Wyoming.Fort Union Gas Gathering.
09/24/2001 
Natural Gas Week 

EOTT'S RECAPITALIZATION WILL INCLUDE CONVERSION OF UNITS, NEW FINANCING
09/24/2001 
Petroleum Finance Week 

Stock Rating Reiterations Closing Update
09/24/2001 
Dow Jones News Service 

APGA Urges EIA to Gather Gas Data to Dampen Price Volatility
NGI's Daily Gas Price Index 
published : September 25, 2001

COMPANIES & FINANCE INTERNATIONAL - Appetite for North American energy assets remains strong
By SHEILA MCNULTY and KEN WARN.
09/25/2001 
Financial Times 

CALIFORNIA PREMIUM GASOLINE DROPS TO 91 OCTANE RATING
09/24/2001 
Octane Week 

Williams Invests Big in Deepwater.
09/24/2001 
Natural Gas Week 
----------------------------------------------------------------------------

Wyoming.Fort Union Gas Gathering.

09/24/2001 
Natural Gas Week 
P14 
(c) 2001 Energy Intelligence Group. All rights reserved 
Fort Union Gas Gathering announced that as of Sept. 5 it had tested and placed in service a 62-mile expansion of its system which will allow it to accommodate increased natural gas production in the Powder River Basin. Gathering system capacity is now at 634 MMcf/d, up from 434 MMcf/d before the expansion. 
The system now extends roughly 105 miles from near Gillette, Wyoming, south to Glenrock, Wyoming. The system interconnects with Colorado Interstate Gas' Powder River lateral, the KN Interstate system, and Wyoming Interstate's Medicine Bow Lateral. 
Fort Union Gas is a limited liability company whose partners are affiliates of CMS Energy, Northern Border Partners, Western Gas Resources, El Paso and Williams.


EOTT'S RECAPITALIZATION WILL INCLUDE CONVERSION OF UNITS, NEW FINANCING

09/24/2001 
Petroleum Finance Week 
(c) 2001 Phillips Business Information, Inc. 
EOTT Energy Partners L. P. (NYSE: EOT) announced a recapitalization that will include a conversion of outstanding subordinated units and additional partnership interests (APIs) into common units and implementation of a refinancing plan. Upon the plan's successful completion, directors of EOTT's general partner, EOTT Energy Corp., intend to increase the annual cash distribution on common units from $1.90 to $1.95. Elements of the plan require unitholder approval, which will be sought later this year. "We believe that the plan enhances the value of EOTT's common units and places our common unitholders in a position to realize immediate benefit from increases in the partnership's available cash," said EOTT Chairman Stan Horton. 
In the conversion of subordinated units and APIs to common units, Enron Corp. (NYSE: ENE) and Koch Petroleum Group L.P. have agreed to convert all 9 million outstanding subordinated units and $9.3 million of APIs into approximately 4.3 million common units. EOTT anticipates that these changes in capital structure will enhance its ability to increase cash distributions to its common unitholders. An amendment to the partnership agreement will be required to make the conversion. 
EOTT also intends to affect equity and long-term debt offerings to refinance short-term debt incurred in connection with a $117 million asset acquisition that it completed in June 2001. The Houston partnership also intends to replace its existing working capital credit facility with a new bank credit line. EOTT said that the financings, which it expects to complete by the end of the year, would not require it to amend the partnership agreement.


Stock Rating Reiterations Closing Update: TUNE INTU CHKP

09/24/2001 
Dow Jones News Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
Company               Symbol  Brokerage Firm        Reiterated Rating: 
Microtune             TUNE    Prudential             Buy 
Intuit                INTU    Prudential             Buy 
Check Point Sftwr     CHKP    Buckingham Research    Strong Buy 
Quest Diagnostics     DGX     Merrill Lynch          NT Buy/LT Buy 
Thoratec Labs         THOR    Adams Harkness         Buy 
Star Gas Prtnrs       SGU     Dain Rauscher Wessels  Buy 
No. Border Prtnrs     NBP     Dain Rauscher Wessels  Buy 
Sanmina               SANM    CSFB                   Strong Buy 
Juniper Networks      JNPR    Buckingham Research    Neutral 
Vitria Tech           VITR    Buckingham Research    Accumulate 
Netegrity             NETE    Buckingham Research    Strong Buy 
     


NGI's Daily Gas Price Index 
published : September 25, 2001
APGA Urges EIA to Gather Gas Data to Dampen Price Volatility 
The American Public Gas Association (APGA) has called on the Energy Information Administration (EIA) to begin collecting and distributing "relevant and timely" natural gas production and consumption information on a regular basis to help temper the "extreme price swings" in the market. 
"We believe that such information, if available on a timely basis, would achieve the twin goals of providing better transparency in the marketplace and effectively promoting stability in natural gas markets," wrote APGA President Bob Cave in a letter Friday to EIA Acting Administrator Mary Jean Hutzler. 
Specifically, the group of municipal distributors urged the Department of Energy (DOE) agency to "exercise its broad jurisdiction" under the Federal Energy Administration Act (FEAA) to "collect and disseminate" information pertaining to production, production capability, pipeline capacity, pipeline capacity utilization and end-use consumption by customer class. This "is not intended as an inclusive list of needed information, but rather as a starting point." 
By gathering this additional information, Cave believes the overriding significance that the gas industry currently attaches to the American Gas Association's (AGA) weekly storage reports would diminish. "AGA's weekly storage report is an important piece of data because industry participants perceive it as an indicator of the balance in supply and demand. But, because it is just about the only relevant and timely data available in the marketplace, there is an inordinate amount of price volatility associated with its anticipated release and its actual release," he said. 
APGA "firmly believes that the only way to combat such volatility is to make available to the marketplace other relevant production and consumption data, so that the AGA report is viewed in its proper perspective," Cave noted. 
The group recommended that the EIA meet with other industry trade groups and the Federal Energy Regulatory Commission "as promptly as possible to develop a comprehensive list of the needed data to permit EIA to fulfill its statutory mission" under the FEAA. 

     



COMPANIES & FINANCE INTERNATIONAL - Appetite for North American energy assets remains strong - The pace ...
By SHEILA MCNULTY and KEN WARN.

09/25/2001 
Financial Times 
(c) 2001 Financial Times Limited . All Rights Reserved 
COMPANIES & FINANCE INTERNATIONAL - Appetite for North American energy assets remains strong - The pace of mergers and acquisitions in the oil and gas industry shows no sign of slowing, write Ken Warn and Sheila McNulty. 
Global economic uncertainty and weak oil and gas prices are not slowing the pace of consolidation in the North American energy industry. 
With some oil and gas companies bullish on energy prices over the longer term, Canadian assets, in particular, look set to remain in strong demand. 
The appetite for energy assets could even strengthen as companies look for secure and readily accessible oil and gas supplies following the attacks on the US, some analysts believe. 
"We are starting to see a lot more interest in domestic players," says Martin Molyneaux of Calgary-based First Energy Capital. "Assets in political hot spots have been sharply marked down." 
Duke Energy, the biggest US utility owner, last week agreed to buy Westcoast Energy, a Canadian pipeline company, for about USDollars 8.5bn in cash, stock and assumed debt. 
TransCanada Pipelines, the country's biggest pipeline company, on Friday sold some of its gas marketing and trading operations to a unit of BP. 
At least two other Canadian energy companies may be on the block. 
Husky Energy, the integrated oil and gas producer, confirmed last week it was in talks with unnamed "parties" on "potential transactions". 
Calgary-based Husky, which is majority-owned by companies controlled by Li Ka-shing, the Hong Kong businessman, has a market capitalisation of C$7.9bn (USDollars 5.04bn). 
The company has heavy oil assets in western Canada, refining and marketing operations, and expertise in natural gas. Husky's assets could be divided among several purchasers, analysts believe, with US, Canadian or international companies among the possible buyers. 
Canadian Hunter, a smaller producer which is focused on natural gas, has seen its share price rise 15 per cent over the past four weeks amid takeover speculation. 
"Any American company that wants to set up a presence in Canadian natural gas could find Canadian Hunter attractive," Mr Molyneaux says. 
PanCanadian Petroleum, one of Canada's biggest natural gas producers, is one of a handful of Canadian companies seen as having the scale to be a consolidator in the industry, but even it could fall prey to a US or international buyer. It is due to be spun off next month by majority-owner Canadian Pacific. 
US energy companies say they have been increasingly looking to Canada because it is relatively unexplored compared with the US. 
"Reserves have generally declined in the US over the past 10 years," says Rob McKee, executive vice-president of exploration and production at Conoco. 
"The lower 48 states are much more drilled and explored than Canada is." Conoco itself acquired Gulf Canada Resources in July in a USDollars 6.3bn deal - the largest oil and gas deal in Canadian history. 
Analysts suspect the terrorist attacks on the US could bolster the arguments for opening the environmentally sensitive Arctic National Wildlife Refuge in Alaska to drilling. 
That would lessen US dependence on foreign energy sources. "Perhaps this will provide the push to open up the Arctic refuge," says Bill Featherston of UBS Warburg. 
Investors' wariness of energy companies with assets in politically sensitive areas has taken its toll on Canada's Talisman Energy, which has seen its share price under pressure since the attacks on the US. 
Talisman has a 25 per cent stake in the Greater Nile Oil Project in Sudan, a country wracked by civil war and which was formerly a haven for Osama bin Laden.

CALIFORNIA PREMIUM GASOLINE DROPS TO 91 OCTANE RATING

09/24/2001 
Octane Week 
(c) 2001 Phillips Business Information, Inc. 
With little fanfare, the octane rating of premium gasoline in California has dropped from 92 to 91. The change occurred in the first week of August. While the California Energy Commission (CEC) says the switch was made to help refiners deal with the upcoming MTBE ban in the state beginning in 2003 and the subsequent demand for ethanol, some say other factors are at work - such as Unocal's RFG patents. 
"To say it's just the ethanol issue... no way," said Will Woods, executive director of the Automotive Trade Organizations of California. "We don't believe that for one minute." 
The CEC lowered the octane rating of premium gasoline in California after asking Kinder Morgan, the state's primary fuel pipeline operator, to survey oil refiners about whether or not they wanted to make the change, said CEC spokesperson Rob Schlichting. When refiners said yes, the CEC made the switch, he said. "As California moves ahead without MTBE, it is difficult to create 92 octane gasoline," he continued. "They would have to use a lot of other blending components." 
It's cheaper to use Unocal's patents to make 92 octane gasoline than it is to blend around them, Woods said. But it's even cheaper to switch to 91 octane and never have to worry about the Unocal patents again, he continued. 
Schlichting admits that he has heard that avoiding the Unocal patents is a big benefit of the new octane rating, but said that was not the reason the CEC did its initial study. The decision was not made with any government involvement, and was a result of industry input, he said. 
While the octane rating has dropped, the price of premium gasoline has not dropped accordingly, Schlichting also acknowledged. "I don't think it's enough of a quality change that you'll see a drop in price," he said. "After all, it's not inferior gasoline." 
"It sounds like a profit maximizing strategy to me," Unocal spokesman Barry Lane said. "We find it very interesting that they drop octane, but margins remain the same. The consumer will ultimately decide if this is a good idea or not."


Williams Invests Big in Deepwater.

09/24/2001 
Natural Gas Week 
P18 
(c) 2001 Energy Intelligence Group. All rights reserved 
Williams will invest more than $400 million to develop the infrastructure for the Devils Tower deepwater project, the company announced last week. 
Devils Tower is being developed through an innovative, but increasingly popular, third-party midstream transaction by Williams. The field will be majority owned and operated by Dominion Exploration & Production, while Williams will build the infrastructure for Dominion to use (17#37-07). 
In exchange for the use of the facilities required to produce the Devils Tower field, Dominion and Pioneer Natural Resources, the minority field owner, will make fixed monthly payments. Williams will own the floating production facility and export pipelines. Williams has contracted with Dominion to operate the floating production facilities. 
A portion of the expected revenues for the project through 2011 will come from these fixed payments associated with the use of the infrastructure. The fixed payments will begin upon facility commissioning and will provide more than 50% of the anticipated revenue for the first five years of the project, Williams said. 
Williams will assume responsibility for payment of the truss spar floating production facility which Dominion had already contracted from J. Ray McDermott's SparTEC subsidiary. The facility will handle up to 60,000 b/d of oil from as many as eight wells. First production is expected in mid-2003. Reserves are estimated at 50 million-75 million bbl of oil. 
The field is located in Mississippi Canyon Block 773 in 5,600 feet of water. Dominion is the operator and 75% interest holder. Pioneer has the remaining stake. 
In addition, Williams plans to build two separate oil and gas pipelines from the floating production facility. The 18-inch Canyon Chief gas pipeline will run 96 miles to the Mobile Bay lateral owned by Transco, a unit of Williams. The Transco lateral will move the product to Williams' Mobile Bay gas processing plant. The natural gas liquids will then be shipped to Williams' Baton Rouge fractionator and other downstream markets on the Tri-States and Wilprise pipelines, which are operated and partly owned by Williams. 
The oil line, the Mountaineer pipeline, will transport crude oil from the deepwater platform to an onshore oil terminal.