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FERC Proposes New Rules On Energy Co Affiliate Dealings
09/26/2001=20 Dow Jones Energy Service=20 FERC Grants PD for Tuscarora Lateral, Approves Northern Abandonment=20 NGI's Daily Gas Price Index=20 published : September 27, 2001 TRANSWESTERN TOUTS SUCCESS OF OPEN SEASON FOR SUN DEVIL PIPELINE 09/13/2001=20 Foster Natural Gas Report=20 FERC Proposes Rulemaking, Plans Meetings=20 NGI's Daily Gas Price Index=20 published : September 27, 2001 Proposed Rule Extends Marketing Affiliate Regulations to All Affiliates=20 NGI's Daily Gas Price Index=20 published : September 27, 2001 Govt keen to solve Enron crisis 09/27/2001 The Statesman Fin. Times Info Ltd-Asia Africa Intel Wire.=20 US Physical Natural Gas Prices Fall; Light Demand Seen 09/26/2001=20 Dow Jones Energy Service=20 Transwestern Pipeline. 09/17/2001=20 The Oil and Gas Journal=20 National Post Business Magazine=20 Deconstruct=20 Passing Gas: How dancing elephants and smart pigs help heat your home Larraine Andrews 10/01/2001=20 National Post=20 Heating Bills This Winter to Ease Sharply Utilities: Lower natural gas pric= es are reducing costs for Californians, but reliance on imports could be a = problem in the long run, studies say. NANCY RIVERA BROOKS 09/27/2001=20 Los Angeles Times=20 USA: FERC OKs Tuscarora natgas pipeline for Nev, Calif. 09/26/2001=20 Reuters English News Service=20 ------------------------------------------------- FERC Proposes New Rules On Energy Co Affiliate Dealings 09/26/2001=20 Dow Jones Energy Service=20 (Copyright © 2001, Dow Jones & Company, Inc.)=20 WASHINGTON -(Dow Jones)- The U.S. Federal Energy Commission proposed Wednes= day new restrictions governing natural gas pipeline and electric utility af= filiate dealings.=20 The commission unanimously agreed to initiate a rulemaking to tighten regul= ations prohibiting pipelines and utilities from providing market-sensitive = information to their marketing affiliates.=20 FERC rules allow monopoly pipeline and utility companies to sell natural ga= s and electricity at market rates, providing they adopt codes of conduct th= at prevent the passage of information giving a competitive advantage to the= ir marketing affiliates.=20 The proposed changes reflect the sweeping convergence between the natural g= as and power sectors in the years since FERC deregulated the pipeline indus= try in the 1980s.=20 FERC's "code-of-conduct" rules prohibit pipelines from sharing market-sensi= tive information with their gas-marketing affiliates. But the rules don't a= ddress the pipeline's power marketing affiliates.=20 The commission's proposed rules would expand the code-of-conduct rules to a= ddress all marketing affiliates, including those involved in financial tran= sactions that don't entail the physical delivery of energy.=20 The template for the proposed changes can be found in the conditions FERC i= mposed in a 1999 order authorizing the acquisition of Pittsburgh-based Cons= olidated Natural Gas by Dominion Resources (D). The commission approved the= electricity-natural gas convergence merger, contingent on Dominion agreein= g to adopt codes of conduct applying equally to its gas and power marketing= affiliates.=20 FERC's rule changes would apply to other electric utilities with pipeline i= nvestments, such as CMS Energy (CMS), Duke Energy (DUK) and American Electr= ic Power Co. (AEP).=20 It wasn't immediately clear how the changes would affect joint operating ag= reements, such as the one between Entergy Corp. (ETR) and privately held Ko= ch Industries.=20 The largest impact will be for large pipeline companies with extensive powe= r marketing operations and investments in power plants.=20 For example, El Paso Corp. (EPG), Williams Cos. (WMB) and Enron Corp. (ENE)= , represent about 70% of the interstate pipeline industry, and are among th= e nation's top power marketers and merchant power plant developers.=20 The changes under consideration stem from the commission's investigation of= El Paso Natural Gas Co.'s controversial contract with a marketing affiliat= e for pipeline capacity into California.=20 The affiliate transaction has been blamed for California's dramatic runup i= n natural gas prices over the past year, which contributed to the state's u= nprecedented high electricity cost last year.=20 NGI's Daily Gas Price Index=20 published : September 27, 2001 FERC Grants PD for Tuscarora Lateral, Approves Northern Abandonment=20 The Federal Energy Regulatory Commission (FERC) has issued a favorable prel= iminary determination on non-environmental grounds to Tuscarora Gas Transmi= ssion's Wadsworth Lateral, a 14.2-mile pipeline extension and associated fa= cilities that would increase Tuscarora's transportation capacity by 95,912 = Dth/d. The lateral would extend from Tuscarora's mainline in northern Washo= e County, NV, to an interconnect with Paiute Pipeline in Nevada.=20 The expansion of the 229-mile pipeline system, which extends from Malin, OR= , to a growing Nevada market, would serve two new power generation faciliti= es in Nevada near Tracy and Wadsworth. Duke Energy plans to construct a 540= MW plant near Wadsworth, and Morgan Stanley is now constructing the 360 MW= Naniwa Energy facility near Tracy.=20 The added capacity also would supplement the growing gas distribution needs= of Sierra Pacific Power Co. and Southwest Gas Corp., which collectively di= stribute natural gas to all of northern Nevada and portions of Northern Cal= ifornia.=20 If FERC approves the application, Tuscarora said it would begin constructio= n in April 2002 and begin service by the end of that year. The $60 million = expansion is supported by long-term, firm transportation contracts ranging = from 10-to-15 years that are contingent upon completion.=20 FERC also gave Northern Natural Gas the authority to abandon by sale its fa= r east leg to Wisconsin Gas for use by affiliate Guardian Pipeline. The Nor= thern line runs from Boone County, IA, to an interconnect with ANR in Rock = County, WI. It extends to a delivery point near Eagle, WI. This nine mile, = 24-inch diameter line is located primarily in Walworth and Waukesha, WI.=20 FERC has given Guardian Pipeline authorization to eliminate construction of= its Eagle lateral, which would have run parallel to the Northern line. The= 8.5 mile, 16-inch diameter Eagle Lateral would have run from a connection = with Guardian to Eagle, WI, at a delivery point with nonjurisdictional faci= lities of Wisconsin Gas and Wisconsin Electric.=20 TRANSWESTERN TOUTS SUCCESS OF OPEN SEASON FOR SUN DEVIL PIPELINE 09/13/2001=20 Foster Natural Gas Report=20 Page 10=20 © Copyright 2001, Foster Associates, Inc.=20 Enron Corp.'s subsidiary Transwestern Pipeline Co. says it received request= s for more than 1.3 Bcf/d of capacity for its proposed Sun Devil Pipeline e= xpansion project that would transport San Juan Basin natural gas production= to market areas in Phoenix and California by January 2004.=20 Transwestern's Sun Devil Pipeline was announced as another of several new w= estern states' gas transportation options. A Transwestern official said the= gas-fired electric generation market in Arizona is the second largest grow= th market in the U.S. The company is working with shippers to finalize tran= sportation agreements and expects to file its Sun Devil application with th= e FERC early next year. Shippers needing additional information can contact= Project Director Kevin Hyatt at 713-853-5559 or email at Kevin.hyatt@enron= .com.=20 Transwestern announced its plans on August 8. The proposed project will inc= lude new compression and pipeline looping plus a new lateral, the Flagstaff= - Phoenix, Arizona lateral, which would add approximately 175 miles to Tra= nswestern's existing system. The project's estimated in-service date is Jan= uary 2004. The proposed facility modifications will enable Transwestern to = deliver an incremental 780,000 dth/d from the Blanco Hub located in San Jua= n County, New Mexico to the Thoreau area, an incremental 90,000 dth/d from = Thoreau to the California border, and an incremental 450,000 dth/d from Tho= reau to Phoenix. Potential supply receipt points from the San Juan Basin at= the Blanco Hub are BRT/Val Verde Plant, WFS/Milagro Plant, WFS/Kutz Plant,= and TransColorado/Blanco. Transwestern will consider interconnecting with = other upstream and downstream pipelines, subject to the mutual agreement of= the pipelines. The estimated maximum one-part reservation rates, exclusive= of fuel and all surcharges, for firm service through the capacity describe= d in this open season are as follows: San Juan to Thoreau -$.0985 dth/d; Th= oreau to California -- $.240 dth/d; and Thoreau to Phoenix -- $0.454 dth/d.= (See REPORT NO. 2348, pp6-7.)=20 Transwestern's Red Rock Project (CP01-115), approved by FERC earlier this s= ummer and under construction, will add 150 MMcf/d of new capacity for deliv= eries to the California border in mid-2002. NGI's Daily Gas Price Index=20 published : September 27, 2001 FERC Proposes Rulemaking, Plans Meetings=20 In the same way your teacher loaded you down with books and assignments on = the first day of the school year, new Federal Energy Regulatory Commission = Chairman Pat Wood, presiding over his first meeting Wednesday. He put a who= le slew of initiatives in motion, setting meetings, rulemakings, and callin= g for comments.=20 Sorting it out:=20 The Commission voted out a proposed rulemaking that which would extend the = standards of conduct to fence off federally regulated transmission monopoli= es, both gas pipelines and electric transmission lines, from any other affi= liate, including financial affiliates (see related story). For gas pipeline= s, which have been unbundled for a number of years and subject to affiliate= codes of conduct for an equal number of years, the proposed rule will not = be as onerous as it will for electric utilities, many of which are still bu= ndled. This will mean, however, that gas transmission utilities must mainta= in firewalls between themselves and power affiliates, as well as gas market= ing affiliates. Turn in your comments, please.=20 By its second meeting in October, FERC will have a detailed business plan, = including priorities and completion dates for its Oct. 1, 2001 to Oct. 1, 2= 002 fiscal year. Wood directed a panel of senior staff members and another = of junior staff members and union representatives to come up with the plan.= The commissioners voted Wednesday to amend their existing five-year plan t= o emphasize their major new emphasis on market monitoring and mitigation.= =20 FERC will be holding regional meetings on gas and electric infrastructure. = It will start with a meeting on the western infrastructure following the No= v. 1-2 Western Governors Association meeting in Seattle. Wood said he expec= ted federal and state regulators, and others to participate. A meeting for = the Northeast may be scheduled in December, with sessions for the South and= Midwest to come later. Attendance is not mandatory.=20 FERC will cooperate with the Department of Energy in two technology-oriente= d sessions, one to explore technology solutions such as remote metering to = capturing retail and wholesale consumer demand response in mid-February and= another to investigate new transmission technology in mid-January.=20 Don't be surprised to see a lot of topics debated at FERC's regular open me= etings. The sunshine laws which prohibit more than two commissioners from d= iscussing FERC business except in an open meeting, is confining, Wood said.= (Usually commission staff runs back and forth among commissioners to estab= lish positions before the meetings). Wood would like to have more discussio= ns out in the open to work things out, and also to let the public know "not= just what we are doing, but why we are doing it."=20 And also, be prepared to pledge allegiance to the Flag of the United States= of America from now on at any FERC meeting presided over by Chairman Wood.= The chairman also asked for a moment of silence Wednesday for the victims = of the Sept. 11 attack.=20 NGI's Daily Gas Price Index=20 published : September 27, 2001 Proposed Rule Extends Marketing Affiliate Regulations to All Affiliates=20 Federal Energy Regulatory Commissioners Wednesday agreed to issue a notice = of proposed rulemaking broadening the application of standards of conduct f= or transmission providers, including both natural gas pipelines and power l= ines, to require separation of the regulated monopolies from any other comp= any affiliate.=20 Previously, the rules simply required creation of a firewall, including sep= arate operations in separate locations staffed by separate personnel, betwe= en gas pipelines and their marketing affiliates. The proposed rule would wa= ll off both gas and electric transmission operations from any other affilia= te, gas or electric, including financial affiliates.=20 The Commission was presented with two options regarding the application of = the proposed rule to electric transmission affiliates, which still in many = cases have bundled operations. One option would enforce complete separation= , while a second would have exempted employees who deal in sales or purchas= es of bundled retail native load. Staff and Commissioners Wood, William Mas= sey and Nora Brownell appeared to favor walling off all affiliated personne= l, so they would not be privy to market information about transmission oper= ations that other non-affiliated competitors did not have access to.=20 Commissioner Linda Breathitt, however, argued for exempting personnel deali= ng solely with retail native load. Breathitt said that while she supported = the eventual separation of the entities, she was concerned about the timing= . "I see no compelling reason at this time; there have been no complaints a= nd no evidence." She said she thought state commissions might consider the = move an infringement on their jurisdiction. "I agree with concept philosoph= ically, but I think there will be other opportunities later on, after we do= a little more bridge-building with state commissions."=20 Wood said he understood "the political issue here with respect to federal-s= tate relations, but I think this is an opportunity for discrimination that = ought to be eliminated." Staff pointed out that if there were any problems = with transmission reliability or if some small utilities had problems, waiv= ers could be granted. Staff was questioned by the commissioners as to how m= uch information was available to affiliate personnel. "If I am an affiliate= employee dealing solely with retail native load, I can go into the control= room and get all the information I want," one staffer responded.=20 Wood proposed, and the commissioners ratified, a proposed rule with no exce= ptions, but which makes clear that in the final rule the Commission may rev= erse field and determine that separation of employees dealing with sales of= native load is not required. Commenting parties should provide cost/benefi= t analysis on both sides of the question. State commissions are also invite= d to comment. Wood had suggested the Commission extend the separation to al= l sales employees, "but make it clear that if we don't hear from people tha= t they really want this separation, we ain't going to do it."=20 Govt keen to solve Enron crisis 09/27/2001 The Statesman Fin. Times Info Ltd-Asia Africa Intel Wire. The Statesman Copyright (C) 200= 1 The Statesman Ltd. All Rights Res'd STATESMAN NEWS SERVICE & AGENCIES NEW DELHI/MUMBAI, Sept. 26. An inter-mini= sterial committee of Union secretaries is monitoring the Enron crisis regul= arly, to facilitate some kind of early solution to the Enron imbroglio invo= lving the Dabhol power project, the power minister, Mr Suresh Prabhu, said = here today, while refusing to divulge the options being explored.=20 An institutional framework committee, made up of the finance secretary Mr A= jit Kumar, power secretary Mr Ashok K Basu, law secretary Mr R L Meena and = the petroleum secretary Mr V N Kaul, has been monitoring the developments o= n the project front, and regularly interacting with the parties Mr Prabhu s= aid at a briefing. We want an early solution to the problem, but the Centre has a very restric= ted role, limited only to facilitate an amicable solution, he said.=20 Mr Prabhu refused comment on Enron chairman, Mr Kenneth Lays reported lette= r to the Prime Minister, Mr Atal Behari Vajpayee, seeking $5 billion in dam= ages for terminating the contract, but said if by writing letters problems = can be solved, we can also write letters. He said the government and the Ca= binet have been kept informed of the status of the negotiations but it woul= d be premature to speak at this stage on the problem which has its genesis = in the contract signed in 1992.=20 DPC AGM: Notwithstanding its depleting financial conditions, Dabhol Power C= ompany has recorded a higher net profit of Rs 208 crore for the year ended = 2000-01, compared with Rs 198 crore in the previous year.=20 Disclosing this at the annual general meeting here today, the Enron India c= hief, Mr Wade Cline, said that the promoters of DPC would be making efforts= to fetch additional finances from the institutions to complete the remaini= ng 10 per cent construction work of the 2,184-MW power project at Guhaghar = in Ratnagiri district of Maharashtra.=20 Godbole report: The recommendations of the Godbole Committee, that held ren= egotiations with Enron on the future of DPC, are likely to remain on paper.= =20 This was clear from the Maharashtra Chief Minister, Mr Vilasrao Deshmukhs p= ost-Cabinet-meeting statement today when he said the government noted certa= in recommendations of the Godbole panel following several round of talks wi= th officials of Enron-DPC over the past five months.=20 Mr Deshmukh said these recommendations would guide the government in future= while negotiating fresh projects.=20 The fate of DPC will thus remain undecided. In the last Cabinet meeting, th= e Maharashtra government announced terms of reference for an inquiry commis= sion, which would be set up to probe the entire Enron-MSEB deal ab initio. = However, the government is still to name a retired Supreme Court Judge to h= ead the commission.=20 Mr Madhav Godbole, a former bureaucrat, had clearly suggested that the pane= l should call off renegotiations, since Enron had announced its desire to w= alk out of the DPC. He said other states such as Karnataka, Madhya Pradesh,= Delhi and Rajasthan were ready to purchase Enron power, provided the rate = per unit ranged between Rs 2.25 and Rs 2.40. This was rejected by Enron.=20 Other recommendations noted by the State include: The Union Government whic= h has given counter guarantee of Rs 2,500 crore, should raise bonds of the = same amount and give them to Maharashtra as interest-free loan. US Physical Natural Gas Prices Fall; Light Demand Seen 09/26/2001=20 Dow Jones Energy Service=20 (Copyright © 2001, Dow Jones & Company, Inc.)=20 HOUSTON -(Dow Jones)- U.S. natural gas physical prices fell Wednesday on li= ght demand, as traders hoped to take advantage of cash-outs on pipelines, m= arketers said.=20 "Not much is getting done for next month," one veteran trader said. "It's (= Tuesday) all over again."=20 He said traders are hoping they can "get away with as much as possible on t= hose cash-outs and pray they don't get a call from pipelines" asking them t= o ante up on the $2.15/MMBtu and above prices from earlier in the week.=20 As for next-month bidding, "everyone was asking," but not much was getting = accomplished on baseload trading for October physical gas, a trader said.= =20 Wednesday, prices were at a premium to the New York Mercantile Exchange to = start the session, but ended up either in convergence or slightly in contan= go, he said.=20 Looking ahead, some incremental demand may be seen next month, as some util= ities switch to natural gas from fuel oil and a number of nuclear energy si= tes go off-line for maintenance, one veteran trader said.=20 October, a shoulder month, tends to be a major price discount month, he sai= d. On the Nymex there's presently a 42-cent difference between the outgoing= October contract and the November contract. The November-November 2002 spr= ead is more than 80 cents.=20 Wednesday, traders again saw tight ranges as the Nymex October contract tra= ded under the spot cash bid-ask price, which are both at 30-month lows.=20 Traders are in the midst of a three-day monthly bid week as they set baselo= ad pricing for October.=20 The Nymex Oct natural gas futures contract expired at $1.83 a million Briti= sh thermal units, down 9.5 cents. November settled at $2.253/MMBtu, down 4.= 7 cents.=20 The American Gas Association said 91 billion cubic feet of gas was added to= storage, and the bearish report sparked a selldown in October to $1.76/MMB= tu.=20 At the benchmark Henry Hub in south Louisiana, the delivery point for Nymex= gas, prices fell 5 cents-8 cents to a $1.85-$1.92/MMBtu closing range.=20 First-of-month index for the Henry Hub is around $2.34/MMBtu.=20 Deals at Transcontinental Gas Pipe Line Station No. 65 were done at $2.03-$= 2.15/MMBtu, up 5 cents-6 cents.=20 At the Arizona-California Border, where gas from El Paso's pipeline begins = delivery to Southern California, buyers paid $1.72-$1.81/MMBtu, down 4 cent= s-5 cents. Index for September is at $2.66/MMBtu.=20 At PG&E Citygate, traders paid $1.85-$2.05/MMBtu, down 3 cents on the bid, = up 8 cents on the ask. September first-of-month index is at $2.71/MMBtu.=20 At the Katy hub in East Texas, prices were in a $1.81-$1.87/MMBtu range, do= wn 6 cents. First-of-month September index is $2.37/MMBtu.=20 At Waha in West Texas, buyers paid $1.65-$1.78/MMBtu, down 3 cents-9 cents.= Index is at $2.32/MMBtu, traders said.=20 Transwestern Pipeline. 09/17/2001=20 The Oil and Gas Journal=20 Page 8=20 Copyright 2001 Gale Group Inc. All rights reserved. COPYRIGHT 2001 PennWell= Publishing Co.=20 Enron unit Transwestern Pipeline has received requests for more than 1.3 bc= fd of capacity on its proposed 400-mile Sun Devil Pipeline expansion projec= t, which would bring natural gas from New Mexico's San Juan basin to market= in Phoenix, then to California by January 2004. "Sun Devil is an important= project that will serve the gas-fired electric generation market in Arizon= a, which is the second-largest growth market in the US," Transwestern said.= The company presently is working with shippers to finalize transportation = agreements. It plans to apply with FERC early next year. The company also s= aid its Red Rock pipeline project will make 150 MMcfd of gas capacity avail= able for delivery into California in mid-2002. National Post Business Magazine=20 Deconstruct=20 Passing Gas: How dancing elephants and smart pigs help heat your home Larraine Andrews 10/01/2001=20 National Post=20 National=20 Page 86=20 © National Post 2001. All Rights Reserved.=20 REVEALED Finding natural gas was once a matter of luck -- surface seeps pro= vided the only real clue. Eventually, though, people realized that seeps of= ten occurred on anticlinal or dome-like slopes, indicating the presence of = an underground trap. In the early 1900s, oil companies began relying on geo= logists to help them read what the rocks had to say, but it was many years = before seismic technology could give a picture of rock formations hidden de= ep in the Earth. These days, specialized vibroseis trucks use mechanical vi= brations to create seismic waves. Costing US$350,000 each, the trucks weigh= from 18,000 to 30,000 kg and travel in groups of four or five. They are of= ten called "dancing elephants," operating in unison at 100-metre intervals.= An on-board hydraulic system presses a central plate against the ground, l= ifting the truck into the air and vibrating it over a controlled frequency = band. The resulting waves are reflected from rock layers in the Earth -- di= fferent types of rock reflect waves differently, much as a ball bounced on = pavement will bounce higher than a ball bounced on sand. The returning wave= s are then measured by sensitive geophones, or jugs, strung out every 25 me= tres along the ground. Supercomputers process the data to generate a 2-D or= 3-D picture of the underground structures. In the end, the only sure way t= o know if gas exists is to drill, but these days the final decision is base= d on much more than a hunch and a prayer, since so much is at stake: about = $900,000, the average cost to complete a gas well in western Canada.=20 SNIFFED Natural gas at the wellhead contains a potentially poisonous contam= inant called hydrogen sulphide, or H2S. Natural gas that contains more than= 1% of it is called "sour" gas. It has a strong odour, similar to rotten eg= gs. About 30% of Canada's total natural gas production is sour, most of it = found in Alberta and B.C. By contrast, discoveries in the Arctic and off th= e East Coast contain less than 1% H2S and are called "sweet." If the gas is= sour, it is "sweetened" by converting up to 99% of the H2S into elemental = sulphur for use in fertilizers and for export. The remaining H2S is flared,= a controversial incineration process that results in the conversion of H2S= to sulphur dioxide, which is released into the atmosphere. (An excellent a= ccount of the controversy can by found in Andrew Nikiforuk's book Saboteurs= : Wiebo Ludwig's War Against Big Oil, to be published this month.) Whether = sweet or sour, the natural gas used to heat our homes must be processed bef= ore it is pipeline-ready for shipment. Processing occurs at plants close to= the production areas or at straddle extraction plants on major pipeline ro= utes. In Canada, there are 837 processing plants, 756 of them in Alberta. T= he four largest processors are: Husky Energy Inc. (51 plants), Anderson Exp= loration Ltd. (49), Canadian Natural Resources Ltd. (47) and Conoco Canada = Ltd. (35).=20 SQUEALED "Smart pigs" aren't actually pigs. They're sophisticated tools tha= t travel inside pipelines checking for corrosion and evidence of stress or = cracking in the pipe. Early versions were called pigs because they squealed= as they moved inside the pipe. Propelled by the gas, they travel at speeds= from 0.8 to 16 km per hour. Only about six companies in the world build an= d inspect pipelines with pigs, which have cost up to US$1 million for resea= rchand development. Pigs range in size from 89 mm to 1.4 m in diameter and = can be as long as 6 metres. Special pig "launch and trap facilities" are bu= ilt along the length of the pipeline to allow for insertion and removal at = various intervals.=20 TRAPPED In nature, natural gas, made predominantly of methane -- four hydro= gen atoms attached to one carbon atom -- is found mixed with other hydrocar= bons such as ethane, propane and butane, as well as hydrogen sulphide and c= arbon dioxide. Most experts believe the carbon and hydrogen came from micro= scopic plants and animals deposited with mud and silt at the bottom of anci= ent oceans. Over millions of years, the intense pressure and heat caused by= growing layers of sediment transformed this organic material into crude oi= l and natural gas. The sediment itself eventually became porous sedimentary= rock. Oil and gas migrate upwards through this rock because they are less = dense than the seawater in its pores. You would see the same result if you = put a mixture of gas, oil and water in a glass: they would separate accordi= ng to their different densities. If the gas manages to reach the surface, i= t is released into the atmosphere. But often it will be stopped in its upwa= rd journey by impermeable rock formations, or cap rocks, that trap it in un= derground reservoirs.=20 SHIPPED Hidden a metre or more underground, a vast subterranean network of = steel pipes and plastic tubes delivers natural gas from the wellhead to the= consumer. Almost 80,000 km of gas pipelines link producers in the west to = the populated regions of eastern Canada and the U.S. Efficient movement thr= ough the pipeline requires transmission at high pressure along the way. Pro= pelled at speeds of up to 40 km per hour, it takes about three days for nat= ural gas from Alberta to reach markets in southwestern Ontario. A voracious= U.S. appetite for natural gas has sparked recent additions to the system, = such as the $1.8-billion, 1,051-km Maritimes and Northeast pipeline that mo= ves Sable Island gas from Nova Scotia to Dracut, Mass., and the $4.5-billio= n, 2,988-km Alliance pipeline that links B.C. and Alberta to the Chicago ma= rket.=20 MEASURED In the metric system, joules measure energy content. The joule was= named after James Joule, an English physicist who co-discovered the law of= conservation of energy: "Energy used up in one form reappears in another a= nd is never lost." One joule is the amount of energy required to heat one g= ram of water by 1/4 degree Celsius. Since joules are so small, people norma= lly speak in terms of gigajoules, or one billion joules. An average Canadia= n home would use about 150 GJ in a year, and one gigajoule on a particularl= y cold winter day. Producers and pipeline operators measure natural gas by = volume using cubic metres (or cubic feet, just to confuse the issue). One c= ubic metre is the size of an average dishwasher. Canada is the third-larges= t producer of natural gas in the world, producing 162 billion cubic metres = in 1999. No. 1 is the Russian Federation (551 billion), No. 2 is the U.S. (= 540 billion) and No. 4 is the U.K. (100 billion). According to Oilweek maga= zine, the top three Canadian producers in 2000 were: Alberta Energy Company= Ltd. (gas revenues of $2.3 billion), PanCanadian Petroleum Ltd. ($1.6 bill= ion) and Canadian Natural Resources Ltd. ($1.3 billion).=20 DISCOVERED The first natural gas discovery in Canada was at Stoney Creek, N= .B., in 1859. The first commercial development came 30 years later, when en= trepreneur Eugene Coste drilled a well that supplied communities in Essex C= ounty, Ont., near Windsor. By 1904, he had moved west, making history in 19= 09 with "Old Glory," so-called for the size of its flare, near Bow Island, = Alta. This discovery was large enough to justify a 270-km-long, 40-cm-wide = pipeline to Calgary, the longest of its kind at the time.=20 PRICED If Canada has so much natural gas, why did prices hit an all-time hi= gh of $16.90 per gigajoule in December 2000, up from $2.63 in January 2000?= Simple supply and demand, combined with a cold winter and fears of low sto= rage levels. Since then, prices have fallen to the $4.50 range, partly due = to the economic slowdown. Matthew Foss, an economist with the Canadian Ener= gy Research Institute in Calgary, predicts an average price of $3.50 per gi= gajoule this winter, since storage facilities are at near capacity and new = drilling is proceeding: about 13,000 gas wells by year's end. Heating Bills This Winter to Ease Sharply Utilities: Lower natural gas pric= es are reducing costs for Californians, but reliance on imports could be a = problem in the long run, studies say. NANCY RIVERA BROOKS 09/27/2001=20 Los Angeles Times=20 Home Edition=20 Page C-1=20 Copyright 2001 / The Times Mirror Company=20 Winter heating bills in California will be substantially smaller than the s= wollen tabs of last year because of sharply lower natural gas prices and pl= entiful supplies, utilities said Wednesday.=20 But the longer-term picture for consumers is not as rosy, despite the recen= t decline in wholesale natural gas prices.=20 Two reports released this week warn that California's heavy reliance on imp= orted natural gas, which fuels most of the state's power plants in addition= to fulfilling most of its heating needs, could be setting the state up for= future energy crises.=20 For now, the wholesale price of natural gas is dropping along with most fos= sil fuels, and supplies are plentiful. Natural gas futures slumped to a 2 1= /2-year low Wednesday after an industry report showed a bigger-than-expecte= d jump in U.S. inventories.=20 The American Gas Assn. said supplies in storage rose 3.3% last week to 2.84= 8 trillion cubic feet, continuing a steady build made possible by reduced d= emand from manufacturers.=20 In response, natural gas for October delivery fell 9.5 cents, or 4.9%, to $= 1.83 per million British thermal units on the New York Mercantile Exchange.= Prices have dropped 82% from a Dec. 27 record of $10.10 per million BTU, c= aused by scant supplies.=20 Prices in California, which imports 85% of its natural gas from other U.S. = states and Canada, peaked much higher in December at about $60 per million = BTU. California wholesale prices now are hovering close to the Nymex price.= =20 California was clobbered harder last winter than the rest of the country fo= r several reasons: colder-than-usual weather, heavy use by in-state power p= lants and reduced pipeline capacity caused by a deadly explosion. In additi= on, state regulators accused a major pipeline operator, the El Paso Natural= Gas unit of El Paso Corp., of manipulating the market; federal regulators = have not yet ruled on that case.=20 "The message this year is much better than it was at this time last year," = said Anne Smith, vice president for customer service at Southern California= Gas, a subsidiary of San Diego-based Sempra Energy. Southern California Ga= s' more than 5 million customers paid record prices last year, as did the c= ustomers of Sempra's San Diego Gas & Electric and PG&E Corp.'s Pacific Gas = & Electric.=20 Unlike with electricity, the price of natural gas is not fixed for resident= ial and small-business customers. The gas utilities pass along the commodit= y price to customers with no markup.=20 Last winter, which runs from November to March in the utility world, the av= erage residential customer of Southern California Gas got a monthly bill of= $80. This winter, the average bill is expected to be about $60, Smith said= .=20 The basic commodity cost for natural gas sold to its residential customers = for this October, for example, will be 15.9 cents per therm, compared with = 57.04 cents last October. (A therm is one-tenth the standard wholesale meas= ure of 1 million BTUs, or about 100 cubic feet of gas.)=20 Transmission costs, which remain fairly constant year to year, average abou= t 40 cents per therm for the company's residential customers. (The average = single-family home uses about 75 therms a month.)=20 PG&E projects similar cost declines, and both utilities say they have plent= y of gas in storage to meet the needs of their core residential and small-b= usiness customers.=20 But problems loom with California's natural gas supply system, according to= studies released this week by the California Energy Commission and the Cal= ifornia Public Interest Research Group.=20 The two studies agree that heavy demand has strained the state's delivery a= nd storage systems, but otherwise they had little in common.=20 The final draft of the Energy Commission staff report, released Monday, not= ed that utilities already are moving to expand or build new pipelines, and = recommended that the state encourage the drilling of more natural gas wells= and expansion of pipeline systems within California, among other things.= =20 The CalPIRG report, released Wednesday, advocates that the state deny licen= ses to any new power plants fueled by natural gas and to encourage renewabl= e energy production through favorable taxation and by requiring that a mini= mum of 20% of the state's electricity come from wind, solar and geothermal = sources by 2010.=20 "Natural gas is cleaner than other fossil fuels," said CalPIRG's Brad Heavn= er, the report's author. "But it's not a magic bullet, and by relying on it= we are setting ourselves up." USA: FERC OKs Tuscarora natgas pipeline for Nev, Calif. 09/26/2001=20 Reuters English News Service=20 (C) Reuters Limited 2001.=20 WASHINGTON, Sept 26 (Reuters) - Tuscarora Gas Transmission Co. won prelimin= ary approval on Wednesday from the Federal Energy Regulatory Commission to = build a pipeline to ship natural gas to local distribution companies and el= ectric power plants in Nevada and California.=20 The pipeline and related facilities would carry up to about 96 million cubi= c feet per day of natural gas.=20 The agency must still determine the environmental impact of the pipeline be= fore making a final decision on the project.=20 Tuscarora owns an interstate natural gas pipeline system that begins at a c= onnection with PG&E Gas Transmission-Northwest Corp., located near Malin, O= re., and extending southeasterly for 229 miles to its terminus in Storey Co= unty, Nevada, at the Tracy Power Plant. The power plant is owned by Sierra = Pacific Power Co., an affiliate of Tuscarora.=20 Shipments in the pipeline would be phased in over a two-year period beginni= ng in November, 2002.=20 Tuscarora Gas Transmission Co. is a partnership between Sierra Pacific Reso= urces and TransCanada Pipelines Ltd.
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