agreement with the Powell Valley Utility District toinstall and operate a new gas utility to service residential,commercial and industrial users in Hancock County, TN.

Thanks to a new deal with CMS Energy’s Panhandle EasternPipeline Co., three FirstEnergy gas turbines in Defiance, OH, willenjoy a 15-year supply of gas. The agreement makes FirstEnergyPanhandle’s seventh power plant customer.