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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 15
 Powerline: El Paso to Buy Arctic LNG: Colder Than Average Winter Predicted:
 Deep Gas Conference
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From http://www.enerfax.com :
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CaliforniaWants to Renegotiate Power Contracts=20
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California's governor says he is working on proposals that could result in =
negotiations with power suppliers to reduce the cost of power being purchas=
ed by the state through long-term power purchase contracts signed earlier t=
his year. However, none of the generators reportedly have heard anything co=
ncerning renegotiations of the deals. While the state would gain lower rate=
s for power from any renegotiations, the advantage to the power providers i=
s not certain, other than the avoidance of future legal or regulatory chall=
enges 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 low=
er their prices. How FERC will act on the deals remains to be seen. Sempras=
igned a 10-year, 1,900-MW deal with the state in May that could be worth $7=
 billion. Semprabegan 250 MW deliveries this summer and expects increase ou=
tput under the deal over the next several years as it brings new power onli=
ne. The contract includes variable prices based on the cost of natural gas.=
 With gas prices at about $2 per MMBtu, Semprais able to sell the state bas=
eloadcapacity at $0.041 per kWh and peaking capacity at $0.051 per kWh.=20
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New Path 15 Power Line to Be Built=20
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PG&E and other power companies will build a new $300 million transmission l=
ine 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 The outdated transmission lines in the area do not have enough=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 t=
he state during peak demand periods. Expanding Path 15 to include a 3rd pow=
er line would boost transmission by about 1,500 MW. The project could be co=
mpleted by summer 2004. Kinder Morgan, Williams, Trans-Elect, and the Weste=
rn Area Power Administration are also involved in the project.
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For more information, see the LA Times article at http://www.latimes.com/ne=
ws/local/la-000083333oct19.story.
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El Pasoand Iberdrolato Buy LNG from SnoehvitProject
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The Snoehvitconsortium, led by NorwaysStatoilhas signed deals with El Pasoa=
nd Spanish Iberdrolato supply LNG from the Arcticfor 17-20 years. El Pasowi=
ll buy 2.4 Billion cubic meters of gas per year, while Iberdrolawill purcha=
se 1.6 Bcmfor a total of $453.8 million per year. Snoehvitwill also sell vo=
lumes totaling 1.7 Bcmto partners Gazde France and TotalFinaElf. Snoehvit, =
estimated to hold 320 Bcmof gas will be developed as a subseatie-back to a =
LNG plant near the world's northernmost city Hammerfest. The LNG will be tr=
ansported by specialized carriers to the USand Europe. In the US, the LNG w=
ill be sold at spot prices. Environmentalists oppose Snoehvit, the first de=
velopment in the Arctic Barents Sea, because of potential ecological damage=
. The deals were signed under a condition that the Norwegian parliament app=
roves the project. A new political party is set to take over Norwaysgovernm=
ent today and may postpone Snoehvitin order to make further environmental i=
mpact studies. Otherwise, construction is scheduled to begin by spring 2002=
 and be operational by autumn of 2006.
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NOAA Winter Weather Forecast
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Colder than average temperatures will prevail this winter in the Northeast,=
 Upper Midwest, Great Lakesand Great Plainsstates, according to the Nationa=
l Oceanic and Atmospheric Administration. NOAA says that the absence of El =
Nino and La Nina could lead to heavy snow in the Midwestand along the East =
Coast. The forecast does not expect a repeat of the record-breaking cold te=
mperatures of November and December of last year, but winter should still b=
e colder than normal. The Pacific Northwesthad near-record dry conditions l=
ast winter that depleted hydropower severely, but will have more normal wea=
ther this year. Texas, Oklahoma, and the western parts of Arkansasand Louis=
ianawill receive above average rain while Florida, Georgia, South Carolinaa=
nd the eastern part of North Carolinawill be dryer than usual.=20
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Deep Gas Conference in Houston
=20
The Strategic Research Institute is holding a conference on deep gas techno=
logy on November 27-28 in Houston.  For more information, see the following=
 website http://www.srinstitute.com/cr214.
=20
Bob Brooks
GPCM Natural Gas Market Forecasting Systemhttp://gpcm.rbac.com=20
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