NGI The Weekly Gas Market Report

Tennessee Gas Pipeline’s Express 500 Project, which offers firmtransportation through the bottlenecked Gulf of Mexico supply area,won more than 1 Bcf/d of capacity requests from customers duringthe project’s first open season. “We believe that this level ofparticipation demonstrates the need for incremental capacity fromthe Gulf Coast,” said Tennessee President John Somerhalder II.Tennessee has targeted Mar. 31 as the deadline for signedagreements, with plans to file a 7(c ) certificate next November.To accommodate the firm load, Tennessee will expand capacity at keyreceipt points on the Tennessee 500 line: the South Pass (Fishhook)System, the Bluewater Header and East Leg, the Venice ProcessingPlant tailgate, and any other points on the 500 line requested byopen season participants.

Central Maine Power and New York State Electric and Gas haveformed a joint venture, called CMP Natural Gas, to provide newlocal gas distribution service to communities in Maine. The newdistribution grid would become one of the largest infrastructureprojects in the state in more than four decades.

Avista Energy will be shopping this year for gas storage in theMidwest and Northeast, and for electric generation and transmissioncapacity in the Pacific Northwest as part of an effort to bolsterits gas and power marketing portfolio, Avista President LloydMeyers said last week. “These will be necessary tools as westrengthen our competitive edge in an energy landscape thatcontinues to evolve.”

Despite a 150% increase in its gas-fired power portfolio lastyear, San Jose-based Calpine Corp. proved last week its buyingspree isn’t letting up. The company has entered into exclusivenegotiations to acquire Dow Chemical’s 70 MW natural gas-firedpower plant and a natural gas pipeline system located adjacent toDow’s chemical plant in Pittsburg, CA. The pipeline delivers gas tothe plant directly from Sacramento basin fields. Calpine sees thesite as a perfect location to add more generation capacity andcontinue to grow its position in the deregulating Californiaelectricity and gas marketplace.

An additional 200 MMcf/d of gas could enter the Californiamarket now that the former Naval oil reserve at Elk Hills in thesouthern central agricultural valley of California is totallyprivatized, according to most of the oil/gas people in thisenergy-dominated part of the state. The new supplies would be addedto a state already experiencing a large overcapacity of interstatesupplies.

Noted Economist Dr. Alfred Kahn is a firm believer thatregulators ought to plan for their “demise” as they usher incompetition to monopoly industries, but he conceded last week thatthis may not be entirely conceivable in the electric utilityindustry.

Fearing that it might be growing dusty and staid, FERC earlierthis month kicked off a three-month, all-encompassing review of itsprocedures and processes “to try and keep current with the times,including a very changing energy marketplace that we regulate,”Chairman James Hoecker said.

A leading gas marketer last week decried FERC’s reprimand ofNatural Gas Pipeline Company of America (NGPL) formarketing-affiliate improprieties as being far too light. The minoradmonishment, according to Natural Gas Clearinghouse (NGC), failedto provide adequate redress to the overall market, and to producersand marketers victimized by the Midwest pipeline’s wrongdoing.

Pipelines are breathing a lot easier in the wake of a FERC orderthat said Texas Eastern Transmission (Tetco) acted reasonably whenit demanded further financial security from Public Service Electricand Gas (PSEandG) as a condition for authorization to transfertransportation contracts (worth over $3 billion in payments,according to the pipeline) to a wholly-owned subsidiary. ChairmanJames J. Hoecker said the Commission was merely clarifying itspolicy in light of this particular case, but the decision may causedistribution companies to think twice about transferringliabilities to avoid paying stranded costs.