InterGen Takes 30% Stake in Coral Energy

With plans to grow its power generation portfolio in the United States, 
InterGen, the power generation 
joint venture of Royal Dutch/Shell Group and Bechtel Enterprise Holdings 
Inc., closed a deal yesterday 
giving the international developer a 30% equity interest in Houston-based 
Coral Energy, one of the 
largest natural gas and power marketers in the country. 

Coral Energy officials had predicted in July that Shell and construction 
giant Bechtel would fold InterGen, 
InterGen North America and certain assets of Coral Energy into one business 
(see Daily GPI, July 10). 
Under the agreement announced yesterday, InterGen will receive the majority 
of the natural gas pipeline, 
storage and power generation assets of Shell's Coral Energy affiliate in the 
United States. It remains a 
joint venture of Shell and Bechtel. 

The move gives Shell a 68% ownership in InterGen, with Bechtel owning the 
remaining 32%. InterGen 
had been formed as a 50/50 joint venture, and Bechtel made an undisclosed 
payment to Shell in the 
deal. About 230 Coral employees, mostly related to the Texas-based assets in 
Houston, will become 
InterGen employees under the agreement. 

InterGen is considered a world leader in power generation development, with 
projects around the world. 
Carlos Riva, InterGen's CEO, said that the transaction "represents a 
significant boost to our plans in the 
United States. These assets and strengthened alignment with a premier U.S. 
gas and electricity trading 
enterprise will provide InterGen a strong platform for growth in the U.S. 
market." 

Globally, the alignment is expected to help leverage Shell's strengths in 
both fuel supply and power 
marketing and trading. Bechtel will continue to be InterGen's preferred 
provider for worldwide power 
generation engineering, procurement and construction services. Coral is the 
region's third largest natural 
gas marketer and the twentieth largest power marketer in the country. 

Linda Cook, Shell Gas and Power's CEO, said the "whole idea" was to help 
InterGen grow in the United 
States, and that the best way was to add Shell assets to it. "Success in 
tomorrow's energy markets will 
be earned through globally aligned marketing, trading and asset companies," 
said Cook. "That's 
critically true in the U.S. and will be the case as competitive energy 
markets open worldwide. InterGen 
plans to build a sizable power generation portfolio in the U.S., working 
closely with Coral to pursue 
investment decisions that make the most commercial sense. We expect this 
relationship to make a 
significant contribution to both InterGen's and Coral's long-term success." 

Shell and Bechtel formed InterGen in March 1999 (see Daily GPI, March 18, 
1999) specifically to pursue 
power generation opportunities in North America. The Boston-based company was 
set up to develop, 

"Shell, Bechtel and InterGen have among them the complete skill set for 
success in the new global energy 
market," said Paul Unruh, COO of Bechtel. "InterGen is a world-class 
developer with a proven track record 
of successfully developing, financing and operating projects around the 
world. Shell is one of the most 
successful marketers and traders of energy in the U.S. and is expanding into 
deregulating natural gas 
and power markets globally; Bechtel is a global leader in the development, 
engineering and construction 
of power facilities. These strengths together create a large power generation 
platform now directly linked 
with global energy marketing and trading." 

InterGen's portfolio will give Coral Energy access for its trading business, 
and Coral will participate as part 
of Shell's global trading network, with InterGen a business partner in its 
expanding North American asset 
platform. As the exclusive marketer of Shell's gas production, Coral has a 
gas supply of 2.5 Bcf/d, and a 
trading platform dealing in extensive volumes of energy in all key supply 
basins. For Bechtel, the agreement 
will help it lock in construction contracts for its combined cycle gas 
turbine power stations. 

Specifically, the assets to be transferred to InterGen from Coral include the 
following: 

4,000 miles of major intrastate gas pipelines in Texas. The pipeline 
facilities extend from South Texas near the 
Mexican border along the Texas Gulf Coast to the Louisiana boarder, and north 
from near Houston to the East 
Texas producing areas. 
The West Clear Lake Storage facility, one of the largest natural gas storage 
reservoirs in Texas. Located near 
the Houston Ship Channel, it has a leasehold interest in the Stratton Ridge 
storage facility. 
Coral's interest of more than 500 MW in four power plants --- one in 
operation and three under construction. The 
transfer would follow equity and regulatory approvals. 
In total, Coral had 6,100 miles of gas pipeline that ran along the Gulf Coast 
in Texas and Louisiana. It also is 
building a 100-mile long pipeline in northern Mexico with that country's 
national oil company, PEMEX. 

Currently, InterGen is either operating or building 11 power stations with a 
total of 7,985 MW. It also has
7,040 MW in advanced development. Projects are being operated, under 
construction or are in advanced 
development in the United Kingdom, the Philippines, Colombia, Mexico, China, 
Egypt, Brazil, Australia, Turkey 
and the United States.