NGI The Weekly Gas Market Report

The possibility of a quick-fix, interim settlement that wouldopen up receipt points on the Southern California Gas Co.transmission system emerged as the only positive development fromanother round of all-party talks last week, according to one of themajor shippers attending the session. It came at the conclusion ofthe all-day session in a downtown LA hotel. Talks are expected toresume Sept. 23, with a counter-proposal from Enron being offeredfor discussion prior to a SoCalGas all-parties meeting. Othermeetings among some of the parties will be held Sept. 15.

California legislators have bowed to industry pressure andextended the state’s ban on natural gas unbundling for residentialand small business customers. The new legislation (AB 1421) waspassed in a late night session in the waning days of the currentlegislative session and will maintain the utilities’ role as thealmost exclusive provider for small customers.

According to a recent survey, one in six U.S. consumers, or 17%,say they can now choose their energy suppliers. However, only 2%have actually changed providers.

One year after opening its entire Ohio territory to retail gassupplier competition, Columbia Gas of Ohio said nearly 500,000customers, or about one-third of those eligible, are buying gasfrom marketers rather than the utility. Columbia serves 1.3 millioncustomers in the state.

Western Gas Resources said last week it is weighing its optionsin the wake of a judge’s rejection of its proposed pipeline bypassof Pacific Gas & Electric Co. Administrative Law Judge AndreaBiren recommended regulators approve the gas utility’s motion toreject Western’s application, and reject a contention by Westernthat PG&E was engaging in anti-competitive behavior. Thejudge’s recommendation is scheduled to be considered by theCalifornia Public Utilities Commission Oct. 7.

The recent sale of one million shares of Tom Brown Inc. stock toan undisclosed investor garnered Lakewood, CO-based KN Energy about$29 million in cash and should help the company digest itsacquisition of Kinder Morgan Inc.

A $1.2 million discount paid up front in a lump sum and theprospects of picking up energy trading insights from an experiencednational trader are what prompted the nation’s largest municipalutility to sign a one-year gas agreement worth about $25 millionwith Houston-based Reliant Energy Services Inc. last month.

In the wake of a well blowout and fire that burned for months inthe oil/gas saturated area between Bakersfield and the Elk Hillspetroleum reserve, a flood of small and medium-size Canadianbackers have moved into this old production region 100 miles northof Los Angeles, betting that new significant pools of natural gascan be found with deep-drilling below 15,000 feet.

Columbia Energy Group subsidiary Columbia Energy Services’ (CES)decision to sell its wholesale and trading operation may be aharbinger of a white knight deal to save Columbia from a hostiletakeover by NiSource. Then again, it may simply represent theacknowledgement by the Virginia-based company that its strengthlies in its regional roots.