Message-ID: <32691170.1075852885556.JavaMail.evans@thyme> Date: Fri, 19 Oct 2001 10:52:42 -0700 (PDT) From: rebrooks@earthlink.net To: rebrooks@rbac.com Subject: GPCM News: 10/19/01: Cal to Renegotiate Power Deals?: New Path 15Powerline: El Paso to Buy Arctic LNG: Colder Than Average Winter Predicted:Deep Gas Conference Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Robert E. Brooks X-To: 'GPCM Distribution' X-cc: X-bcc: X-Folder: \KWATSON (Non-Privileged)\Watson, Kimberly\Deleted Items X-Origin: Watson-K X-FileName: KWATSON (Non-Privileged).pst From http://www.enerfax.com : California Wants to Renegotiate Power Contracts California's governor says he is working on proposals that could result in negotiations with power suppliers to reduce the cost of power being purchased by the state through long-term power purchase contracts signed earlier this year. However, none of the generators reportedly have heard anything concerning renegotiations of the deals. While the state would gain lower rates for power from any renegotiations, the advantage to the power providers is not certain, other than the avoidance of future legal or regulatory challenges to the contracts. The governor has come under intense criticism from critics charging that the contracts lock the state into prices that are way too high. The California PUC wants the FERC to force the generators to lower their prices. How FERC will act on the deals remains to be seen. Sempra signed a 10-year, 1,900-MW deal with the state in May that could be worth $7 billion. Sempra began 250 MW deliveries this summer and expects increase output under the deal over the next several years as it brings new power online. The contract includes variable prices based on the cost of natural gas. With gas prices at about $2 per MMBtu, Sempra is able to sell the state baseload capacity at $0.041 per kWh and peaking capacity at $0.051 per kWh. New Path 15 Power Line to Be Built PG&E and other power companies will build a new $300 million transmission line along Path 15, an 84-mile stretch of power lines in the central part of California. The outdated transmission lines in the area do not have enough capacity to carry electricity between the northern and southern parts of the state during peak demand periods. Expanding Path 15 to include a 3rd power line would boost transmission by about 1,500 MW. The project could be completed by summer 2004. Kinder Morgan, Williams, Trans-Elect, and the Western Area Power Administration are also involved in the project. For more information, see the LA Times article at http://www.latimes.com/news/local/la-000083333oct19.story . El Paso and Iberdrola to Buy LNG from Snoehvit Project The Snoehvit consortium, led by Norways Statoil has signed deals with El Paso and Spanish Iberdrola to supply LNG from the Arctic for 17-20 years. El Paso will buy 2.4 Billion cubic meters of gas per year, while Iberdrola will purchase 1.6 Bcm for a total of $453.8 million per year. Snoehvit will also sell volumes totaling 1.7 Bcm to partners Gaz de France and TotalFinaElf. Snoehvit, estimated to hold 320 Bcm of gas will be developed as a subsea tie-back to a LNG plant near the world's northernmost city Hammerfest. The LNG will be transported by specialized carriers to the US and Europe. In the US, the LNG will be sold at spot prices. Environmentalists oppose Snoehvit, the first development in the Arctic Barents Sea, because of potential ecological damage. The deals were signed under a condition that the Norwegian parliament approves the project. A new political party is set to take over Norways government today and may postpone Snoehvit in order to make further environmental impact studies. Otherwise, construction is scheduled to begin by spring 2002 and be operational by autumn of 2006. NOAA Winter Weather Forecast Colder than average temperatures will prevail this winter in the Northeast, Upper Midwest, Great Lakes and Great Plains states, according to the National Oceanic and Atmospheric Administration. NOAA says that the absence of El Nino and La Nina could lead to heavy snow in the Midwest and along the East Coast. The forecast does not expect a repeat of the record-breaking cold temperatures of November and December of last year, but winter should still be colder than normal. The Pacific Northwest had near-record dry conditions last winter that depleted hydropower severely, but will have more normal weather this year. Texas, Oklahoma, and the western parts of Arkansas and Louisiana will receive above average rain while Florida, Georgia, South Carolina and the eastern part of North Carolina will be dryer than usual. Deep Gas Conference in Houston The Strategic Research Institute is holding a conference on deep gas technology on November 27-28 in Houston. For more information, see the following website http://www.srinstitute.com/cr214 . Bob Brooks GPCM Natural Gas Market Forecasting System http://gpcm.rbac.com