NGI The Weekly Gas Market Report

MCN Energy Group continued singing the blues to investors lastweek with an announcement that it canceled its Michigan E&Passet sale and took a huge financial loss during the secondquarter. But company officials promised to turn things around witha new executive leadership team and a narrower,vertically-integrated business strategy.

Oneok Inc. of Tulsa, OK, last week filed to hold Southern Union in contempt for violating an injunction preventing it from attempting to influence a shareholder vote on the merger of Oneok and Southwest Gas Corp.

A change in the timing and location of North Carolina’s powergeneration needs has forced Carolina Power & Light (CP&L)and Southern Natural Gas Co. to put a hold on their PalmettoInterstate Pipeline and consider other pipeline alternatives. Thecompanies said last week they have suspended ongoing routeselection and survey activities for Palmetto and are analyzing twocompeting pipeline projects.

Three Pennsylvania LDCs filed restructuring plans with thePennsylvania Public Utilities Commission (PUC) last week to expandsupplier choice within the state. Filing plans were Columbia Gas ofPennsylvania, Peoples Natural Gas and PG Energy, a subsidiary ofPennsylvania Enterprises Inc. As part of the Natural Gas Choice andCompetition Act passed by the Pennsylvania General Assembly June17, each gas utility is required to submit a restructuring plan tothe PUC by Nov. 1.

Western Resources last week threatened to cancel its proposedmerger with Kansas City Power & Light and sell off the companyto a national energy conglomerate following a decision by theKansas Corporation Commission (KCC) to reopen the docket on its $2billion merger.

Pioneer Natural Resources Co. of Dallas closed a $62.3 millionsale of South Texas gas properties to CNG Producing Co. Proceedswill retire bank debt. Pioneer also agreed to sell a West Texasproperty for $35 million to EnerQuest Oil & Gas of Midland, TX.The property is the last waterflood field operated by Pioneer.Selling the higher-cost field cuts Pioneer’s operating costs. Thetransaction is scheduled to close by the end of the third quarterwith a Jan. 1, 1999 effective date. Pioneer announced the propertysales in June. Pioneer property divestitures in Canada areprogressing as expected, and the company expects to close the lastof several Canadian deals this month. Pioneer has major operationsin the United States, Canada and Argentina.

With retail energy competition around the corner and powergeneration growing by leaps and bounds, Colorado is in need of newgas storage capacity, according to Brandt Energy President MichaelG. Wright.

The increase in prices is primarily attributable to increased demand for electric generation and storage injections.

CMS Energy Corp. is capitalizing on a large supply of liquefied natural gas (LNG) in the world market and is bringing two new LNG shipments to its CMS Trunkline LNG complex at Lake Charles, LA, in September. They are being delivered by CMS Marketing, Services and Trading, and by Duke Energy Corp.