NGI The Weekly Gas Market Report

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.

Recriminations, investigations and large dollar lawsuits wereflying last week in the wake of the failed Oneok-Southwest Gasmerger.

Midcoast Interstate Transmission and two groups oflandowners-environmentalists last week lost their year-long battlein court to overturn the FERC orders awarding a certificate toSouthern Natural Gas to build and operate a competing pipelineextension into northern Alabama.

U.S. and Canadian shippers on Northern Border Pipeline havelobbed a barrage of protests at the pipeline’s latest request toroll-in the costs of its Project 2000 extension, with some going asfar as to question the need for the Illinois-to-Indiana extension.

The American Gas Association (AGA) says it is “highly disturbed”by ANR Pipeline’s request that FERC “reinterpret” the scope of theHinshaw Amendment as part of its deliberations into whether tocertificate the proposed Guardian Pipeline.

Fresh off its purchase of Sonat Inc., El Paso Energy Corp.re-entered the consolidation game by announcing plans to merge withCoastal Corp. in a $16 billion deal. The potential union wouldcreate a pipeline empire capable of serving almost all of the majormarkets in the country. The companies expect the transaction,accounted for as a pooling of interests, to be completed by thefourth quarter of this year.

Conectiv is selling 1,875 MW of fossil-fired generation andrelated assets that are owned by its subsidiaries, Atlantic CityElectric Co. and Delmarva Power & Light, to NRG Energy ofMinneapolis, a subsidiary of Northern States Power, for $800million. The deal includes a power sales contract at closing, inwhich Delmarva will buy 500 MW from NRG.

It may be time for all the critics of the proposed Independence,MarketLink and Millennium expansions to pipe down. Gasdeliverability to the Northeast clearly is not as rosy as manyindustry experts once thought as illustrated by the record high gasprices last week during a period of extreme cold.

Critics of the controversial multi-state gas pipeline project— Independence Pipeline and the associated SupplyLink andMarketLink expansions — insist FERC treated the projects with kidgloves in its interim order last month, while the project sponsorsargue the Commission held their projects to unprecedented higherstandards that may be impossible to meet.