NGI The Weekly Gas Market Report

Rep. Ralph Hall, D-TX, said he believes this Congress will votestand-alone legislation to repeal the Public Utility HoldingCompany Act (PUHCA) as hopes for a comprehensive electricrestructuring bill fade. Talking to reporters after addressing theNatural Gas Roundtable in Washington Tuesday, Hall said the longerCongress puts off comprehensive legislation, the better theprospects get for piecemeal measures.

In a deal that could be the first of its kind in the nation,Pacific Gas and Electric is locked in serious negotiations withnorthern California natural gas producers to sell them itsextensive utility gas gathering system linked to in-state wells,most of which are in the dry gas fields of the greater SacramentoValley. The deal being sought, which is expected to take the betterpart of 1998 to gain final regulatory approvals, is an offshoot ofthe omnibus Gas Accord unbundled intrastate transmission andstorage services that start March 1.

Two new gas-fired power stations announced last week will jointhe 18,300 MW of planned gas-fired power plants in the Northeastregion recently tallied by Resource Data International (RDI) ofBoulder, Colo. (see NGI, 02/09/97).

With all regulatory approvals in place at both Federal andProvincial levels, sponsors of the Sable Island Offshore EnergyProject last week signed both their key commercial agreements andthe Facilities Alliance Agreement to engineer, construct andinstall production and gathering facilities to handle delivery of 3.5 Tcf of gas from offshore Nova Scotia. This formally commits theowners to the $2 billion first phase, which will deliver the firstgas in late 1999.

In announcing a $891 million net loss in 1997 ($17.14 pershare), Pioneer Natural Resources said it plans to sell off 95% ofits domestic fields in 1998 to “unlock the value” contained in itslong-lived reserve base and acreage position. The fields represent10-12% of its total reserve base and the sale is estimated to bringin $375-$550 million. About 95% of its domestic fields generateonly 15% of the company’s total cash flow, said CEO ScottSheffield. “Most of Pioneer’s domestic value is attributable toabout 25 of the company’s 450 fields. The purpose of this programis to shed non-strategic properties, redeploying the proceeds intohigher return assets. Exact timing of the sales will depend onmarket conditions.” The vast majority of these fields were acquiredby Parker and Parsley prior to 1995.

The $5.4 billion merger of Keyspan Energy, parent of the Brooklyn Union Gas (BUG), and the Long Island Lighting Company (LILCO) crossed a major hurdle last week as the New York State Public Service Commission approved a settlement agreement signed by PSC staff, consumer and environmental advocates, labor unions, and Trigen-Nassau Energy. The agreement paves the way for merger-related savings of $100 million/year to be passed on to LILCO’s and BUG’s 1.6 million gas customers and 1 million electric customers. It also caps corporate earnings and installs a new revenue sharing mechanism.

Oneok announced the sale last week of some processing assets, and the company said it is looking for new opportunities, possibly other processing plants, distribution systems or reserves.

Maritimes &Northeast Pipeline (M&ampNE) is moving down the home stretch as its Phase II facilities in central and northern Maine passed preliminary environmental review by FERC staff with minimal required changes.

The multiple protests filed against El Paso Natural Gas’ Bondad Expansion project on its San Juan Basin pipeline system are “based on misstatements of fact, misinterpretations of El Paso’s rate settlement and tariff, and sheer speculation, and should therefore be dismissed,” the pipeline company told FERC in an answer to the protests. Contrary to the claims of Arizona Public Service, Burlington Resources, the California Public Utility Commission, Southern California Gas and several other firms, existing shippers will be no worse off as a result of the project and in fact will be “significantly better off in terms of additional revenue credits, capacity release opportunities and other benefits,” El Paso said.